Court rules Letsoalo entitled to 350% pay hike

Reinstated Prasa board has 3 months to act.

One of the first tasks for the reinstated Passenger Rail Agency of South Africa (Prasa) board would be to pay Collins Letsoalo several million rand in back pay.

This follows a ruling by the Pretoria High Court that Letsoalo, who was fired in February by the board from his position as acting group CEO for increasing his salary by 350%, was in fact entitled to the increased amount of R5.9 million.

The board’s firing of Letsoalo was seemingly the trigger that led to former transport minister Dipuo Peters’ decision early in March, to remove all but one member of the board four months before the end of its term. (Peters has since been removed from cabinet by President Jacob Zuma and replaced by Joe Maswanganyi.)

Judge Peter Mabuse nevertheless set aside Peters’ decision on the basis that it was irrational, unreasonable, disproportionate and procedurally unfair.

He ordered that the board be reinstated and the interim board Peters had appointed in the mean time, be removed. This interim board was to be led by former Sanral CEO Nazir Alli (pictured below).

The court ruling would enable the reinstated board, led by Popo Molefe, to move forward with investigations relating to irregular expenditure of more than R14 billion at Prasa, including criminal charges and civil litigation to recover money that was lost to the organisation.

Molefe earlier told the court that the board had put the Hawks on terms for its failure to execute its mandate and investigate allegations of corruption at Prasa. He said the board would approach the court for assistance if need be.

In his judgement, Mabuse explained that Letsoalo was seconded to Prasa in July last year from the Department of Transport where he is CFO and deputy Director-General. He earns R1.35 million per annum in that position.

Mabuse referred to a letter signed by Molefe, in which Letsoalo was appointed to the position at Prasa and sets out his terms of service as follows:

“During the term of service as acting group CEO, Prasa will pay you at the annualised salary rate applicable to this position and in accordance with applicable remuneration policy, payable at such time at the company’s normal payroll during the 27th day of every month. You will be eligible to receive all the benefits applicable to the position and to Prasa’s Senior Officers. The details related to your compensation and benefits will be discussed and shared with you by the group executive responsible for the Human Capital Portfolio.”

Mabuse said it is clear that the remuneration package amounted to R5.9 million and that Letsoalo was entitled to that package. Molefe signed the letter and there was no mention of any further approvals that were required. He said the applicants did not explain to the court why this paragraph should be read differently.

He said: “It boggles one’s mind that the board seemed to have some difficulty with Letsoalo earning the same salary or the salary of the GCEO [Group CEO], the same amount that Mr Montana [former Prasa Group CEO Lucky Montana] earned per annum or put otherwise, the salary that a GCEO was entitled to. If 350% that the applicants complained about was the percentage that would have brought the level of Letsoalo’s salary to that of its GCEO and if it was agreed, there is no merit therefore, in the allegations that it was unilateral. It would appear that it was justified.

“It is not correct, in my view, that the increase was unlawful or that it had not been agreed by the parties in the appointment document. In my view, the perpetuation of the myth that Letsoalo wanted to increase his salary by 350% per annum is unfounded and unfair to him. The truth is that, based on the information before the court, Letsoalo was entitled to the same package that was agreed upon in his appointment package or the same package that was enjoyed by Lucky Montana.”

He said Peters should nevertheless have accepted the board’s decision to remove Letsoalo.

Her decision to remove the board in response was unreasonable and disproportionate, he found. According to Mabuse, the board’s decision to remove Letsoalo was based on a legal opinion and therefore reasonable and it was in terms of the employment agreement entitled to remove him at will.

He said Peters should have considered the dire consequences of her decision for Prasa, the public and the individual directors. “They were at an advanced stage of managing the investigations into misconduct at Prasa and this could be derailed by the loss of their institutional knowledge.”

Peters further erred by failing to put what she considered the board’s failings to it, stating that she considers removing the board, and affording members an opportunity to respond.

He further found that she acted irrationally by cancelling Letsoalo’s secondment to Prasa, but at the same time removing the board for doing the same.

