Picture: MARTIN RHODES
Picture: MARTIN RHODES

The parliamentary inquiry into state capture kicked off on Tuesday with a probe into the nature of former CEO Brian Molefe’s employment contract and pension benefits.

At issue is the validity of the R30m pension benefit paid to Molefe, which is now the subject of litigation.

Public Enterprises Minister Lynne Brown did not agree to Molefe receiving this payout, according to a testimony by Anton Minnaar, Ekom’s executive support manager who provides administrative support to the board and executive team.

Minnaar said Molefe was seconded to Eskom from Transnet in April 2015 and was appointed on a permanent basis on September 25, with the understanding being that he was employed on a permanent, full-time basis.

However, about a month later Brown — on the basis of a Cabinet decision — instructed that his employment be changed to a fixed five-year contract. This was despite the minister not having mentioned this change in previous correspondence related to the terms of Molefe’s employment.

Minnaar said the only way in which an executive could participate in Eskom benefits, such as medical and pension benefits, was if they were appointed on a permanent basis.

He was emphatic that his understanding was that Molefe was employed on a permanent basis on a fixed term; if he was simply employed on contract this would have required a total renegotiation of his remuneration package after the terms of his employment were changed by the minister. This never happened.

Minnaar said being a permanent employee, Molefe was entitled to full benefits, including pension benefits, with the only implication of his being on a fixed term being his ability to retire. "In my view, he was definitely not employed as an independent contractor," Minnaar said.

However, evidence leader Ntuthuzelo Vanara said Minnaar was the only one at Eskom who seemed to hold this view. He said the rules of the Eskom pension fund did not allow employees on contract to be members of the fund.

Minnaar denied that Eskom had misled the Eskom pension fund about the terms of Molefe’s employment contract. Being employed on a five-year term had significant implications in terms of retirement benefits and an effort was made to compensate Molefe for the losses incurred by the change in the terms of his contract by making provision for early retirement.

Minanaar stressed that the minister was kept aware of the early retirement arrangements being worked on in a letter to her, the receipt of which was acknowledged. The estimated amount of the pension benefits as calculated in January 2016 was R25m.

He also rejected a suggestion by African Christian Democratic Party MP Steve Swart that the R30m pension payout for Molefe after 18 months work was "morally indefensible", saying that given Eskom's importance to the economy, it was important to offer its CE attractive benefits.

IFP MP Narend Singh suggested members of the public enterprises committee - which is conducting the inquiry - had got the impression that Minnaar went out of his way to get the best possible benefits for Molefe.

DA MP Natasha Mazzone said she had been informed by experts that there was no such thing as a permanent employee on a fixed-term contract.

Chairperson of the public enterprises committee Lungi Mnganga-Gcabashe found it unbelievable that with all the human resource and legal expertise within Eskom, the assumption that a five-year contract could also be a permanent contract was not questioned.

As soon as the minister gave the instruction that the contract be a fixed-term one, Molefe's remuneration package should have been renegotiated to take this into account, she said.

At this point the benefits of a permanent employee should have been withdrawn from him. "You did this deliberately," Mnganga-Gcabashe said.

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