Letter reveals Brown knew about Molefe's early retirement deal

Public Enterprises Minister Lynne Brown. (Pic: Gallo Images)
Public Enterprises Minister Lynne Brown. (Pic: Gallo Images)

Johannesburg – Eskom board chair Ben Ngubane informed Public Enterprise Minister Lynne Brown of an early retirement agreement related to Brian Molefe’s appointment as chief executive officer.

This is according to an affidavit filed by trade union Solidarity on Wednesday.

READ: Solidarity wants court to intervene in Molefe matter

Solidarity is seeking the court’s intervention to overturn Eskom’s decision to reappoint Molefe as CEO. Further, the trade union wants the court to review decisions taken by the board to approve Molefe’s pension payout as well as his application to take early retirement last year, explained Deon Reyneke, deputy general secretary of energy, defence and aerospace.

James Selfe, chairperson of the DA’s Federal Council, told Fin24 on Thursday that following a meeting with Gauteng Deputy Judge President Aubrey Ledwaba on Wednesday, the DA "anticipates" that the applications by the Democratic Alliance, the Economic Freedom Fighters and Solidarity will be consolidated.

“We are seeking different reliefs and these can be separated in the court process," he said, adding that the matter will be heard on June 6 and 7.

However, Reyneke told Fin24 that he is not aware of the move to consolidate the cases and still expects Solidarity's case to be heard on 21 June.

Business Day reported earlier that the three cases had been consolidated.

Regarding their application, Reyneke said the trade union wants former Public Protector Thuli Madonsela’s proposal of a judicial inquiry into Gupta links with the power utility to be considered. Solidarity wants the board to be dismissed and to be held accountable in their personal capacity for the costs of the application.

“We dispute the fact of the reappointment of Molefe. We feel that correct processes were not followed,” he told Fin24.

Solidarity’s affidavit revealed that, contrary to Brown’s statements that she was unaware of Molefe’s early retirement agreement, a letter had been written to her by Ngubane detailing the terms of the package.

In an affidavit filed by Brown on Monday, she explained that she only became aware of the pension package at a meeting held with the board on April 19. This followed reports in the Sunday Times that Molefe was to be paid a R30m pension package.

ALSO READ: Brown opens up on how Eskom kept her in the dark

But on November 25, 2015, two weeks after Molefe had signed his appointment letter and two months after his employment at Eskom commenced, Ngubane wrote to the minister requesting her approval of the agreement. 

The board explained that because Molefe had served in various government organisations at executive level, he was unable to accrue the benefits from a single pension fund due to the short-term nature of the contracts.

The board suggested several contractual stipulations, among these that if Molefe was to take an early retirement (prior to the age of 63), penalties prescribed by the Eskom Pension and Provident Fund (EPPF) would be waived. Eskom would then cover the cost of these waived penalties.

“The minister’s assertion that she was not aware of the arrangement is surprising to say the least: the Molefe pension carve-out was the subject of correspondence referred to above date 25 November 2015,” said Reyneke. 

He added that Molefe had not reached early retirement age, set between 55 and 63. At the time Molefe resigned in November 2016, he was only 50 years old.

According to the standing EPPF rules, members are to retire at age 65, ceasing to be members of the fund. As for rules pertaining to early retirement, a member may retire after age 55 and is entitled to a pension in respect of his or her pensionable service. Additionally various penalties apply to taking early retirement, but these can be waived on the employer’s discretion to cover the liability.

Further, Solidarity poked holes in a presentation regarding Molefe’s contract and pension benefits, to the board as well as the People and Governance Committee.

According to Solidarity, the minutes of the meeting show that Molefe was present at this meeting, where his employment contract was discussed and voting was cast. “[He] did not absent himself from that portion of meeting nor did he declare that he had any interest in the subject matter of the resolution or recuse himself from the voting,” said Reyneke.

Solidarity indicated that the conditions of Molefe’s early retirement were misrepresented, indicating that pension fund rules allow those aged 50 with at least 10 years' service to retire. Reyneke said that “in order to qualify for early retirement, a member must have been in service for 10 years and must be over 55 years of age (not 50)”.

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