Outrage — including disgust on the part of the ANC — has greeted the cynical and expedient reappointment of disgraced former CE Brian Molefe to Eskom. It looks like another move in the Zupta state capture enterprise, with an unaffordable nuclear programme now back in sight. But how long can Molefe remain?
The scenes of jubilation and women ululating inside Eskom’s Megawatt Park head office block could have fooled a newcomer into believing that a triumphant hero had finally found his way home. Hordes of women sang and danced happily, brandishing copies of the same placard with the words "Welcome Back Papa Action".
Molefe is back at work not because he loves serving, but because his demand for R30m has been thwarted
Out stepped a beaming Brian Molefe, his wide smile in sharp contrast to the tears he shed when he resigned just a few months ago. He swaggered into the dance frenzy to the rhythm of a struggle song adapted in his honour.
"We’ve told them, our Papa Action is coming back," sang the throng this week, as Molefe walked back into Eskom.
Outside, a more sombre group of about 20 protesters carried placards, trying to keep warm in the cold and rainy early-winter morning. They were there to voice their anger at Molefe’s return. There was no singing, no dancing. Just a smattering of DA and Cope supporters.
About 50km away, lawyers were lodging papers at the high court in Pretoria, asking it to "urgently interdict" Molefe from performing any duties and receiving any benefits associated with the position of CE.
In that 40-page affidavit, the DA’s James Selfe asked the court to set aside Molefe’s reappointment, and for the court to declare invalid any purported pension deal between Molefe and the Eskom board.
But the DA wasn’t the only one seething about Molefe’s stunning return.
Even the ANC, which deployed the person responsible for Eskom, public enterprises minister Lynne Brown, slammed the board’s decision as "clearly immoral and illegal". ANC spokesman Zizi Kodwa said the ruling party was "embarrassed" by the move and wanted Molefe to go.
It remains unclear whether Molefe’s tenure will last.
On Tuesday, as the Financial Mail was going to print, ANC secretary-general Gwede Mantashe confirmed that the party had ordered Brown to rescind Molefe’s appointment. "Ideally they should reverse that decision. We are hoping that they are starting on it immediately," he told Bloomberg News.
Mantashe told News24 that the party’s top six leaders "met with Lynne Brown, and all of us present said ‘comrades, that decision must be rescinded’".
Brown, through her spokesman Colin Cruywagen, told the Financial Mail that "the minister is in discussion with the president and deputy president on the matter".
Former finance minister Trevor Manuel was even more furious. Speaking at an Ethics Institute event, Manuel said Eskom had provided "the most incredible reasons" for Molefe’s return, describing it as "shocking mumbo jumbo".
Jabu Mabuza, Telkom chairman and head of the CEO Initiative working to stave off further ratings downgrades, described the decision as one that "cannot be accepted".
Nobody expected this.
Less than six months ago on November 3, Molefe wept during Eskom’s results presentation over what he believed were desperately unfair findings in former public protector Thuli Madonsela’s "State of Capture" report. It revealed that Molefe had spoken to members of the Gupta family 58 times in eight months, while Eskom was falling over itself to cut corners to help the influential family.
Madonsela said it seemed Eskom had conducted itself in a way that was "solely for the benefit" of the Guptas’ mining company, Tegeta.
Other than intimating that he may have been visiting a shebeen near the Gupta compound in Saxonwold, Molefe has failed to provide an explanation for his frequent calls and alleged visits to the Gupta brothers.
Then, on November 11, Molefe quit, saying he felt it was "in the interests of good corporate governance". He would leave to clear his name.
Now, a few months later, he is back — and if anything, the cloud over his name has darkened, as a draft report prepared by PwC for national treasury concluded that Eskom’s coal deals with the Guptas under Molefe’s first round as CE were full of holes.
It seemed none of this mattered to the Eskom staff who welcomed him back with open arms this week.
Standing in the atrium at Megawatt Park, Molefe gave an impromptu speech. He thanked the predominantly support staff crowd for their "warm welcome" and went straight to business, telling them they "must continue with our mission of keeping the lights on".
A few words later — each sentence interrupted by loud cheers (and the occasional shout of "We love you!") — he launched into the kind of populist speech that strikes a chord with Eskom’s working class.
"We will be going around to the rest of the organisation, all over the country, talking to workers, finding out what the problems are," he told his adoring fans. Molefe reminded them how he used to engage with the staff. There were lots of issues still outstanding, he said — "some of them were the problem of the apartheid wage gap ... I’m sure we’re going to make progress in addressing that issue."
