EDITORIAL: Molefe debacle and Moody’s
The imminence of a Moody’s downgrade is but one of the red flags raised by the Eskom board’s shock decision
When ratings agency Moody’s put SA on review for a downgrade in early April, it cited lack of progress with state-owned enterprises as one of its concerns. The agency, which has to report back on its review by July at the latest, said it would be looking closely at prospects for "reforms to enhance transparency, accountability and good governance in the SOE sector". One wonders what Moody’s thinks now — and whether it will even be that long before it goes ahead with a downgrade. After the Eskom board’s bizarre decision to reinstate former Eskom CEO Brian Molefe, the only question can surely be whether Moody’s will opt for one notch or two. A one-notch downgrade would keep SA on the edge of investment grade: two notches would junk its foreign and local currency ratings, with frightening implications.
The imminence of a Moody’s downgrade is but one of the red flags raised by the Eskom board’s shock decision, news of which initially had South Africans consulting their calendars to check whether Molefe’s reinstatement was an April fool’s day joke. No one is likely to forget Molefe’s tears in November, when the public protector’s State of Capture report implicated him in dodgy dealings with the Guptas and Gupta-linked Tegeta, nor can there be any question that he resigned — in the interests, he said, of "good corporate governance".
Yet Eskom, its board and its shareholder minister, Lynne Brown, have told a most curious story about what happened then. The 49-year-old Molefe did not resign, we are now told. He applied for early retirement, and the board agreed. That gave him an astoundingly large pension of R30m for less than two years’ work; he walked away with the first R7m of it when he departed Eskom in January. No doubt many members of the Eskom Pension and Provident Fund are wondering why they did not manage to negotiate a pension that was even remotely similar, as well as how much they will be contributing to Molefe’s generous payout.
And the fact that the board went along with an employment contract that enabled it in the first place raises some big questions over its judgment. In the event, Brown said no to the R30m and this was what prompted the Eskom board to rehire Molefe.
Brown said on Friday that Molefe had turned Eskom around, a contention some would dispute, but the question of whether he was a good CEO or a bad one in his brief tenure at Eskom is irrelevant. Everyone involved has made it clear the reason the Eskom board agreed last week to rescind his resignation (or retirement?) was so that the R30m package could be renegotiated — allowing what Brown called "a significantly better value proposition to the SA fiscus". This is beyond outrageous, especially given the cloud under which Molefe left Eskom is even darker now that other allegations about Eskom’s relationship with Tegeta keep emerging.
We can only urge that the ANC be this assertive about the fight against corruption all the time, and in relation to all public entities
The ANC condemned the Eskom board’s decision, which it described as "tone deaf to the South African public’s absolute exasperation and anger at what seems to be government’s lacklustre and lackadaisical approach to dealing decisively with corruption – perceived or real".
About time. We can only urge that the ANC be this assertive about the fight against corruption all the time, and in relation to all public entities. It has now said it will instruct Brown to reverse the decision to reinstate Molefe, and has called for the Eskom board to be dissolved. This should have happened long ago: under the watch of the board and its chairman Ben Ngubane, Eskom has been the site of one scandal after another. That it has been so untouchable for so long is yet another blot on the Zuma administration and raises yet more questions about pervasive rent-seeking, cronyism and corruption.
If the Molefe debacle has served to bring all this to a head, SA will benefit. The ANC must not retreat now.