WRAP #StateCapture: MPs grill Eskom’s pension fund over Molefe

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20 Oct 2017

WRAP #StateCapture: MPs grill Eskom’s pension fund over Molefe

Members of Parliament on Friday grilled the Eskom Pension and Provident Fund (EPPF) about why they allowed Eskom’s request that saw ex-CEO Brian Molefe given a R30m pension payout.

EPPF CEO Sibusiso Luthuli and chairperson Mantuka Maisela were at pains to explain the rules of the fund and how they simply followed the rules when processing Eskom’s application for Molefe’s payment.

They later discovered via their own legal opinion that Molefe should not have been on the pension fund to begin with, as they do not take on members who are not permanent employees of Eskom.

It turned out that Molefe was on a five-year fixed-term contract. Molefe is currently challenging this in court. If he loses his court bid, he will have to repay the EPPF over R9m they gave him in cash, when he requested a third of his pension be paid to him in early 2017.

In explaining how they calculated his R30.1m pension, Buthelezi said that Molefe’s marriage to a much younger woman had meant they needed to increase his payout.

Maisela also revealed that they are attempting to find out more about suspended Eskom chief financial officer Anoj Singh’s contract, but said Eskom is not providing them with the right information.

It was revealed at Friday’s state capture inquiry that the committee had received a threatening letter from Black First, Land First. It ordered them to stop the inquiry or face a legal challenge.

“This letter is intimidating us to not go forward,” said acting public enterprises committee chairperson of the Zukiswa Rantho. Democratic Alliance MP Natasha Mazzone said the letter is one of ‘blatant intimidation’.

“There is a lack of an understanding of the Constitution,” she said. “Bring it on. I don’t scare easily. We have an obligation to our country. It has a poor and failed attempt at intimidation.”

Rantho, who has been seen as an effective acting chair of the state capture inquiry, found out on Friday that she would be replaced as a permanent chairperson had been appointed to the public enterprises committee.

“Lungi Mnganga-Gcabashe who previously served on the portfolio committee on Human Settlements becomes the new chairperson of the portfolio committee on Public Enterprises,” the Office of the ANC Chief Whip in Parliament announced on Friday.  

See below for the full coverage of Friday's state capture inquiry...

20 Oct 2017


20 Oct 2017

Eskom in hot water over Anoj Singh’s pension

Eskom has found itself in hot water with the Eskom Pension and Provident Fund (EPPF), after it failed to satisfactorily provide information regarding suspended chief financial officer Anoj Singh.

EPPF chairperson Mantuka Maisela said that following the Brian Molefe order, the fund asked Eskom to send it names of any members of the fund that are not permanent employees.

Eskom employees on fixed-term contracts, as was the case with Molefe, are not allowed to be included in the fund, the EPPF told Parliament’s state capture inquiry.

“We have written a letter to Eskom requesting to give us names of employees who are members of the fund, and we have specifically asked for Anoj Singh,” she said.

“The answer Eskom gave us was not satisfactory,” she said.

“We have now asked Eskom to give us his contract of employment, which we are still waiting for.

“We are trying to dig down to see if there are other people who are on a limited contract and given to us as being permanent.”

EPPF CEO Sibusiso Luthuli also said that the Hawks approached the fund to discuss Molefe’s pension payout. He said they told the Hawks they were willing, but are still waiting for them to meet them.


20 Oct 2017

Suspended Eskom chief financial officer Anoj Singh.

<p><strong>Suspended Eskom chief financial officer Anoj Singh.</strong></p><p></p>

20 Oct 2017

7 things we have learnt about Molefe’s pension

1. Brian Molefe received R9.7m in cash (before tax) from the Eskom Pension and Provident Fund (EPPF). If he loses his court case, he will have to pay this back.

2. Molefe also got about R20m in monthly pension payments, which have been suspended pending the court case. If he loses, then the EPPF will pay this sum back to Eskom, in addition to the R9.7m returned by Molefe.

