Ngubane: We made a R30m mistake, but in good faith

Fails to mention this and several other mistakes in parliament.

Eskom chair Dr Ben Ngubane admits in court papers that the Eskom Pension and Provident Fund (EPPF) rules do not permit the large pension pay-out the board tried to wangle for its CEO Brian Molefe.

This was revealed in an affidavit filed by Ngubane in answer to an application by the Democratic Alliance (DA) to have the decision to reinstate Molefe reviewed and set aside.

Ngubane admits in his affidavit that a resolution board committee adopted in February 2016 for Molefe’s benefit was wrong and could not be implemented when the board approved Molefe’s purported early retirement in November last year.

The Eskom board does not have the authority to change EPPF rules and to attempt to do so would compromise the independence of the EPPF, which is governed by a board of trustees acting in terms of the Pension Fund Act.

He further admits that the board quoted the wrong EPPF rules in its letter approving Molefe’s “early retirement”. The rules quoted refer to retrenchment.

The EPPF, as a result, acted in terms of the wrong rules when it calculated Molefe’s R30 million pension payout that was later declined by public enterprises minister Lynne Brown.

Ngubane nevertheless made no mention of these “errors” when the board and Brown were called to explain Molefe’s controversial reinstatement on Tuesday.

In his affidavit, Ngubane states that all was done in good faith.

He explains that Molefe was appointed as Eskom CEO on October 1, 2015. Brown approved his remuneration package a month later, stating that the appointment would be for five years only. No mention was made at that stage of any extraordinary pension benefits.

A letter was sent to Molefe to confirm his appointment and Molefe signed acceptance.

Only thereafter while preparing his employment contract, Ngubane states that Eskom sent a letter to Brown explaining that Molefe would lose out on pension benefits due to the short-term contract. Eskom and Molefe initially envisaged an open-ended contract term.

Ngubane proposed that Eskom should “bridge the gap” by granting Molefe pension benefits to the age of 63 at the end of his contract even though he would only have been 53 by then. That would require that the penalties prescribed by the EPPF rules for earlier retirement be waived, and he proposed that Eskom should carry the cost of such penalties as well as the benefits for the extra ten years’ pension.

Ngubane does not state whether Brown ever recognised receipt of the letter or responded to it. Neither does she mention it in her affidavit.

Three months later in February 2016, the Board’s People and Governance Committee adopted a resolution to give effect to the proposal sent to Brown, which would apply to all executive directors appointed on short-term contracts. The committee is headed by Eskom director and former AHI president Venete Klein.

Thereafter, on March 15 2016, Molefe signed his employment contract. 

After the release of the former Public Protector Thuli Madonsela’s State of Capture report, Molefe wrote a letter to the board requesting early retirement. He specifically cited the resolution earlier adopted by the board committee.

In its letter accepting Molefe’s request, dated November 24, Eskom according to Ngubane quoted the wrong EPPF rules. This created the impression that Molefe was in fact retrenched. That was also communicated to the EPPF, which processed Molefe’s departure in terms of the rules applicable to retrenchments.

The EPPF made the necessary calculation and Eskom paid R30 million to the fund to ensure other members are not prejudiced.

Molefe in his affidavit in response to the DA application, states that he has not received R30 million.

According to a letter from the EPPF attached to his affidavit, his benefits included a lump sum of R9.7 million, which includes tax payable of R1.9 million and a monthly pre-tax pension of R111 866.17.

It was only after Brown’s press release following an article in the Sunday Times revealing the R30 million benefit that the whole scheme was revisited. Brown in the press release stated that she declined the payment since she “found the argument presented by the board on why the pension arrangement was conceived lacking in legal rationale”.

According to Ngubane, the Eskom board then met and “having considered legal advice received, concluded that the early retirement agreement had legal impediments to its implementation and therefore had to be rescinded and the status quo restored”.

He says the agreement between Eskom and Molefe regarding his early retirement “was concluded in good faith, but on terms which, insofar as it related to pension benefits, could not be implemented”.

The EPPF did not permit retirement before the age of 55, says Ngubane. Eskom had mistakenly acted on the basis of the board committee resolution, which was in conflict with the EPPF rules, he admits.

The board passed a resolution to rescind its decision to accept Molefe’s “early retirement” and set about to restore the status quo, which included getting its R30 million back. After negotiations, Molefe agreed to repay the amounts he received and resume his duties.

Eskom and Molefe agreed to treat the period between January 1 2016 and May 15 2016, when Molefe was “retired” from Eskom, as unpaid leave. During this period he served as an ANC member of parliament.

Brown in her affidavit states that the board did not need her approval for rescinding its decision and reinstating Molefe, but did so as a matter of courtesy.

After weighing the options, she approved.

Molefe in his affidavit states that his original employment never came to an end when he left Eskom at the end of 2016, because both he and Eskom acted on the mistaken belief that he was eligible for early retirement. “The purported retirement from my employment with Eskom was therefore not effective, having been materially influenced by our common error,” he states.

He says he agreed to repay any pension benefits he received.

