Issue: June - Aug 2013


National Treasury’s forthcoming discussion paper on retirement-fund costs will set off a series of heated debates, few more heated than the relative advantages of active against passive investment management. To my mind, active has the edge because there’s one advantage that passive can never enjoy. Insider trading.

A related debate will be on fees paid to asset managers. It’s not only that they form part of costs, but also that managers’ remuneration structures impact on whether they strategise for the short term (on which their performance is too frequently assessed) or for the long term (consistent with retirement funds’ time horizons and the CRISA code for responsible investing).

Draw inspiration from Charlie Munger, partner of Warren Buffett, who told the recent Berkshire Hathaway shareholders’ meeting: “Show me the incentives and I’ll show you the outcomes.” Ditto for the other debate, sparked by the PIC/GEPF, on directors’ remuneration too.

As reported elsewhere in this edition, new trustees of the Trilinear Empowerment Trust have indicated that they expect to be consulted by state prosecutors before they entertain plea bargains for individuals charged with theft. If the trustees don’t approve, can the prosecutors proceed regardless?

Which raises the interesting point of whether the Fidentia curators and the FSB were consulted before the prosecutors accepted the plea bargain of J Arthur Brown. If they didn’t at least ensure that they were involved in the process, it’s mindless.

The same might be said of all the plea bargains accepted over the stripping of pension-fund surpluses; in particular, why Peter Ghavalas was allowed to return to Australia when his evidence was critically needed to support charges in SA.

Without Ghavalas, these curators and the FSB might again find themselves lambasting the state.

For self-regulation of/by the media, the Press Council is the forum to hear complaints from third parties against the media. The flip side, to hear complaints from the media against third parties, is absent.

One of the biggest impediments to balanced reporting is from well-heeled bullies who, when faced with questions they find embarrassing, threaten lesser-heeled media with defamation actions.Would be easy to provide examples, but there’d be consequences.

Am not sure that this is terribly funny, but it was repeated by Coro fund manager Peter Leger at a recent presentation:
Give a man a gun and he can rob a bank.
Give a man a bank and he can rob the world.

In SA’s present Guptagate milieu, I keep thinking of a quote from Hubert Humphrey when he stood in the 1968 US presidential election against Richard Nixon. “All intelligent Americans will vote for you,” an aide advised him. “Yes,” said Humphrey, “but I need a majority.”