3. EPPF CEO Sibusiso Luthuli said Molefe’s pension would have gone ahead if they had not found out in media reports that he should not have been a member of the EPPF. “His pension would have gone ahead,” he said. “We would not have known better.”

4. The EPPF has not received any threats by any members of Eskom or the public.

5. The EPPF said they follow the rules and so don’t feel they failed to meet ethical standards.

6. The fund says it has learnt some important lessons from the Molefe ordeal and will be reviewing its rules. However, any changes will have to be agreed upon by its members.

7. Invoking the rules that got Molefe his R30.1m pension payout had been used by Eskom before, so the pension fund did not believe a suspicious activity was taking place.

20 Oct 2017

Former Eskom chairperson Ben Ngubane and former Eskom CEO Brian Molefe.

<p><strong>Former Eskom chairperson Ben Ngubane and former Eskom CEO Brian Molefe. </strong><br /></p><p></p>

20 Oct 2017

And in other news the rand fell sharply on speculation that President Jacob Zuma is preparing to fire his deputy Cyril Ramaphosa days after removing another critic from his Cabinet.


20 Oct 2017

Eskom gave pension fund wrong info on Molefe

Eskom gave the Eskom Pension and Provident Fund (EPPF) incorrect information regarding former Eskom CEO Brian Molefe’s contract.

That is according to EPPF CEO Sibusiso Luthuli, who was testifying as part of the state capture inquiry in Parliament’s committee on public enterprises.

Evidence leader Nthuthuzelo Vanara asked Luthuli if Eskom misled the pension fund.

In response, Luthuli said he could not say they were misled that Molefe was a permanent employee, when in fact he was on a five-year fixed contract.

Only permanent employees can be members of the pension fund.

Vanara put it to Luthuli: “You acted in good faith, after an impression by Eskom was given that Mr Molefe was a permanent employee?”

“That is correct,” responded Luthuli. “We do place reliance on information that Eskom provides us. If they had brought us this information, we would have avoided this entire process.”

“Legal opinion suggests that Mr Molefe should not have been a member of the fund in the first instance,” he said. “There is a court case in the matter and we can only wait for outcome of court process to confirm that legal view is 100% correct.”

Vanara put it to Luthuli: “Someone came to the pension fund to say Mr Molefe was a permanent employee. You said the facts reveal he had a five-year contract. Had you known that, he would never have been a member of your fund.”

He replied: “Yes, that is correct.”

Vanara then challenged him: “Eskom misrepresented the facts to your pension fund.”

Luthuli responded: “I am not sure if they misrepresented us. They provided us with information and we acted on that information. The information was not correct. We had no sight of the contract. We only learnt subsequently that he was on that contract.”

Vanara said that by characterising him as a member, and invoking the rules, Eskom and Molefe enabled that a sum of R30.1m was made payable for Molefe.          

20 Oct 2017

CEO of the Eskom Pension and Provident Fund (EPPF) Sibusiso Luthuli in Parliament on Friday.

<p><strong>CEO of the Eskom Pension and Provident Fund (EPPF) Sibusiso
Luthuli in Parliament on Friday.<br /></strong></p><p></p>

20 Oct 2017

Brian Molefe’s young wife boosted his pension payout

Former Eskom CEO Brian Molefe's marriage to Arethur Moagi in December 2016 boosted his pension payout, according to Sibusiso Luthuli, CEO of the Eskom Pension and Provident Fund (EPPF).

Luthuli was briefing Parliament’s public enterprises committee as part of its state capture inquiry.

According to Luthuli, in August 2016, Eskom asked the EPPF to calculate Molefe’s pension if they applied two rules where Eskom bought 13 additional years of service for Molefe and waived certain penalties once Molefe turned 50.

They calculated that Molefe, who turned 50 in January 2017, would have received a R25.9m pension payout. However, this was a theoretical calculation and made certain assumptions, including that Molefe’s wife was five years younger than him.

When Eskom applied for the EPPF to process Molefe’s pension payout in December 2016 using rule 28 and rule 21.4, the EPPF followed the process. When they received actual information regarding Molefe, they discovered his salary had increased to R5.6m per annum and that his wife – who he had just married – was far younger than the five year assumption.

