JOHANNESBURG– The Public Servants Association of South Africa (PSA), the country’s main union for government employees, has lashed out at the Public Investment Corporation (PIC), which manages their their pension fund, for agreeing to loan 5.0 billion Rand (about 413 million US dollars) to power utility Eskom.

The PSA is shocked by the decision of the PIC board and feel betrayed after all parties agreed in principle that no State-owned enterprise (SOE) would be bailed out until we are all satisfied that governance has improved at these institutions. We oppose this bailout, irrespective of how it is termed, the union said in a statement here Monday.

The PIC, which administers the Government Employees Pension Fund (GEPF), announced on Monday that it had agreed to give cash-strapped Eskom a 5.0 billion Rand bridging facility for a month. The PIC said it was approached by Eskom for funding and that due diligence was carried out before approving the one-month lifeline to the power utility.

Eskom has been marred by allegations of corruption and State capture, leading to Parliament’s Public Enterprise Committee establishing an inquiry into the affairs of the SOE. The power utility has also been dogged by scandals of questionable contracts which have defrauded the power utility of hundreds of millions of Rand, including a 1.6 billion Rand payment unlawfully made to Trillian Capital and global consultancy McKinsey.

Last month, Eskom reported that its revenue for six months ended Sept 30, 2017 fell by two per cent to 96 billion Rand and cash from operating activities dropped 30 per cent to 22 billion Rand, with the level of debt at above 300 billion Rand.

Eskom’s liquid assets had declined to 9.0 billion Rand from 30 billion Rand a year previously because of a lower than requested tariff increase of only 2.2 per cent and a 1.9 per cent decrease in electricity sales volumes, offset partly by cost containment measures.

PSA threatened legal action against the PIC, adding that the PIC board cannot be trusted.

It is now clear that we cannot trust both boards to look after our members’ pensions. The PSA in the meantime is consulting with its attorneys to urgently look at declaring the whole PIC board illegally constituted after a due date given to prove its board’s legitimacy lapsed.

Our attempts to reason with Finance Minister [Malusi Gigaba],the GEPF and PIC boards has come to nought. This 5.0 billion Rand illegal transaction will be met with necessary consequences for GEPF and PIC.

The union represents at least 230,000 public servants. It has been at the forefront of turning the heat on Gigaba to allow union representation at PIC and GEPF boards. This, the union argued, would ensure that workers’ pensions are safeguarded and not used to bail out struggling state companies.