The ululating grew louder. Molefe was in his element, telling the staff what they wanted to hear. It was uncannily similar to the sort of thing former SABC chief operating officer Hlaudi Motsoeneng made a point of doing.
But Molefe wasn’t done: "Secondly, there has been a lot of comment about power stations closing down in Mpumalanga. We will not close down any power stations."
The crowd had heard all it wanted to hear and broke into song, freeing Molefe to go back to the business of running the utility.
Molefe’s deft handling of this impromptu rally resembled his first public address to Eskom employees, two months after he first started there in April 2015. That meeting had started as a hostile gathering of union members angered by a communiqué that said no bonuses would be paid since Eskom was on its knees financially.
That was no exaggeration. For the previous three years, Eskom had been unable to generate sufficient power tosupply the economy, resorting to daily electricity rationing. It had asked electricity users to reduce their demand by up to 20%, as it was only able to churn out 68% of its capacity. As a result, turnover fell. Bond investors were less than enthusiastic too.
Eskom then started negotiations with government about a possible cash bailout, which eventually led to an R83bn equity injection — R23bn in cash and a R60bn loan-to-equity conversion — by the taxpayer in September 2015.
At that first meeting, surrounded by less-than-friendly faces, Molefe stumbled over his first few words, after listening to hostile questions that bordered on personal attacks, and to mocking laughter.
But then he found his voice. He declared that Eskom would pay "ex gratia" bonuses to all unionised staff. After that, the crowd began eating out of his hand. By the end of the meeting, Molefe was even leading the former protesters in song and dancing to struggle anthems.
Molefe’s similarities with the now-fallen Motsoeneng don’t end at populist dances. Like Motsoeneng, he seems little bothered about the financial implications of winning over staff — even in a struggling business.
Molefe, charismatic and convincing, then went on to persuade the board (headed, conveniently, by Ben Ngubane, who also chaired the SABC during Motsoeneng’s tenure) that it was in Eskom’s interests to make those ex gratia payments. In board minutes seen by the Financial Mail, Molefe argued passionately that it would be a way to boost morale.
Ultimately, it would be taxpayers who footed the bill for the bonuses, through higher electricity tariffs and higher taxes. And governent has had to think of ways to extract more from the tax base, to support its free-spending state-owned firms. Three months ago, former finance minister Pravin Gordhan said treasury needed a further R30bn in taxes to fund a budget shortfall, so it would create a new 45% tax category for those at the top end of the scale.
It was the same story at the SABC, where Motsoeneng unilaterally converted all the corporation’s freelance staff into full-time employees, saddling the SABC with unbudgeted and unaffordable costs.
Motsoeneng amended policy so as to ban news coverage of protests, and to force radio stations to play 90% local music.
Both moves had dire financial consequences which the new interim board, under Khanyisile Kweyama, is now desperately trying to reverse, to win back advertising revenue. Without another government bailout, the SABC will not be able to pay salaries over the next few months.
In both state companies, the common thread has been the blessing of board chairman Ngubane. A former KwaZulu bantustan minister and then minister in Nelson Mandela’s cabinet, Ngubane protected Motsoeneng amid the fallout from his lies about having matric.
At Eskom, Ngubane complained last year that Madonsela had "struck a deadly blow against Eskom and against the people of SA" when she released her state capture report in October, blowing the whistle on how Molefe was allegedly implicated in sanctioning mega-contracts for his friends the Gupta family. "If we lose Brian, she takes the blame," said Ngubane.
Of course, the big difference between Motsoeneng and Molefe is that Molefe, initially, was indisputably a shining light of black excellence, a skilled and capable technocrat. But his Achilles heel was that he allowed himself to be compromised by his association with the Guptas — raising sharp and disturbing questions about his judgment.
In the months after his departure, his replacement, Matshela Koko, had lurched from scandal to scandal — none more damaging than the claims that a company called Impulse International, of which his step-daughter was a director, scored R1.8bn in business from Eskom.
Last week Brown said Koko would "take leave" while these claims are investigated.
Koko was also less savvy when it came to staff relations. He had, ostensibly with the agreement of the board, decided to close six coal power stations near the end of their lifespan. Even before setting foot at his office on his return (and presumably before consulting the board) Molefe reversed that decision.
As the Molefe fallout grew, Ngubane was confronted at the African Utility Week con ference in Cape Town on Tuesday by a phalanx of reporters.
Molefe was meant to address the conference — as the replacement for Koko. But he pulled out, citing "urgent business" in parliament, apparently.
While Ngubane was defending Molefe as the best thing ever to have happened to Eskom, about 20 SACP activists were protesting outside the Cape Town International Convention Centre, calling for the resignation of Molefe and the Eskom board.
