Brian’s R30m trick
Pension experts say Eskom’s agreement to pay Brian Molefe an early retirement pension of R30m could be unlawful
Eskom’s agreement to pay Brian Molefe an early retirement pension of R30m for the 18 months he worked at Eskom before leaving in December could be unlawful, pension experts told the Financial Mail.
To determine the legality of the agreement, the first point to ponder is that Molefe is under 55, which is the eligible age for early retirement, in terms of section 24 of Eskom’s pension and provident fund (EPPF) rules. Molefe was 50 when he struck the agreement with Eskom’s board.
"Even if Eskom had agreed to treat Molefe’s departure as ‘early retirement’ for employment purposes, it could not have been treated as such for the purposes of the EPPF," says independent pension lawyer Rosemary Hunter.
"Molefe would only have been eligible for early retirement in terms of the rules of the EPPF if he had reached the age of 55 — which he hadn’t; and he was not required in terms of his fixed-term contract of employment to remain employed throughout the period of that employment — which in his case would have meant that the board had agreed to change the terms of his contract to reduce its period."
The other point would be Molefe’s own contribution into the fund during the period of his employ. He earned a basic annual salary of R6.9m in the year to March 2016. Based on that number, the DA’s calculation estimates Molefe’s contribution to the fund during his 18 months at Eskom to be about R2.5m. The aborted payout was 12 times that amount, which, even with rapid capital growth could never have been achieved in that short period.
Eskom’s possible breach of its fund rules could also lead to the EPPF trustees falling foul of the Pension Funds Act, which says the rules of a fund shall be binding on the fund and its members, shareholders and officers.
But the Financial Services Board (FSB), which regulates the financial services institutions other than banks, and is the custodian of the legislation, says it could only act on the trustees of the EPPF.
"The FSB can only take regulatory action where it has been established that the board of trustees of a regulated fund has contravened the rules," says FSB spokesman Tembisa Marele. "We have no jurisdiction over decisions taken by the corporate board of a company. It would therefore need to firstly be established that it was indeed the board of the fund that took the action [to pay Molefe the R30m before he reached 55]."