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Return of Eskom CEO ‘unlawful’

Even if Eskom’s convoluted explanation for Brian Molefe’s return is accepted, it is still unlawful.

That is the crux of a new affidavit filed by the DA’s James Selfe on Friday in response to Eskom’s argument that Molefe in effect never resigned and that reinstating him was simply the easiest way to correct the unlawful “early retirement” pension payout he was given last year.

Eskom this week argued in court papers that Molefe’s R30.1 million pension may have been unlawful, but it was an honest mistake.

His retirement was “rescinded” on the basis of his pension deal being unlawfully based on pension fund rules for early retirement – for which he is too young.

This led to a reinstatement agreement which the DA said counts as a new contract of employment, meaning Public Enterprises Minister Lynne Brown had to approve it.

Brown, for her part, said she was happy to let the court decide this point.

If the DA was correct, then the reinstatement is invalid, she said.

Her own affidavit this week made clear that the dilemma around Molefe’s pension payout had four potential solutions, according to legal advice sought by the Eskom board.

Bringing Molefe back was one.

The others where to have him leave with an agreed smaller payout or to fight him to lower it.

Selfe said that the choice to bring Molefe back, rather than opting for any of the other solutions, amounted to an exercise of public power, meaning it could be challenged on the basis of rationality.

As with almost every decision taken on the Molefe matter, Brown seemingly had no real input at all.

The legal fight is being pursued by the opposition, but the ANC itself has expressed almost exactly the same condemnation of Molefe’s re-employment and the “irrational and untenable” situation created by the convoluted explanations for Eskom’s behaviour.

THE MISTAKE IN THE MISTAKE

The argument made by Eskom chair Ben Ngubane in his affidavit this week is that it was all an honest mistake.

However, Ngubane’s explanation involves two distinct mistakes.

First, Ngubane claims that no one on the Eskom board realised that the rules of the Eskom Pension and Provident Fund (EPPF) do not allow for employees to go on early retirement before the age of 55.

They accidentally granted this to Molefe not knowing it was unlawful, Ngubane said in the papers.

Second, the board gave Molefe his outsized pension based on a rule of the pension and provident fund for retrenched employees – not early retirees.

Ngubane dismissed this as a typing error.

According to his affidavit, his letter accepting Molefe’s retirement “incorrectly refer(s) to the rules relating to retrenchment as opposed to early retirement”.

“Rules 28 and 21.4 were erroneously referred to,” said the Eskom chair.

The retrenchment rule coincidentally provides the only mechanism for granting a topped-up pension for 50-year-olds.

Molefe’s formal “retirement” was three days after he turned 50 on December 28 2016.

This alleged mistake was apparently repeated when the retirement deal was communicated to the EPPF.

The EPPF itself has said, in a statement last week, that Eskom asked it to calculate a payout in terms of the retrenchment rule.

“In this instance, the employer agreed to exit the employee in terms of rule 28 and 21(4) and notified EPPF accordingly,” reads the statement.

“On this basis EPPF actuarially calculated the exit cost which amounted to R30.1 million and which the employer paid to EPPF to ensure that the fund is financially neutral,” the fund said.

Trade union Solidarity, in its own court papers this week, pointed out that the policy making the large pension payout possible was voted on by an Eskom committee on which Molefe himself sat.

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