PetroSA execs must pay back bonuses - MP | Fin24
 
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PetroSA execs must pay back bonuses - MP

Dec 04 2016 14:40
Liesl Peyper

Cape Town – The R17.3m bonuses that PetroSA executives received this year must be paid back immediately, said Gordon Mackay, Democratic Alliance spokesperson on energy.

“The DA also wants the legal opinion which informed this disastrous payment to be made public and tabled before Parliament’s portfolio committee on energy.”

The Sunday Times revealed that executives at the struggling PetroSA benefited from a legal opinion that said “affordability” should not qualify as a justifiable reason not pay bonuses.

The bonus payouts to executives took place amid large-scale retrenchments at the state-owned entity to curb costs and amid financial losses that amounted to billions of rand over the past two financial years.

PetroSA with a staff compliment of 1 800 people is on a drive to reduce its workforce by 40%. Between January and June this year, 250 employees were retrenched.

READ: Cash-strapped PetroSA offers severance packages

Bonuses despite botched projects

But despite this, bonuses were paid to 11 executives in October and November, while the last payment will be made to three executives at the end of February 2017.

Among the recipients were:

- The Manager of Geosciences and data Andrew Dippenaar, responsible for the botched project Ikhwezi, which caused PetroSA to incur a R14.5bn impairment in the 2014/15 financial year and which failed to deliver the expected volumes of gas under the sea off Mossel Bay. Dippenaar received R2.3m.

- The Head of Legal Services Mokgaetsi Sebothoma, who received R2.4m despite leading the failed Project Irene – an attempt to acquire the operations of Engen.

- Acting vice-president of new ventures Thabiso Manne, who received R2.2m, and who was in charge of another failed venture – Project Mthombo, which failed to meet its target of building a development zone near Port Elizabeth.

- Richard Mkhonta, Head of Capital Projects who worked closely on Project Ikhwezi, and who received a R1.3m-bonus.

Staff at PetroSA told the Sunday Times that PetroSA’s acting CEO had initially rejected bonus payouts to executives but since changed the decision based on a legal opinion. The payments were made while other staff members were told that there was no money for performance bonuses for two consecutive years. 

In addition, former acting CEO and acting head of Human Capital Mapula Modipa received a voluntary severance package of more than R2m when she left the company in June.

READ: PetroSA acting CEO quits 

'Legal opinion is disturbing' 

The DA’s Mackay said in a statement it is disturbing is that the legal opinion was obtained by the same Head of Legal services, Sebothoma, who received “a massive R2.4 million payout”.

“The payment of bonuses to executives comes at a time when the state oil company recorded an immense loss of R14.5 billion due to a number of disastrous projects and failure to meet key targets,” Mackay said.

In light of austerity measures and the fact that PetroSA staff members have not received bonuses for two years, it is “manifestly unfair” for executives, many of whom have overseen failed projects and have not met targets, to received millions in bonuses, he added.

READ: PetroSA fails to deliver report on project which lost billions

“We cannot afford a culture in state-owned entities where poor decisions and lack of accountability by top executives are rewarded with the payment of astronomical bonuses.”

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