“If the spouse is much younger, it affects the cost of benefit,” said Luthuli. “The gap was much bigger.”

The salary increase and age of Molefe’s wife then saw his pension payout increase to R30.1m. Molefe requested that one third of that amount (less tax) be paid to him in cash (R9.7m - R7.9m after tax), while another two thirds was retained to be paid as a monthly pension payout from February 2017 (backdated to January, when the pension payouts began), Luthuli said.

Luthuli explained how they calculated the R30.1m. He said they took his gross pension pay-out due to his 16 months that he worked at Eskom (using his R5.6m salary) and calculated his gross pension if he worked 156 months (which was his 13 years of additional service bought by Eskom).

They then added an amount as a result of his younger wife. This amount then took his total payout to R30.1m.    

Luthuli then said that - according to legal advice - Molefe should never have even been on the retirement fund, because he was on a fixed-term contract.

20 Oct 2017

BLF sends Parliament court threat that is ‘blatant intimidation’

Black First, Land First (BLF) has sent Parliament a letter warning the public enterprises portfolio committee to stop the inquiry by October 19 or else it will take it to court, the committee heard on Friday.

Acting chairperson of the Zukiswa Rantho said she “received a letter from the Black First, Land First movement”.

“It is addressed to me, the committee secretariat and the honourable (Speaker) Baleka Mbete. The content of the letter is asking the committee to stop the inquiry as of yesterday at 13:00. If not, we will be taken to court.

“This letter is intimidating us to not go forward,” she said. “It has names of people they have mentioned in this letter. Also, they are saying the nature of the current inquiry is not clear.”

Democratic Alliance MP Natasha Mazzone said the letter is one of ‘blatant intimidation’.

“There is a lack of an understanding of the Constitution,” she said. “Bring it on. I don’t scare easily. We have an obligation to our country. It has a poor and failed attempt at intimidation.”

ANC MP Zukile Luyenge said the inquiry is an extension of Parliament.

“We have an obligation to listen to anyone who wants to share information that is for the best interest of the public,” he said. “The writers of the letter have more information on state capture, but unfortunately we are dealing with Eskom and certain individuals.

“If they have that kind of information they need to follow proper channels,” he said. “The work we are doing can’t stop now, because they have further information of other individuals. It must not derail our focus. They must follow the right channels at an appropriate time.”

EFF MP Flloyd Shivambu asked why the committee was “entertaining the Gupta militia”.

“They are seeking to divert the honest work by parliament,” he said. “They tried with the finance committee’s questions of the corruption of Dudu Myeni. They came to disrupt our committee of finance.

“The packaging of the letter sounds like the same issues raised by the Minister of Public Enterprises,” he said. “It sounds like state capture is run from a central place.

“They can go to court,” he said. “There is no rational court which will say we can’t conduct our constitutional obligation of overseeing the executive.”

African Christian Democratic Party MP Steve Swart revealed that one of the inquiry’s witnesses has already received a death threat. “This is threatening our parliamentary sovereignty,” he said.  

20 Oct 2017

Eskom Pension Fund to brief Parliament

The Portfolio Committee on Public Enterprises is about to be briefed by the Eskom Pension Fund on former Eskom CEO Brian Molefe's pension payout. The briefing forms part of the inquiry into the mismanagement of state funds in State-Owned Enterprises (SOEs).

In July, Public Protector Busisiwe Mkhwebane said she would probe the decision that led to a R30m pension payout for Molefe.

The Public Protector will be probing the role of Public Enterprises Minister Lynne Brown, as well as the Eskom board's role in the saga.

The Democratic Alliance requested the investigation after it emerged that the Eskom board approved a R30m pension payout to Molefe, after only 18 months as CEO of Eskom.

Molefe briefly returned as CEO of Eskom on May 15, but was removed again two weeks later when Public Enterprises Minister Lynne Brown ordered the board to reverse his reinstatement.

He has since launched an application in the Labour Court to have the rescission of his appointment declared unlawful.

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