Former Eskom head Brian Molefe has been ordered to return an unlawful pension pay out, but the hangover from his controversial resignation and attempted reinstatement at the utility, may not be over.
On Thursday, the High Court in Pretoria ruled that Molefe’s controversial reinstatement as chief executive was invalid, and that Molefe was never entitled to any pension benefits from the Eskom Pension and Provident Fund.
As a result the Eskom board decision in November 2016 to accept Molefe’s application for early retirement was reviewed and set aside, and any money paid to him under the purported pension agreement must be paid back, it said.
But trade union Solidarity – one of the parties that took the matter to court along with the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF) – wants to see criminal proceedings brought against Molefe.
Solidarity general secretary Dirk Hermann, said the ruling paved the way for criminal prosecution.
The judgement confirmed that unlawful representations were made to the Eskom pension fund, in order to enrich Molefe, Hermann said.
“There were unlawful representations made to the pension fund, that Mr Molefe is a full time employee and therefore is eligible for a pension pay out. And they knew it was not true,” said Hermann.
The DA and the Organisation Undoing Tax Abuse (Outa) both opened criminal cases against Molefe over the pension matter last year.
“This ruling is not the end of Molefe’s worries,” the DA’s James Selfe said in a statement, responding to the judgement.
“The DA has in the past laid criminal charges against Molefe and it is now time for the [national prosecuting authority] to step up and prosecute him to the fullest extent of the law.”
Following the release of the public protector’s State of Capture report in late 2016, Molefe left Eskom under a cloud. The report seriously implicated Molefe in questionable dealings with the Gupta family. He said, at the time that he was leaving Eskom in the interests of corporate governance.
After it later emerged that he stood to receive a R30-million pension pay out, public enterprises minister Lynne Brown ordered Eskom to renegotiate the amount.
But following a series of baffling explanations – including justifying Molefe’s bonanza by way of a fund rule relating to retrenchments – the Eskom board then led by Ben Ngubane, rescinded the early retirement agreement and reinstated Molefe in his role as CEO.
Brown agreed to the board’s decision, announcing the reappointment in the face of widespread public outcry.
For his part, Molefe maintained that he took early retirement and did not resign.
He argued that there was a “common misunderstanding” between himself and Eskom about the early retirement and pension payments which rendered the retirement agreement void. As a result, his job as chief executive was restored by the operation of law.
But the three presiding judges on the matter did not see it that way.
Eskom, they said – despite the knowledge that Molefe was not a permanent employee, but on a fixed term executive employment contract, and so not eligible to be a member of Eskom’s pension fund – told the fund that Molefe was a permanent employee.
It also asked the fund to grant Molefe years of extra service. Eskom agreed to waive any penalties and pay in the difference for these extra pensionable years, which totalled 13, even though Molefe had only worked at Eskom for 15 months.
This cost Eskom R30-million and did not comply with the rules of the Eskom pension fund the court found.
“There is a strong inference to be drawn…that the early retirement agreement was a deliberate scheme devised by Eskom with the involvement of Mr Molefe to afford him pension benefits he was not entitled to,” the judgement said.
The court also found that Brown and Eskom, could not ignore the serious allegations against Molefe, contained in the public protector’s report, and so acted irrationally in reappointing him.
In response to Solidarity’s court papers, the director of public prosecutations (DPP) had said that possible criminal offences by Molefe would be investigated, Hermann said.
The union would hold the the DPP to its word, he said, adding that that Solidarity intended to make representations within two weeks on the grounds for criminal prosecution of Molefe.
The judgement also expressed a growing impatience for the abuse of public resources by powerful officials.
“What is most disturbing is the total lack of dignity and shame by people in leadership positions who abuse public funds with naked greed…without a moments sconsideration of the circumstances of fellow citizens who live in absolute squalor,” the court said.
It ordered that Molefe pay the costs of the case, including the costs of two counsel where employed.