It was former Eskom chairperson Ben Ngubane who made the final sign off on a retirement package that led to former chief executive Brian Molefe’s whopping R30-million “pension” payout, according to testimony from Venete Klein, a board member at the power utility.
Klein was responsible for Molefe’s appointment. She chaired the People and Governance committee, which dealt mainly with the succession of senior executives within Eskom and the remuneration of chief executives.
On Tuesday, she gave evidence to the parliamentary inquest into Eskom. The inquest is tasked with investigating the appointment of Molefe, his “retirement” package to the tune of R30-million and allegations that procurement procedures were not followed through and may have favoured Gupta-linked businesses.
But one of the most explosive details of Klein’s testimony came when she told MPs how Molefe had received a R30-million payout after he resigned from the power utility. It was later rescinded after the payout became public, leaving South Africans outraged.
In February 2016, the People and Governance committee made a resolution to give Molefe the normal payout that Eskom senior executives receive after typically a decade of service in recognition of their work, Klein said.
Molefe had been employed by the parastatal for less than one year.
When Molefe requested early retirement from Eskom, his retirement letter never went to Klein’s committee, nor to the minister as it was meant to. Instead, Molefe sent a letter directly to Ngubane.
To handle Molefe’s early retirement application, a special People and Governance committee meeting was held with only two original members in attendance. Other board members from other committees also attended this special committee meeting.
It was Eskom executive support manager Anton Minnaar who then made the decision that Molefe should receive a standard payout despite his brief tenure at the energy parastatal. Klein said that she had notified Public Enterprises Minister Lynne Brown of this decision, but received no response from the department.
Klein said that this special People and Governance meeting was not meant to make decisions. Yet, from this meeting, Minnaar went to Ngubane to sign-off on the proposal allowing Molefe’s retirement.
During the committee, Klein said that while the committee resolved in February 2016 to pay Molefe out, they did not agree to the amount of R30-million. She seemed to lay the blame at Ngubane’s feet for the large payout.
Why Eskom wanted Molefe
In 2015, the Eskom board wanted Molefe to sign a permanent contract to be chief executive. They previously hired him on short term contract, but believed he should be there permanently, Klein said.
Klein testified that she joined an almost entirely new board at Eskom in 2014, which was not supported by the executives of Eskom. Subsequently, board members were required to make decisions with “misleading information” and in some instances critical information “was completely omitted”, she said.
Klein, her fellow board members and the public enterprise department, which Eskom reports to, found that none of them could trust information from the energy parastatal as, Klein said, the information seemed to change on an almost “daily basis” — making the decision making process difficult.
But when Molefe came, he sat Eskom bosses down to discuss problems at the power utility and possible solutions. He then held a meeting with board members where he presented the challenges Eskom faced and what could be done to fix them.
It was actually the first time someone spoke about a “glass half-full”, said Klein.
With a desire to hire Molefe permanently, the People and Governance Committee chaired by Klein approached Minister Brown on June 19 2015. According to Klein, the Minister’s office said Molefe would need to work for six months before he could be considered. Klein then asked for the extension of Molefe’s contract.
Molefe was receiving much support to become the next Eskom CEO, however in order for Eskom to hire him, the People and Governance Committee needed to comply with the appropriate legal documents of the employment opportunity program Medupi Leadership Initiative, Labour Relations Act, Eskom employment policy and procedures.
Despite knowing which documents and procedures needed to be followed, Klein called for a deviation to expedite Molefe’s appointment and that of a chief financial officer’s appointment in a resolution on September 10.
Klein motivated that, because South Africa was suffering from load-shedding which was costing Eskom R434-million a day, a person who “could grapple with the issues and turn it around so quickly” would be an asset.
Klein said that this decision was the best she and her committee could make at the time, even if there had been better candidates.
On October 1 2015, Molefe and Anoj Singh, who reportedly received money from the Guptas in exchange for helping the family get kickbacks, were appointed to Eskom as the chief executive and chief financial officer respectively.
Seven days later, Molefe’s contract, according to Klein, faced some confusion. Molefe was meant to become a permanent employee as per Eskom rules; however, the Minister suggested that Molefe be given a five-year contract.
But the contract that the Eskom chairperson Dr Ben Ngubane gave Molefe to sign on November 9 was a full-time permanent contract.
However, another contract was drawn up in line with Brown’s wishes for a five-year term. This contract would nullify Molefe’s permanent position at the utility. When he was presented with the contract, he said he had wanted “to retire at Eskom”, according to Klein.
It was then that the pension payout controversy began to take shape.
Klein testified that Eskom’s head of legal Suzanne Daniels, who has been praised for her bravery at the inquest, had information that would have prevented Molefe from signing a permanent contract. Four days before Molefe signed a fixed term contract, Daniels had received an email from the public enterprises department stating that Molefe was to serve a five year term.
Klein believed that she had followed the procedure expected by Eskom, but that in hindsight, she and her board could have made better decisions.
“What happened with state capture has changed many people’s’ lives and I pray that we have the chance to do a proper inquiry so that those involved can feel the force of the law,” said Klein.