Presentations made to parliament regarding the R30 million retirement package Eskom wanted to pay its former CEO, Brian Molefe, has revealed exactly how the power utility worked out how much he should get paid.
According to Sibusiso Luthuli, CEO of the Eskom Provident and Pension Fund, the fund was asked to calculate how much Molefe would receive if he retired at the age of 50. The former CEO was listed as a permanent employee by Eskom, and so it proceeded with the calculation.
Calculations for the payout was done with Molefe’s spouse in mind, Luthuli said, and the baseline assumption is that his spouse is five years younger. If a spouse is more than five years younger, then the overall calculation adjusts higher.
The calculation, based on information provided by Eskom, and taking his younger wife into account, came to R30.1 million.
Molefe opted to take a third of his pension in cash, and two thirds of his pension in retirement until he dies. He was earning R5.6 million per annum, Luthuli noted.
Eskom wanted to give Molefe a retirement benefit until the age of 65, Luthuli said, which equated to 172 months. The two-thirds pension Molefe opted for entitled him to R111,000 a month.
Not a permanent employee
However, these calculations were moot, as Luthuli explained that Molefe should never have been part of the fund in the first place – as we was not a permanent CEO, but was at Eskom on a fixed-term contract. This position was later confirmed by legal advice the fund received.
The CEO said that it, at the time, had no reason to not trust Eskom when it told them that Molefe was a permanent employee – but it was later revealed that the company had only signed him on a 5-year fixed contract, and ‘bought’ him 13 years of additional service (making his effective retirement age 63, not 50).
Thus, the communication from Eskom about the terms and dates of Molefe’s employment were distorted, Luthuli said.
Among the inconsistencies, the fund’s records showed three different dates for when Molefe joined the fund: on the 14 September 2015, 1 October 2015, and 25 October 2015, as declared by Molefe when he exited the fund.
“On the 12th of May, (Head of Legal and Compliance at Eskom) Suzanne Daniels asked that we stop paying Mr Molefe’s pension as he was reappointed as chief executive,” Luthuli said. “After that, we asked Eskom to clarify issues to the fund because we have never dealt with such a situation before.”
According to Luthuli, the fund has no access to employee contracts, and everything is handled through Eskom itself. He stated that the entire process of paying out pensions to Molefe would have been avoided, had Eskom not given the impression that he was a permanent employee.
The fund CEO hesitated to say outright that Eskom misrepresented facts to the fund, but said the fund acted on information provided by Eskom.
The Eskom board, led by former chair Ben Ngubane, signed off on Molefe’s R30 million retirement, despite him only working for the company for 18 months.