Flash Briefing: Govt publishes Reg 28 rules to tap pension funds; Eskom R2bn ‘ghost contract’ scandal; Smith; Buffett

https://open.spotify.com/episode/34r8lprWb0FMQYflVD8QLz

• The National Treasury has published draft amendments to Regulation 28 of the Pensions Fund Act to encourage investment in infrastructure. This move has been widely expected, as the cash-strapped South African government needs to find funds to support its plans. The proposals allow for investment of up to 45% in domestic infrastructure, with an additional 10% for the rest of Africa. Definitions have been tweaked to facilitate a higher exposure to private equity. No mention was made of easing exchange control regulations to allow South Africans to increase exposure to global markets through domestic pension funds. The draft rules will be open for comment until the end of March.
• Public sector unions insist they will accept nothing less than above-inflation salary increases when they enter a fresh round of wage negotiations with the government on Monday, reports the Sunday Times. The unions have threatened a nationwide strike should they not get their way at the Public Service Co-ordinating Bargaining Council. Economists say that that reducing spending on the public sector wage bill is critical for getting the country's economy back on a positive growth trajectory.
• A fresh financial scandal has erupted at troubled power utility Eskom. A preliminary forensic report suggests that over R2 billion was stolen from Eskom through a network of ghost service suppliers and well-placed officials, according to City Press. The money was allegedly funnelled via fraudulent transactions over the last three years, involving a number of companies invoicing Eskom for work that was never carried out, reports MyBroadband.co.za. The report was compiled by forensic investigators from Seekers Finders Forensic Auditors and Risk Services after a whistle-blower alleged that prominent Eskom employees were colluding with service providers to generate the fraudulent invoices. At least three Eskom officials have been implicated in the irregularities, in addition to prominent Mpumalanga businessman Jerry Zitha, owner of engineering company Mfondo Trading, reports MyBroadBand.co.za. The report has been handed over to the Special Investigating Unit (SIU), which has confirmed it is investigating certain issues. News of the report comes days after Eskom CEO André de Ruyter confirmed that the utility's Chief Procurement Officer Solly Tshitangano had been suspended for bad performance and would be subjected to disciplinary action.
• Former ANC MP Vincent Smith, who has been arrested in connection with corruption and state capture, will see his and his family's assets frozen after the Investigating Directorate obtained a court order, reports the Sowetan. He has been ordered to hand over control of his assets to a court appointed curator under the Prevention of Organised Crime Act. The Zondo Commission into State Capture has heard evidence of Smith's links to Bosasa, a company that provided services to the department of correctional services. Smith allegedly received free security upgrades from Bosasa at his home and also allegedly received more than R2m through various bank accounts.
• Warren Buffett's Berkshire Hathaway Inc. bought back a record $24.7bn of its own stock last year and said there's more to come, as the conglomerate struggled to find other ways to deploy its enormous pile of cash, reports Bloomberg. The company's purchase of $9bn of shares in the fourth quarter matched a record set in the previous three-month period, Buffett said Saturday in his annual letter to investors. "Berkshire has repurchased more shares since year-end, and is likely to further reduce its share count in the future," Buffett, 90, said in the letter. "That action increased your ownership in all of Berkshire's businesses by 5.2% without requiring you to so much as touch your wallet."He shied away from some of the most controversial issues of the day, including politics, the pandemic and racial equality. But Buffett stood by his optimism for America, saying that progress on achieving a "more perfect union" was uneven but still moving forward. "Our unwavering conclusion: Never bet against America," he said.

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