Molefe and Singh’s 92% pay raise
Eskom’s top two bosses could earn R27-million bonuses for barely a year of work
In the 2017 financial year Eskom not only gave its now fired chief executive Brian Molefe and current, embattled chief financial officer Anoj Singh hefty increases, it also backdated longterm incentive awards in a way that would see them profit handsomely come 2018.
Molefe has lost out on those longterm rewards by being fired. If he succeeds in having his firing overturned by the high court in Pretoria, however, he could be back in the money. If so, he and Singh between them could ultimately earn as much as a combined R27-million for their year at work (or for nine months at work in the case of Molefe, who contends he was on unpaid leave for three months while serving as a member of Parliament).
In the 2016 financial year the two earned R14-million from Eskom, making for a combined increase of 92% in its most recent year.
The raise was not effected by hiking up Molefe and Singh’s salaries, but was engineered largely through a “share scheme” run by Eskom for the benefit of its top executives.
In effect the “share scheme” works by creating fictional bank accounts for each executive and depositing a set amount of money into those accounts at the beginning of the financial year, where the money earns interest. At the end of a threeyear period each executive is paid a percentage of the resulting sum, depending on how well Eskom has performed on targets set in its corporate plan and its compact with the government. For the money maturing in 2018 Eskom currently expects the award rate to be 50%.
On April 1 2015, the beginning of its financial year, Eskom made such notional deposits for its top executives. Molefe only joined the company on April 20 of that year, and Singh on August 1. Nonetheless each received a healthy deposit, R7.5-million for Molefe and R3.9-million for Singh, each treated as if they were made at the beginning of the financial year and had earned interest accordingly. They could expect a payment of a portion of that, realistically about 50%, in June 2018, provided that they remain in Eskom’s employ until then.
Sometime during the course of 2016, however, Eskom came to the conclusion that the incentives were not sufficient. So, for reasons not yet disclosed, it “revised and backdated” the deposits, adding R3.2-million to Molefe’s account and R2.6-million to that of Singh.
Eskom disclosed the additional incentives only in footnotes, in tiny type, more than 100 pages into the annual financial statements appended to its annual report.
No other executives’ accounts were revised.
A smaller part of the two executives’ increases came in the form of “other payments” made to them during the year. These were for what Eskom’s books describe only as “fees related to telephone costs, security services and operating vehicle expenditure”. In the 2017 financial year Eskom paid Molefe and Singh a combined R1.2-million under this heading, on top of their salaries. In the previous financial year their combined payment was R35 000.
On Wednesday Singh said he was not aware of the increase in these payments but he “can look into it”.
He also promised to release a document he is preparing that would explain leaked emails showing he was a regular guest of the Gupta family in Dubai, at their expense, while the family was doing business with his then employer Transnet.
Molefe has likewise previously promised to explain why he had regularly visited the area of the Gupta family compound and phoned members of the family and their associates many times while Gupta companies were negotiating with Eskom. He has never done so.