The Department of Transport was ordered to pay the applicant’s costs.

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No wonder the SOE’s are all financially challenged. For the GCEO of a set-up like Prasa to warrant a salary of R5.9m is off-the-rails crazy. More especially considering that they are in such deep sh1t.

Would be interesting to learn what the other SOE top guys are earning.

If they are such whizz kids, one wonders why they (the myriad of SOE executives) are not in the private sector making even more money and crating the jobs that the country is in such dire need of? Far easier spending other people’s money – our taxes. Maybe there are some – anyone heard of them?

Take one: Thank you, I will take that for doing nothing because you failed to read the basic terms of the contract.

Take two: Let’s try again, and see if the knucklehead Minister has bothered to do elementary basic grammar reading, because it seems that she had difficulty with arithmetic.

Take three: Now here we go… whose the next beneficiary?

The next beneficiary is every cadre on the ANC deployment list.

This is just too much money to pay every CEO in the state employ.

No wonder the country is broke and the poor antagonistic towards the government.

It is not White monopolistic capital to blame for the evils of this administration, but it is the Black monopolistic ways now entrenched in all state owned enterprises (and there are so many) that are to blame.

ANC supporters – wake up and smell the roses.

Seems like a hell of a salary for a railroad where the trains seldom run on time – according to commuters. And to have the honorable? Mr Alli running the SOE would have been a complete shambles.
Where do the SOE’s and the ministers get their legal advice from? Given the slew of rulings against them in the last few years, they must be complete idiots.
At least Peters is out of the game until she’s redeployed somewhere to do more damage.
Finally, hope the board (and the Hawks) get their act together and identify and prosecute both the officials and the companies responsible for the massive irregular expenditure.

Wasted and bloated salaries, endless poor legal advice – let it roll. Now that Gordhan is out the way, the funds will flow easy again. Spend and be merry while making yourself rich. The poor have no idea what we are doing – just keep feeding them the same old lies and all will be well. Don’t forget to keep supporting number 1 though, otherwise it’s game over.

I would try to institute a breach of fiduciary duty, as this was not in the best interests of the company, as more experienced Directors could have been obtained for the position for much less and try to pin directors liability on him in accordance with the Companies Act.

And this is only speculation but they might also be in contravention of reckless trading.

Has anyone asked whether this cadre is actually worth more than R500k pa? Thought not.

The court is talking BS, what about a grading system, Prasa will definitely have that in place. I may get 3% and then I’m lucky. But if I say something I’ll be deemed Racist. So let the court give you the money, take the money when we have so much debt created by the government and the middle class have nothing left to give, then the Poor will finally wake up and the tyres will again burn in the streets and hopefully around one or two fat cats necks……You decide who they may be…….I have no rights in this country

I ask the world to dis-invest like you did in Zim, because once the money dries up and the grants can’t be paid the poor are coming for you and the government will have to run like rabbits to get ahead of the masses, only a matter of time…….I hope i’m still alive to see it. Only a matter of time

Well that is not very clever. You and your loved ones either don’t live in SA anymore or you don’t think very hard before opening your trap. What do you think will happen when the scenario you described above unfolds? A complete collapse of the economy? Currency debasement? Once the economic illiterate realise that they cant borrow anymore they will start up the money printers. How well did that work in Zim? Do you think with our government pushing the racist divide that will be good for social stability and peace in this country? We are on the precipice of one of the worst things that can happen in this country and some people still think this is a game. Why not cut off your nose to spite your face?

Well good for this guy. He played the game according to the rules of the system and won. He wasn’t unethical or dishonest, he just read his contract and enforced his rights. Anyone in the same position would do that. Sure, the tax payer pays but you cant blame this guys for it, blame your useless government.

Oh my! These days all a CEO needs to do to be paid (note I’m not using the word ‘earn’) an insanely high salary, is to royally stuff things up. All this while the poor are getting poorer. Shame on the High Court and shame on PRASA.

End of comments.

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