Brown defends shock Molefe reinstatement, as Koko takes leave amid forensic probe

12th May 2017

By: Terence Creamer

Creamer Media Editor

     

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Public Enterprises Minister Lynne Brown has defended her decision to accept the Eskom board’s much-criticised recommendation that Brian Molefe be reinstated as CEO and see out his five-year contract to 2020 on the basis that it offered “better value” than the alternative of paying him a R30-million pension.

The Eskom board made the shock recommendation in response to Brown’s April 23 refusal to accept the proposed pension pay-out. The board's remedy, accepted by Brown, is that the 50-year-old Molefe agree to repay any pension money received and be reinstated as CEO for the remainder of his contract period. In addition, the terms of the contract would be revised to ensure the pension plan was revalued to be more reflective of five years service and in to be line with Cabinet-approve remuneration standards.

"I believe the board's proposal ultimately presents a significantly better value proposition to the South African fiscus than the previous pension proposal," Brown said during a media briefing in Cape Town on Friday afternoon.

Molefe stepped down as CEO of electricity utility on January 1 in the wake of the Public Protector’s ‘State of Capture’ report, which recommended the establishment of a judicial commission of inquiry to further probe serious allegations relating to contracts involving the Gupta family and several State-owned companies, including Eskom.

The report contained cellphone records showing that, between the period August 2, 2015, and March 22, 2016, Molefe called Ajay Gupta 44 times and Gupta called Molefe 14 times.

It also “observed” that the sole purpose of awarding contracts to Tegeta to supply Arnot power station was to fund Tegeta and enable it to purchase all shares in Optimum Coal Holdings, a company owned hitherto by mining giant Glencore. In addition, a hastily approved R650-million prepayment to Tegeta was held up as suspicious, as it appeared to have been used by Tegeta to buy all the shares in OCH shortly after bank funding was refused.

Molefe subsequently became an African National Congress MP amid strong speculation that President Jacob Zuma intended appointment him to replace Pravin Gordhan as Finance Minister. In the event, Malusi Gigaba was appointed during the early hours of March 31 in a Cabinet reshuffle that precipitated downgrade by both S&P Global Ratings and Fitch Ratings.

On Friday, Parliament confirmed the resignation of Molefe as an MP effective from Sunday, May 14 and the Eskom board indicated that he would resume duties at Eskom on Monday May 15.

Brown also confirmed that interim CEO Matshela Koko, who is the subject of a forensic and legal investigation by Cliffe Dekker Hofmeyr, would “take leave” until the investigation was concluded. The probe was meant to be finalised in May, but the timeframe had been extended by the board at the request of the firm of attorneys investigating the matter.

"In the interests of the process, the interim group chief executive has decided to take leave until the investigation is finalised in mid-June."

Cliffe Dekker Hofmeyr had been instructed to conduct a forensic and legal investigation in respect of a potential conflict of interest relating to Koko’s stepdaughter, Koketso Choma, who, according to media reports, was a shareholder in Impulse International, which received Eskom contracts value at around R1-billion from a division overseen by Koko.

Brown said she had accepted the board’s recommendation that Molefe be reinstated on the proviso that it was legal, for which she had received assurances. However, she indicated that further technical details would be provided during a joint media briefing with the Eskom board in the coming days.

She said she was fully aware of the public outrage, but refused to comment on a statement issued by the ANC condemning Molefe’s reinstatment as “unfortunate and reckless”. The governing party indicated that it would be seeking “an engagement with Comrade Lynne Brown, the Minister of Public Enterprises, under whose authority Eskom falls and under whose direction the entity should operate on this matter.”

REVERSE THE DECISION

Condemnation also flowed from labour and civil society organisations, political parties and business, with Business Leadership South Africa (BLSA) calling for the decision to be reversed.

BLSA chairperson Jabu Mabuza said the reappointment made a “mockery of Mr Molefe's own words about leaving Eskom in the interest of the country and good governance. His reappointment is willfully disrespectful of the citizens of this country.”

The organisation noted that five separate reports, including the Public Protector’s ‘State of Capture’ report had found “prima facie evidence of serious malfeasance at Eskom during Mr Molefe's tenure”.

“We call on the government to use its powers as Eskom’s shareholder to reverse this decision immediately and to replace the existing board,” Mabuza said, while welcoming the ANC’s statement on the matter.

The National Union of Mineworkers said it awaited a “proper invitation from Eskom so that we can comment appropriately on this joke”, while the National Union of Metalworkers of South Africa’s Irvin Jim general-secretary told eNCA that the reinstatement raised serious governance concerns and called for the firing of the entire Eskom board. Trade union Solidarity noted that Molefe had resigned “under a dark cloud” and that his reinstatement had been made under “ suspicious circumstances”.

INNOCENT UNTIL PROVEN GUILTY

Questioned on the ethics of Molefe’s reinstatement, Brown said: “The man hasn’t been found guilty yet. He must be seen as innocent until he’s proven guilty.”

However she reiterated her support for a judicial commission of inquiry to deal with the allegations contained in the Public Protector’s report, arguing that such an intervention was necessary to clear the air surrounding Eskom and other SoCs.

The Minister refused, however, to offer either the board or Molefe her unequivocal support. “I can’t give anybody unequivocal support. I’m saying: come back, you do your job, when you prove your job’s well done, then I give you my support.”

Eskom, she argued, was in a better financial and operational position in 2017 than had been the case when Molefe joined Eskom. Initially seconded from Transnet in April 2015. Molefe was appointed permanently to the position on September 25, 2015.

Edited by Creamer Media Reporter

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