Cover-Up on E-Tolling Project Reminiscent of Pre-1994 Tactics

F

Freaksta

Expert Member
Joined
Sep 4, 2005
Messages
3,748
Reaction score
13
Location
Melbourne
The IFP said today that it was shocked to learn the real reasons behind government's push to ensure the controversial Gauteng e-tolling project succeeds.

It is reported today, that the Public Investment Corporation - an investment manager for state institutions - has bought R17 billion in SANRAL bonds. 89% of this investment is made-up of the Government Employees Pension Funds.

"Finally it is clear why government wants to save this project at all cost, despite it being unfeasible and despite it receiving so much public resistance. These types of cover-ups were prevalent during the apartheid regime, but never could one have imagined such a huge cover-up in our post-democratic dispensation," said Narend Singh MP, the IFP's spokesperson on Finance and on the e-tolling project.

It is now clear that there are huge economic issues at stake. If the tolling project fails, Government will not only have to bail-out SANRAL, but it will also have to bail-out the civil servants' pension funds as well.

"It is clear that Government finds itself between a rock and a very hard place," said Singh.

He added, "This matrix that we find ourselves in now is totally untenable, especially since the pensions of ordinary citizens are at stake. Government has misled the public. We believe that this might possibly be one of the biggest post-democratic era scandals to date. I will raise this matter at the next possible opportunity at Parliament, as the taxpayer deserves answers on this matter," concluded Singh.

Source: http://allafrica.com/stories/201203130169.html

And the cookie crumbles........
 
That is an interesting development, so the pension funds of government employees hangs in the balance? Can you imagine the outcry if it was one of the public financial houses.
 
where did their pension fund go? ( the ones gauteng will be paying for..)
 
Freaksta said:
The IFP said today that it was shocked to learn the real reasons behind government's push to ensure the controversial Gauteng e-tolling project succeeds.

It is reported today, that the Public Investment Corporation - an investment manager for state institutions - has bought R17 billion in SANRAL bonds. 89% of this investment is made-up of the Government Employees Pension Funds.

"Finally it is clear why government wants to save this project at all cost, despite it being unfeasible and despite it receiving so much public resistance. These types of cover-ups were prevalent during the apartheid regime, but never could one have imagined such a huge cover-up in our post-democratic dispensation," said Narend Singh MP, the IFP's spokesperson on Finance and on the e-tolling project.

It is now clear that there are huge economic issues at stake. If the tolling project fails, Government will not only have to bail-out SANRAL, but it will also have to bail-out the civil servants' pension funds as well.

"It is clear that Government finds itself between a rock and a very hard place," said Singh.

He added, "This matrix that we find ourselves in now is totally untenable, especially since the pensions of ordinary citizens are at stake. Government has misled the public. We believe that this might possibly be one of the biggest post-democratic era scandals to date. I will raise this matter at the next possible opportunity at Parliament, as the taxpayer deserves answers on this matter," concluded Singh.

Source: http://allafrica.com/stories/201203130169.html

And the cookie crumbles........
Click to expand...

What would this mean in terms of the etags being implented on the 30 April?
 
Great move by Government of South Africa Pty (LTD). Now the majority of COSATU members are screwed if e-tolling fails to turn a profit since their pensions go with it.
 
Richardxtc said:
What would this mean in terms of the etags being implented on the 30 April?
Click to expand...

It means that if etolling fails, SANRAL won't have the money it owes for the Gauteng project. As it's a private company a creditor could force it into bankruptcy, at which point the pension fund's shares value disappear down the toilet. Which means that government employees don't have a pension, which I'm guessing would create some unhappiness with the 60% of the South African workforce. And COSATU.

But of course then private companies tax rate will be increased to 200% of turnover. But wait, the largest of companies are now BEE.

I give up.
 
It is now clear that there are huge economic issues at stake. If the tolling project fails, Government will not only have to bail-out SANRAL, but it will also have to bail-out the civil servants' pension funds as well.
Click to expand...

Well, no. Practically every pension fund in South Africa will own Sanral bonds. But...how on earth did the PIC rack up more than half of the HWAY medium term note programme though? And why? WTF were they thinking? They are the single largest pension fund in Africa, but R17bn far outweighs their cash flow requirements, I'm very sure.

