BONUS BONANZA FOR FAILED BOSSES
Cash-strapped PetroSA awards millions despite string of missed targets
CASH-strapped state oil company PetroSA has paid senior executives millions in bonuses despite a string of disastrous projects that resulted in a R14.5-billion loss.
Eleven bosses received payouts totalling R17.3-million even after the board said they did not deserve them.
The executives benefited from a legal opinion that said “affordability would not qualify as a justifiable reason” not to pay the bonuses.
Furious mid-level employees this week accused their bosses of running a “self-enrichment scheme” and demanded repayment of the money. They said the bonuses were being paid while the company was laying off hundreds of staff to cut costs.
The uproar comes amid growing concern among ratings agencies over the financial health of stateowned enterprises.
The payments were made while other staff members were told two weeks ago that for a second successive year there was no money for performance bonuses.
An internal document leaked to the Sunday Times this week details bonuses paid to 11 senior executives in two transactions, on October 20 and November 24. The last tranche of the payment to three executives is due at the end of February.
Disgruntled employees have referred the matter to the Commission for Conciliation, Mediation and Arbitration and plan to launch lunchhour protest pickets from Wednesday. Among those to benefit are:
Manager of geosciences and data Andrew Dippenaar. He was responsible for the unsuccessful Project Ikhwezi, which explored for gas off Mossel Bay. He received R2.3-million even though Ikhwezi missed its targets. Dippenaar returned to work in July after being suspended for nine months amid board unhappiness about Ikhwezi. This led to the axing of former CEO Nosizwe Nokwe-Macamo and finance chief Lindiwe Mthimunye-Bakoro;
Head of legal services Mokgaetsi Sebothoma. She was paid R2.4-million despite leading the failed Project Irene. This was an attempt to buy petrol retailer Engen’s operations, including its franchise business and its Durban refinery;
Acting vice-president of new ventures Thabiso Manne. He was in charge of Project Mthombo, which failed to meet its target of building a new refinery in the Coega industrial development zone near Port Elizabeth. He was paid R2.2-million; and
Richard Mkhonta, the head of capital projects, who worked closely with Dippenaar on Ikhwezi, was also paid a generous R1.3 million.
Executives who worked under Dippenaar, Sebothoma and Manne were paid bonuses of between R317 000 and R1.6-million.
Sources at PetroSA said former acting CEO and acting head of human capital Mapula Modipa received a voluntary separation package of more than R2-million when she left the company in June, despite a board decision that executives should not benefit from the company’s retrenchment regime.
The state firm is on a drive to cut its 1 800-strong workforce by 40% after chalking up a loss of R14.5-billion in 2015. Almost 250 employees were retrenched between January and June this year.
In a memorandum sent to staff on Thursday, seen by the Sunday Times, acting CEO Kholly Zono said the board initially rejected the payment of bonuses but changed its decision following a legal opinion from a senior counsel.
He said the bonuses were not
From where we’re sitting we just see people running a self-enrichment scheme here
linked to the company’s performance but were part of PetroSA’s short-term incentive plan, a skills-retention scheme.
The legal opinion found that there was “no merit in the argument” that the bonuses should not be paid. It argued that the projects had been discontinued and that “affordability would not qualify as a justifiable reason” not to pay bonuses.
This is contrary to the company’s “remuneration philosophy” outlined in its 2016 annual report, which says shortterm incentive plan payments “are not guaranteed and payment will be dependent on PetroSA’s performance against its own corporate balanced scorecard”.
Thabo Mabaso, the head of communications at PetroSA, said the company had a legal obligation to pay the bonuses, although he admitted its finances were not in good standing.
“PetroSA is not in a sound financial position to be paying bonuses; however, the company still has an obligation to honour its contracts. PetroSA is not in a financial distress situation to justify not honouring any legal or valid contract.”
A mid-level employee who was involved in one of the failed projects said it was dishonesty of the worst form for executives to reward themselves when staff had been denied bonuses for two years.
“From where we’re sitting we just see people running a self-enrichment scheme here. It’s really painful,” he said.
“Why are they not leading by example? Since the company is in the red financially, they must also forfeit those bonuses. They must pay that money back,” said the employee, who commented on condition of anonymity because he is not authorised to speak to the media.
Chemical and energy workers’ union Ceppwawu said it had demanded that Zono authorise the payment of bonuses to ordinary staff.
The Ceppwawu chairman at PetroSA, Zolani Tyatya, said it was problematic that the board had asked Sebothoma to obtain the legal opinion when she was one of the individuals who stood to benefit.
“Guess what? She got the highest amount,” he said.
“The most painful thing is that this is our second year without getting bonuses, but they get millions.”
Mabaso said Sebothoma had not been “involved in sourcing the external legal advice”.
He said former acting CEO Modipa was paid a “portion of her long-term incentive plan on a pro rata basis, equivalent to 18 months of service in line with her contract of employment. She was also paid a voluntary separation package like all employees that were granted [such a separation package].”