South Africa

The Molefe pension letter that could come back to bite Lynne Brown

By Jessica Bezuidenhout 26 October 2017

A two-page letter by former Eskom chairperson Dr Ben Ngubane is at odds with Public Enterprises Minister Lynne Brown’s contention that she was not party to Brian Molefe’s employment contract or in the loop about plans for his generous retirement benefits. By Jessica Bezuidenhout for SCORPIO.

Tucked away in a batch of Eskom documents prepared for various legal challenges involving the power utility and its former Group CEO Brian Molefe is a letter by then chairperson, Dr Ben Ngubane.

Unambiguous, it is titled: “Retirement Arrangements – Brian Molefe” and it is addressed to the honourable minister.

An email trail shows that the document was sent to three people in Brown’s office: the DPE registry officer, the department’s chief director of governance and Kim Davids, Brown’s personal assistant – the one who left after her Dubai stay courtesy of the Guptas were exposed by amaBhungane and Scorpio earlier this year.

Upon receiving this letter from Eskom, Davids wrote back: “Your email is received with thanks and hereby acknowledged. The contents hereof will be brought to the minister’s attention.”

Eskom seemingly required Brown’s approval to build the expensive retirement package into Molefe’s employment contract, one that was initially open-ended but which was later revised to limit his term to five years.

Dated 25 November 2015, it stated that Eskom was busy drafting Molefe’s five- year contract “for the minister’s input” as per her request.

Those retirement package details were seemingly being prepared by Eskom and required sign-off from the minister so it could be incorporated into Molefe’s employment contract which was being drawn up at that stage.

In April this year when all hell broke loose over Molefe’s R30-million pension payment, Brown publicly stated that that the employment contract had been concluded between Ngubane and Molefe, adding “it didn’t have to be shown to me’ – thereby suggesting she knew nothing about it.

Brown’s office also declined to answer detailed questions about whether she was aware of the letter, had responded to it or whether she had withheld this information from the public. Her spokesman, Colin Cruywagen said she would respond to “these and other issues” in her answering affidavit in an upcoming High Court matter.

Documents show that Brown had on 1 November 2015, in writing approved Molefe’s R7.6-million remuneration package, reiterated the revised five-year contract and had “looked forward to receiving a copy of the draft employment contract and performance agreement as requested” from Eskom.

It was in response to that letter from Brown that Ngubane sent her one, dated 25 November which read: “As part of the drafting process, however, an important principle regarding Mr Molefe’s retirement fund needs to be addressed and I request the minister’s prior approval before we submit the draft contract for further input.”

Ngubane proposed various “contractual stipulations” to help ensure that Molefe would benefit from a boosted pension package to make up for the slow growth of his own pension caused by him having spent an extended time saving public sector institutions on short-term contracts. Those stipulations listed by Ngubane included:

*That regardless of Molefe’s age after his five-year contract, he be allowed to retire from Eskom’s service on the basis that he is aged 63;

*The penalties prescribed by the Eskom Pension and Provident Fund (PPF) for retirement prior to age 63, be waived; and

*That Eskom carries the cost of such penalties.

A further condition was that Molefe would not be allowed to subscribe to any other government pension fund in the event his five- year contract was not renewed.

I trust that this will receive the minister’s favourable approval,” stated the letter that was signed by Ngubane.

Considering the testimony of Sibusiso Luthuli, the CEO of the Eskom Pension and Provident Fund during a parliamentary inquiry currently underway, those favourable provisions which Ngubane communicated in the letter to Brown all appear to have made it into his final job contract signed in March 2016. Luthuli told MP’s that:

*Eskom had created the impression that Molefe was a full-time employee and was entitled to be a member of the pension fund when this was not the case as he was on a fixed-term contract and therefore not eligible; and

*That Eskom waived penalties and bought Molefe an extra 13 years of service totaling R30-million.

Molefe, who arrived at the parastatal with a pension kitty of just over R4-million scored an extra 156 months in pension contributions from Eskom through this deal, Parliament was told. This all pretty much sums up the content of Ngubane’s letter to Brown.

Ngubane said the letter formed part of issues to be thrashed out at upcoming litigation and said he therefore could not comment. This relates to a Pretoria High Court application by trade union Solidarity which wants the pension payout to be declared unlawful and for it to be set aside. The case is scheduled to be heard next month.

Molefe, declined to comment but had previously told Scorpio that he intended paying back the money received thus. However, an affidavit he has since filed suggest he may exercise his rights in terms of initial job contract signed which billed him an executive employee and not a contractor.

There appears to be no indication of a response by Brown to Ngubane’s letter of November 2015 – clearly an important one that will have had significant cost implications for Eskom. There is no indication that she interrogated the Eskom board about the cost of the proposed retirement package or that she rejected it.

In April, when the Sunday Times exposed details of Molefe’s controversial R30-million golden handshake Brown was quoted saying she knew nothing of it because it was “an operational issue”.

Back then – there was still much confusion over whether Molefe had resigned, been retrenched or whether he had taken early retirement – Brown was also quoted saying: “I am not aware that Eskom has paid Brian any severance package, but then again, those are operational matters managed by the board – it is only brought to my attention if it is unusual.”

Molefe spent around 16 months at Eskom and resigned in December 2016 following the release of the Public Protector’s report which exposed his close ties with the Gupta family, the more than 50 telephone calls between him and one of the Gupta brothers amid the family’s frantic efforts to buy Optimum Coal Mine – one they acquired with much help from both Eskom and other friends.

In May, after pushing the Eskom board to come up with a more cost effective package for Molefe, Brown permitted his return as CEO – provided it was legal – saying it was the “only solution” to the crisis or he would drag them to court.

A month later there was an about-turn. Filing an affidavit at the Labour Court where Molefe sought to enforce a decision that he be allowed to return to Eskom, Brown lashed out at him as well as the Eskom board. DM

Photo: President Jacob Zuma welcomed by Eskom CEO Brian Molefe at Eskom Headquarters in Megawatts, Sunninghill on his monitoring visit to the state owned power utility. 06/05/2016. Photo: Kopano Tlape/(GCIS)

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