Lynne Brown: Paying Brian Molefe R30-million is the ‘only solution’

As the country reels from the news that Brian Molefe will go back to work at Eskom, Public Enterprises Minister Lynne Brown gave a press briefing intended to clarify the move, but instead raised more questions than it answered.

In the briefing, Brown said there “isn’t another solution other than paying Mr Molefe the R30-million or him [Molefe] taking Eskom to court.”

On the proviso that it was legal, this was one of the reasons that Brown said she agreed to the board’s decision to reinstate Molefe at the power utility.

When asked by journalists whether this suggested that Molefe had Eskom’s board “over a barrel” Brown refused to answer, saying “I can’t know what Mr Molefe is thinking in terms of that.”

News broke on Friday that Molefe would return to his former job next week, after he and Eskom’s board could not come to an agreement over a pension pay-out.

Business Report wrote that Eskom’s board had rescinded his application for early retirement, because it could not agree with him “on a mutually beneficial pension proposal”.

This was after Brown refused the initial R30-million package in April and instructed the board to renegotiate with Molefe.

Brown said that she believed the board’s decision “represented a better value proposition to the South Africa fiscus” than coughing up the funds, and that Eskom would benefit from Molefe’s return.

Brown promised to hold another press conference next week, with the board present, so that it could answer questions around the technicalities of the reinstatement in more detail.

Molefe’s reinstatement has been widely condemned, including by the ANC. The party had nevertheless seen fit to appoint Molefe to parliament after he resigned from Eskom under a cloud last year.

The ruling party said it was seeking a meeting with Brown.

At the briefing, Brown said she would prefer not to comment on the ANC’s reaction, because she did not want to preempt the meeting.

Despite Brown’s justifications for the decision, many questions remain regarding the circumstance of Molefe’s exit, as well as his return to the job.

The Organisation Undoing Tax Abuse (Outa) is not at all convinced.

In a letter to Brown released on Friday, Outa demanded more details around the circumstances of Molefe’s reinstatement, saying that it appeared unlawful.

According to Outa, Molefe resigned his contract and the board accepted it, but it appeared that Molefe did not qualify for early retirement.

“Mr. Molefe terminated his contract through resignation on 11 November 2016, and the chairman of the board, Dr. Ben Ngubane stated on record that he accepted Mr. Molefe’s termination,” Outa’s Wayne Duvenage said in the letter.

Molefe’s difficulties or disputes with his pension fund had nothing to do with his terminated employment relationship with Eskom.

“According to Eskom’s pension fund policy on early retirement, Mr. Molefe does not qualify,” Duvenage noted.

It was Outa’s understanding that a new CEO appointment needed to follow due process, said Duvenage, which included formal advertising of the post and screening of the candidate.

Duvenage asked Brown to clarify whether Molefe had been reinstated, or in fact reappointed anew, as well as provide “evidence of the due process that was followed to appoint and/or reinstate” Molefe.

In response to Mail & Guardian questions, the board said in a statement that Molefe and Eskom could not find a “mutually acceptable pension proposal”.

As a result the board “rescinded its approval of Mr. Molefe’s early retirement application” and with “the Minister’s consent his contract of employment has been reinstated”.

He would return to the job of Eskom chief executive on the terms of his original contract, which would end on September 30 2020.

It added it was very excited to have such a skillful leader return.

Big business is far less excited.

The CEO Initiative – a collective of the heads of South Africa’s largest firms- expressed its “grave concern over the impact of this move on the country”.

Molefe’s reappointment added to the “political and institutional uncertainty” facing the country and would exacerbate negativity caused by recent credit ratings downgrades.

Molefe resigned as Eskom chief last year after being named in the public protector’s State of Capture report.

In her report, which recommended a judicial commission of inquiry into her findings, former public protector Thuli Madonsela noted the extensive communications of Molefe with members of the Gupta family or executives in Gupta-linked companies. This was at a time when Gupta-linked company Tegeta was in the process of negotiating the purchase of Optimum Coal Holdings and its Optimum Coal Mine, which supplies Eskom with coal.

Revelations included that Molefe had been taking and making calls to Gupta family members and Gupta company executives at this pivotal time – including 44 calls to Ajay Gupta, while Molefe was placed in the Saxonwold area 19 times through cellular phone records.

Molefe denied wrongdoing but said he would leave Eskom in the interests of coporate governance.

But Madonsela’s observations had not been resolved, the CEO Initiative said, and Molefe’s reinstatement “makes a mockery” of his own words “to act in the best interest of the institution and the country”.

Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.
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