Asked whether the board should be dissolved, Ngubane said only that he was proud it had "made a difference" and saved the country from unplanned blackouts.
Ngubane praised Molefe’s work ethic (5am to 10pm every day, apparently), leadership abilities (boosting morale) and for keeping the lights on.
"(His return) is going to be for the good. He is going to be carrying on where he stopped, making affordable electricity available to the people. We are going to move forward," Ngubane said.
During this week’s joyous scenes, it seemed lost on the workers that Molefe was back at work not because he loved serving Eskom, but because his demand for R30m of their pension fund had been thwarted.
As the backlash grew on Friday morning, Brown admitted as much, as she defended Molefe’s return to work. "I still think it is a better proposition than paying Molefe R30m as a pension. There isn’t another solution other than paying Molefe R30m or taking Eskom to court," she said.
But the sheer size of the pension payout was puzzling. Why should a man who only worked at Eskom for 18 months leave with such a monstrous amount?
It amounted to 12 times what Molefe would have contributed to the pension fund during his short stint at the helm — R2.5m, according to the DA’s calculations.
Manuel, speaking at the Ethics Institute, said it beggared belief. "There is absolutely no way that his contribution, the employer contribution and the growth fund could have produced R30m. No way at all," he said.
But in Cape Town this week, Ngubane said the outcry was simply due to a "lack of knowledge" about how the R30m pension payout worked. He said the pension is calculated on the basis of a 10-year contract because the post was not a permanent position, as had been the case with previous CEOs.
Critics also pointed to the fact that Molefe had "resigned", not retired. The suggestion he took "early retirement" only emerged after the Sunday Times exposed his proposed R30m "pension" windfall this year. Asked about this, Eskom said it couldn’t comment as the matter was sub judice. But Eskom board spokesman Khulani Qoma had earlier told the Financial Mail that Eskom could not keep Molefe away from his job because he had left on the basis of an agreement that entitled him to a payout. When Brown objected to the payout, the agreement fell away.
This appears to be yet another stain on the credibility of Eskom’s board. In announcing his departure in November, Eskom vaguely said Molefe was "leaving", without mentioning early retirement.
It was Brown who mentioned a "resignation" when announcing Molefe’s replacement last year, Koko.
The issue now is whether the Eskom board deliberately misled the public and the minister when it said Molefe was "leaving voluntarily".
Coincidentally, that R30m would have resembled what Molefe would have earned, had he served the remainder of his five-year contract at Eskom at his basic annual pay of R6.9m.
To some, this suggests that a separation agreement was put together, which was misleadingly termed a voluntary resignation, which wouldn’t ordinarily entitle someone to such an immense payout.
Eskom, of course, refuses to shed light on this. But should the board be unable to justify the payment, it could fall foul of the Public Finance Management Act.
Corruption Watch’s David Lewis says his organisation is considering approaching the court to have the entire Eskom board — including Ngubane and Molefe — "declared delinquent and barred from serving on company boards".
"The sort of ethical challenges displayed by Molefe, Ngubane and the Eskom board disqualify them from public life," said Lewis.
Over the past five years, there have been at least five investigations into possible corruption at Eskom — including the much-discussed Dentons report, which Eskom refused to release until the Financial Mail was leaked a copy.
But instead of taking action, the board sought to bury the investigations. Brown aligned herself with this inaction, compromising herself by admitting that she had authorised the board to keep the Dentons allegations concealed.
Besides that, the Special Investigating Unit also probed Eskom, while audit firm PwC investigated irregularities in its coal procurement processes. The PwC report, tabled by treasury in parliament this month, laid bare glaring allegations of abuse of process and possible corruption.
Brown’s answer, when she was put on the spot last week over Molefe’s return, was that he hasn’t "been found guilty of any offence". It’s a thin excuse, especially considering that the board has failed to follow up on many of these investigations. Lewis says this implies "only proven criminals could be barred from high public positions".
This week, Manuel turned the focus on the board, asking: "When the board fails as patently as it did in this instance, who then takes responsibility?"
So what lies ahead for Eskom now that Molefe is back?
First order of business, it seems, is for Molefe to put the nuclear deal back on track. During his triumphant return, Molefe signalled as much, saying: "We must continue with our nuclear programmes to ensure that SA has electricity that meets growth."
The Gupta family, Zuma’s close friends and business partners of his son Duduzane, are front of the queue to benefit.
But it remains to be seen whether Molefe will remain as CE to pilot that nuclear deal through the inevitable challenges. With even the ANC now against him, it could well all end in tears — again.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.