It is gratifying to note that one of the key proposals in the bill is creating an investment board for the Public Trustee.
It is a good place to start because we now have somebody to hold to account for investment decisions made by the Public Trustee.
It is gratifying that Parliament is at last processing a law that will dramatically change the operations of the Office of Public Trustee by causing this critical institution to operate more transparently.
A story in this paper last week reported that a committee of Parliament handling the Public Trustee Amendment Bill 2017, had proposed that all unclaimed assets sitting with the Public Trustee should not be transferred to the National Treasury-based Unclaimed Assets Authority.
Away from the limelight, it would appear that a jurisdictional dispute is brewing between these two institutions. Indeed, the move by the parliamentary committee must be seen in the context of this emerging turf war.
Those against the push for more transparency in the operations of the Public Trustee would appear to have the upper hand.
Way back in 2008 when the National Treasury was crafting the framework for establishing the Unclaimed Financial Assets Authority, the Office of the Attorney General and particularly the Public Trustee department came out strongly to fight to have the Public Trustee excluded from the new framework of handling unclaimed assets.
Because of the opaque manner of its operations, the Pubic Trustee remains one of the biggest black holes in our public finance system.
Hundreds of millions of liquid assets are regularly transferred to the trustee when people die intestate or when beneficiaries cannot be traced. Yet the Public Trustee cannot claim to have even the most rudimentary of accounting and reporting systems.
Despite the fact that it sits on substantial public funds, it is not compelled to regularly report and account for what has been received and from whom, what has been paid out and for the balances in its books.
Currently, the Public Trustee makes large investments in fixed deposits in commercial banks, government paper and in equities. Yet interest income is not regularly and transparently posted in the accounts of beneficiaries.
It does not retain investment analysts and fund managers to give it professional guidance on how to invest the money.
And, the law does not compel the Public Trustee to appoint fund managers and custodians as is the case of pension schemes.
The Public Trustee does not regularly publish financial statements. Indeed, successive reports of the Auditor General have been decrying the poor state of record keeping and reporting by the Public Trustee.
Each year, the Auditor General points out how the Public Trustee is yet to fully embrace information technology and how this situation badly affects the accuracy of its financial records.
Every year, the auditor has been reporting how he was not able to vouch for the accuracy and completeness of the cash in the Public Trustee’s bank accounts.
The consequence of poorly kept financial records has been grave suffering by members of the public. The queue of widows and orphans waiting for their money at the Public Trustee’s keep growing.
By its own accounts, the Public Trustee closes 4,500 case files annually but an average 5,000 new unclaimed files are received.
In all, it is estimated that the Public Truste on average and at any time holds more than 45,000 pending files unprocessed due to disputes between families’ lack of identifiable heirs and lost documents.
It is gratifying to note that one of the key proposals in the bill is creating an investment board for the Public Trustee. It is a good place to start because we now have somebody to hold to account for investment decisions made by the Public Trustee.
Parliament should go the whole hog and create an autonomous body operating away from the AG’s. The investment board should be made to publish its reports and table quarterly financial reports to Parliament.
The Public Trustee is not the only black hole in our public finance system. The external debt registry, the pensions department at the Treasury—the biggest black hole — and unrecorded contingent liabilities arising from foreign loans extended to parastatals also make the list.
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Note: The results are not exact but very close to the actual.
