/ 7 March 2018

Ngubane sheds light on Molefe’s pension payout

Eskom chair Ben Ngubane.
The report reveals that Ben Ngubane wrote a letter to Lynne Brown titled 'Suspension of contact in any form whatsoever and/or commercial relationship with the Mail and Guardian, City Press and the Sunday Times'. (Gallo)

Former Eskom Board chair Ben Ngubane denied that Brian Molefe attended a committee meeting where his remuneration and pension package was discussed.

During questioning by evidence leader Advocate Ntuthuzelo Vanara, Ngubane relayed details on Molefe’s appointment, salary and early retirement.

Ngubane said that Molefe’s salary was no different to basic packages of previous CEOs at Eskom. He also said that the disparity in pay levels between the top executives of a company and workers is a fact of the system society operated.

“I do not set levels of payment at Eskom or any state-owned enterprise. The chairman of a board does not set payment levels. We get that from the system.”

Vanara in turn referred to the court ruling which ordered Molefe to pay back his early retirement millions.

In the ruling three judges said that Eskom’s decision to grant Molefe R30.1m after 115 months of service was unlawful and not in compliance with the rules of the pension fund.

The judgement said that it reflected greed of people in leadership positions abusing public finds. Ngubane said that there is a lot of greed, but it is the nature of the state of the system. He added that this indictment would apply to the likes of Steinhoff and other multinationals.

Vanara further questioned Ngubane on Molefe’s presence at a committee meeting where his remuneration was discussed. Molefe could have been in the general meeting but when discussing prescribed remuneration, it is standard procedure for those in question to recuse themselves, said Ngubane.

Vanara said that in institutions where corporate governance is supreme that would happen, but not in one where corporate governance has collapsed. Ngubane would not admit that there was a collapse of corporate governance at Eskom.

Vanara pointed out that the court ruling showed Molefe had not recused himself. Ngubane denied this happened. “I would like to see mins of meeting. I cannot believe that happened… I do not know where it comes from.” Vanara once again asked Ngubane if he ojected to what three judges said which suggested a collapse in corporate governance at Eskom.

To this Ngubane replied: “I am denying it.” Chair Zukiswa Rantho asked Ngubane to clarify if he was disputing what the judges said. In his reply Ngubane said that judges make decisions based on the information they have.

Vanara also asked Ngubane why he had not checked with the minister that Molefe’s pension payout was approved. Ngubane said that he received acknowledgement of that his letter was received by the DG.

Vanara asked if that amounted to ministerial approval. Ngubane said it did not amount to ministerial approval. “It amounts to the fact that the minister is aware of what we are doing.”

Brian Molefe received millions on his early retirement from Eskom, Parliament heard.

Former board chair Ben Ngubane disclosed the circumstances of Brian Molefe’s appointment of group chief executive of Eskom as well as his pension package.

Molefe requested early retirement on November 11 2016. Molefe’s early retirement was discussed at a special people and governance committee meeting on November 21.

On November 24, Ngubane approved the early retirement and confirmed all penalties would be waived for Molefe.

On March 23 2017 the amounts paid to Molefe in respect of his salary up to December 2016 were R575 679.91, leave due to him came to over R226 200 and a short term bonus of over R2-million. The total paid to Molefe was R2.9-million.

On April 19, 2017 former Public Enterprise Minister Lynne Brown called a meeting to discuss the pension pay-out of R30-million as it was not accepted.

Molefe had already received 30% of his pension benefit in January 2017. Molefe said he only received R7.7-million from the Eskom Pension and Provident Fund and of this R4.3-million was a transfer from the Transnet Pension Fund. 

Nothing unique about prepaid coal agreements – Ngubane

Former Eskom board chair Ben Ngubane said that the pre-payment for coal is not “unique” and has been done in the past.

He was explaining a prepayment of over R659-million to Gupta-linked company Tegeta.

Ngubane said that prepayment agreements form part of the procurement mandate approved by Eskom’s Board Tender Committee in 2008. “It is used in large projects, coal mining contracts and emergency supply contracts,” he said.

He referred to the public protector’s report on the matter which also noted that Eskom has the policies in place to allow for prepayments.

But in the same report the public protector said that if Eskom conducted due diligence of Optimum Coal Mine, Eskom would have seen that it would not make commercial sense to contract with Tegeta for a higher price of coal.

Ngubane pointed out a preliminary legal opinion indicated that the transaction was not in contravention of the PFMA.

Eskom delayed suspending Matshela Koko in March 2017 to avoid litigation, the Eskom inquiry heard.

During questioning by evidence leader Advocate Ntuthuzelo Vanara, former Eskom board chair Ben Ngubane spoke on why Eskom had not suspended Koko after he was implicated in a whistleblower report.

“To suspend directly on a whistleblower note without going through process would be illegal,” said Ngubane.

“He would have taken us to the CCMA and Labour court and won if we took steps not in law or policy.”

Ngubane also said that he did not solely make the decision not to suspend Koko, it was a matter that the board and the people and governance committee had engaged on.

“I did not just say ‘no suspension anymore’. It was a product of our consultations.” Koko was given 48 hours to make his case to avoid suspension. Thereafter the matter was referred to the audit and risk committee.

Ngubane could not call out specific reasons as to why the board was considering suspending Koko. He said that it was the “collectiveness of the issues” raised in the whistleblower report which were considered.

Ngubane also said that he did not get a phone call from former Public Enterprise Minister Lynne Brown to halt the decision.

“The minister called me often, particularly after work at Parliament,” he said. There were issues such as stability of Eskom, which Brown was concerned with.

“She phoned me, but it was not about Koko. It was about Eskom business. It was about a whole lot of processes that dealt with Eskom stability.” – Fin24