Their bond issuance hasn't reached full subscription yet afaik, so while the MTN programme allows for up to R32bn of bond issuance, it hasn't all gone to market yet. This means that private asset managers have actually avoided Sanral bonds nearly altogether and the major investor has been the PIC.

That is absolutely massive news as it stinks of corruption of the absolute highest order - nobody should ever purchase an E-tag just on this news alone. NOBODY!. This means that the government has used the pension funds of their employees to fund the construction of Gauteng's roads and collections. That contravenes so many laws it is difficult to fathom how they could think they would get away with this.

And there is no secondary market for Sanral notes, so yes one or the other would have to be bailed out. It would be completely illegal for the government to bail out the PIC so the only other option would be Sanral. What an absolute cock-up...

EDIT: regarding the bailout - the pensioners would still feel the hit of this, as Sanral would effectively have to go into liquidation, forcing an events of default clause on their entire MTN programme and all other non-NRA bonds that haven't yet reached maturity. This would result in an immediate debt of the outstanding programme, which government simply cannot afford to dish out...
 
In case people don't understand the jargon in my previous post, here is a breakdown:

Sanral borrowed money supposedly in the private market by issuing a bond, which is bought up by asset managers such as pension funds. These bonds allow Sanral the cash flow to fund their operations. Although I question this because the creditors actually only had to pay the cash over midway through 2011, which explains why contractors weren't being paid.

Now it comes to the fore that the PIC (who run the government pension programme) owns the vast majority of these bonds, which means that in effect, the government has used the pension funds of its own workers and citizens to fund the project.

If Sanral fail, the balance sheets of these pension funds turns tits-up, which means that each and every pensionable employee of government would lose a huge portion of their pension.

Although government pension funds are not prohibited from subscribing to government bond issuances, they certainly cannot subscribe to such a large portion of it. I'm quite sure SARS have strict rules regarding the legalities of this. Moreover, it is simply absurd that the pension funds have effectively funded the construction and that the citizens are going to be nailed if Sanral fall.

This is very important news...
 
  • Like
Reactions: STS
But what about that foreign investor? The one from Sweden or whatever. How do they fit in?
 
Don't the furriners have the operations contract for the etoll infrastructure?
Also, the bond issue isn't the entire funding for the roads. There were other sources too.

This is despicable. The only comfort I can take is that most of the state pensioners are probably anc cadres, so they're getting ****ed by their own party. Small comfort I know. but still.
 
Ancalagon said:
But what about that foreign investor? The one from Sweden or whatever. How do they fit in?
Click to expand...

There is no need to look at them in this scenario. This issue is how Sanral raised financing for the construction of the roads. Who they contracted to is another issue altogether. We mustn't dilute the seriousness of this issue with factors like contract awarding...
 
Sinbad said:
Don't the furriners have the operations contract for the etoll infrastructure?
Click to expand...

Yes, but that doesn't impact the fixed income market. Who subscribed to Sanral debt is the issue here - not who the contracts were awarded to. Which in itself is very dodgy...
 
427006_10150590937237551_633152550_9342112_374103122_n.jpg
 
One must also remember that Sanral have been punting themselves as a private company for some years now. Ergo they should be treated as such should they trigger a default on their bonds. And the PIC made a conscious decision to invest in their bonds. If Allan Gray had done the same, we wouldn't see a bailout. There should be no bailing out of anyone, however this will be impossible considering the precarious situation that government has placed themselves in.

As the only investor in Sanral, they are liable. By redirecting pension fund cash into Sanral they have quadrupled the problem. By not listening to their citizens, they have quintupled the problem. They are, in short, fscking morons...
 
DJ... said:
If Allan Gray had done the same, we wouldn't see a bailout.
Click to expand...

If Allan Gray had the government's pensions tied up they probably would. I agree bailouts are not the answer though it's too early to tell if they will. I wonder what sort of investment period PIC have gone in for?
 
Fudzy said:
If Allan Gray had the government's pensions tied up they probably would. I agree bailouts are not the answer though it's too early to tell if they will. I wonder what sort of investment period PIC have gone in for?
Click to expand...

There is no selective "investment period". Bonds have maturity dates and in this case the HWAY programme matures between 2023-2025 depending on which issuance and tranche they invested in. There is no secondary market for Sanral bonds (i.e. an opportunity to sell off the bonds once you own them). Bonds trade very differently to the equity market and they work on spreads. Bonds by their nature are very illiquid...
 
Last edited:
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X