Power utility launches probe into former CEO Brian Molefe’s R30m pension payout
R111 000 monthly for life
ESKOM was on Friday tightlipped on the fresh information regarding former chief executive Brian Molefe’s controversial R30.1 million pension.
Eskom Provident and Pension Fund chief executive, Sibusiso Luthuli, on Friday stopped short of accusing Eskom of misrepresenting facts when the power utility requested the fund to process Molefe’s pension payout.
Molefe’s controversial pension payout came under the spotlight during the ongoing parliamentary inquiry into state capture. He was at the helm of Eskom for 16 months and almost walked away with a R30.1m pension payout.
This would have included a R111 000 monthly payment for life. This was despite the fact that, months after leaving Eskom, Molefe was gainfully employed as a Member of Parliament.
Approached for comment, Eskom said: “The matters you refer to in your query pertain to an ongoing parliamentary inquiry and court process. Eskom is therefore not in a position to engage in any detailed manner on these issues until these processes have run their course.”
According to Luthuli, Molefe received an after-tax payout of R7.9m after he opted to take a third of his pension in cash.
However, Molefe was on a fixed five-year contract and should not have been a member of the fund. Luthuli put the blame on Eskom’s door, saying the fund had relied on the information from the utility. “The fund does not have access to the document. We do not know if the member is permanent or temporary,” said Luthuli.
But he said it was difficult to assume that there was dishonesty on the part of Eskom. “It would be of help if the true facts were provided. We received an application and indicated which rules needed to be applied. Eskom had applied the rules.
“There was no reason to question the bona fides of the employer. Had any of this not been in line with the rules, we would not have processed the application,” said Luthuli.
Responding to questions on how the fund had reached the R30.1m figure, Luthuli said Eskom had decided to “buy” Molefe an additional 156 months, which he said was allowed in terms of the rules.
According to Luthuli, the fund – on Eskom’s request – calculated Molefe’s pension if they factored a scenario whereby the utility bought 13 additional years of service for Molefe and waived certain penalties once Molefe turned 50. The theoretical calculation came to a R25.9m pension.
The “bought” years allowed Molefe to retire at 50, but receive benefits he would have enjoyed had he stayed in the company until he was 63. Luthuli said Eskom asked the fund to waive all penalties for early retirement.
He defended the fund’s actions. “From the fund point of view, we looked at the rules. The rules allow the employer purchase additional service. It was not the first time Eskom had invoked the rule. There was no reason for the fund to be concerned,” he said.
Responding to questions by the inquiry’s evidence leader, Ntuthuzelo Vanara, Luthuli said the fund allowed for the company to purchase additional services. “We do not know the agreement between the employer the and the employee. The rules are binding,” he said.
Luthuli also told the inquiry that Molefe’s marriage to Arethur Moagi in December last year had boosted his pension payout. In its initial calculation, the fund had assumed that Molefe’s wife was five years younger than him.
However, when Eskom asked the fund to process Molefe’s pension in December last year, his salary had subsequently increased to R5.6m a year and that Moagi was more than five years younger than Molefe. “If the spouse is much younger, it affects the cost of benefit,” said Luthuli.
This contributed to the increase of the pension payout to R30.1m. Molefe requested that one third of that amount (less tax) be paid to him in cash, while another two thirds was retained to be paid as a monthly pension payout from February (backdated to January, when the pension payouts began), Luthuli said.