He states that he did not attend the board committee meeting where the resolution relating to the early retirement was passed and never even checked the EPPF rules before the controversy started in April.

Molefe states that he only agreed to return to Eskom if the board could assure him that his return would be lawful.

The DA application will be heard on June 6.

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These people are behaving like a school of eels

Slippery indeed. The words ‘good faith’, Ngubane and Eskom do not belong together in the same story.

Brown (Ma Baker) said it would be better (cheaper) to take Baby Brian back than to pay him the R30 mill, yet we see that at this stage Ngubane already knew for a long time that the payment was not allowed by the fund rules. Baby Brian says in an affidavit that he did not receive the money, but then there is the little contradiction in the story that says Eskom had to get its money back and that Baby Brian repaid it.

This entire thing is BS (huge capitals) and smoke and mirrors – the single biggest regret we should all have right now is that Thuli’s report failed to mention Ngubane and Ma Baker by name or with sufficient weight (I’m sure that when the Commission is finally set up and done with its work they will be as strongly implicated as Baby Brian though).

Clearly another corrupt government official raping the system to the benefit of him and him alone robbing tax payers of millions. But in stead he decided to blame ‘external forces’ such as ‘white Monopoly Capital’. It seems his soul is corrupt as well and he dos not deserve to lead. In fact Eskom Board should also be investigated. How on earth can leaders in high positions make such an obvious mistake not questioning the basics (R30M for such a short time in the job??? How is this possible? An entry level tax consultant would have been able to do this calculation)

Paying back the money is not good enough. Molefe’s soul is corrupt and SA cant afford to have him in charge of Eskom. In fact, he should be investigated for allegations as per State Capture report.

The sheer incompetence by eksdom and wet-wipes alone warrants the immediate dismissal of the eksdom board and molefe (if indeed he is still employed.)

Eskom is a mockery. Complete incompetence. Transferring of millions to personal accounts is clearly not considered a problem and their normal way of operating. ‘Sorry we’ve just accidentally transferred R30M to Molefe’s account, but let’s move on…’ Molefe will pay it back, but knowing that he will just take it later from either the nuclear or other deals. Just simply let is slip under the table. No one will know. In fact, the board is doing it anyway.

This is going on while millions of South Africans have to salve in order to stay alive.

Why is the review of the public protectors report only happening in mid October?

My understanding was that the PP at the time indicated that Zuma should set up a judicial review within 30 days, surely he is then in contempt of that order already and the matter was “urgent”?

Not a lawyer but seems like anything goes these days regardless of law.

Delaying tactics so they can destroy records before they are all implicated.

the same person that reappointed Molefe now wants to ” probe ” ESKOM. how does this people think ?

Chev, the only way you can issue a glowing report is to investigate yourself. Simple hey?

The staff at Eskom should all go on strike as they have been conned and robbed by the very system they thought they were securely employed by. And so should all SOE employees elsewhere too. Bring the government to its knees and that way force the corrupt heads to one exposed and deposed. There is talk of a silent coup. It makes sense what the academics are saying. Time to get rid of those Ba$tards who have been stealing from us for years.

R30 million mistake. Bull$h1t. It is theft. Nothing else.

The kingpin at Eskom is Ben Ngubane; his actions need to be thoroughly investigated. So far he has been treated with kid’s gloves.

besides the obvious concerns, how does he manage to only have a tax bill of 19% on a R9.7mil. more anc accounting?

Yes. ANC tax rules for their senior people are different to those who belong to private pension schemes or who are still at the bottom of the pile.
Normal “rules” don’t apply. If they might get caught, they simply spread large amounts over a number of years. If BM had accepted R2 million a year for 15 years, no-one would have noticed. Considering he would want to take “early retirement” owing to ill-health, he could easily have arranged that a la Schabir Shaik method.

Now all these clever board members sitting around deciding that we need nuclear, can’t even agree on whether Molefe was legible for retirement, retrenchment, unpaid or maternity leave. God help us.

Molefe probably threatened to spill the beans on jz783 , so some fancy foot work happened to keep him quiet- like all the others

Molefe is a snake and cannot be trusted. He is linked to too many corruption issues. He should be criminally prosecutes and only if found innocent he can serve in government. In fact ,this rule must apply to all government officials serving us (note: (ANC) government is actually supposed to serve us and not the current way)..

Did anybody review the agreements? Possibly not, ‘when you have a doctorate you don’t do that, that’s what your Sexretary does. I honestly can’t believe that this is this good doctor’s excuse. You know what would even be a worse mistake? Keeping the lot. Just fire the entire bad batch. Get people who know what they are doing. Not people leaving asking Ngu bane? (who is it…that made this costly folly?)

Possibly not? You are being generous in your criticism. I never sniffed amounts like R30 million in my life, but would like to think that someone CHECKED before they gave him his employment contract to sign. No, it’s OK. If he does notice the mistake, he’ll point it out to us at some appropriate time (like after he actually goes on sick leave), if not, it’s just taxpayers’ money and they will cough up because it will be well hidden away in the trough by then. Single entry bookkeeping once again.

End of comments.

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