Molefe has all the answers
Publish date: 22 November 2017
Issue Number: 4354
Diary: Legalbrief Today
Category: State capture
Former Eskom boss Brian Molefe finally got his day before Parliament’s inquiry into state capture at the power utility yesterday – and according to a City Press interpretation of the hearing, he ran circles around MPs as they tried to nail him for his pension payout, the Public Protector’s findings against him and his alleged dodgy relationship with the Gupta family. City Press says he denied having ever met the Guptas to discuss state business, but admitted having visited their home on several occasions, including for Diwali celebrations and other functions; he denied having met President Jacob Zuma’s son Duduzane to talk business, but said he met him at a one-year-old’s birthday party; and he disputed several of former Public Protector Thuli Madonsela’s findings in her State of Capture report – especially those placing him in Saxonwold and the findings about the telephone calls he allegedly exchanged with the Gupta brothers. He decried not being given an opportunity by Madonsela to present his side of the story. Molefe said he never challenged Madonsela’s report in court because his lawyers had advised him that there were no findings, that Madonsela had made observations and there was no finding to challenge. A Business Day report notes Molefe observed that Madonsela had not asked for his explanation for the numerous phone calls which he had allegedly made to the Guptas, ‘nor did she bring the phone records in her possession to my attention before she finalised the report’. As Madonsela failed to provide phone numbers, dates and times the calls were allegedly made, Molefe said it was ‘difficult to determine the veracity of her claim’. And City Press notes he dismissed a direct question about state capture, suggesting that the concept of state capture was ‘a manufactured crisis’. Molefe told MPs that while people talked about state capture, there was another capture which benefited established companies and which has been happening since the apartheid days.
Molefe also denied any knowledge of the relationship which Eskom had with Gupta-linked Trillian, notes a BusinessLIVE report. It points out Eskom paid R564m to Trillian without a valid contract and for little work and is demanding that it pays the money back. Molefe was questioned about Eskom’s relationship with Trillian by the DA's Natasha Mazzone. He objected to being asked questions about Trillian, saying this was not on the list of issues the committee told him would be discussed with him. He said if he knew beforehand if Trillian issues would be raised, he could have prepared himself. But he noted that Eskom was involved in contracting all the time without him as CEO necessarily being aware of all of it. Molefe also stuck to his guns that he had not resigned from the utility but taken early retirement. BusinessLIVE notes the issue is crucial as it will decide the fate of his R30m pension benefit which will be the subject of a High Court case next week. Molefe was grilled by evidence leader at the inquiry, Nthuthuzelo Vanara, who quoted from public statements that Molefe and the Eskom board made in November 2016 announcing that Molefe voluntarily resigned on 1 January to clear his name following the release of Madonsela’s damning report. The board also announced to staff that former head of generation, Matshela Koko, would take over as acting CEO from 1 December, indicating, Vanara said, that the board was already thinking beyond Molefe. But Molefe said these statements were simply announcing his intention to leave the company which he formally did in a letter to then Eskom chair Ben Ngubane a few days later. In the letter he asked to take early retirement. The public statements, Molefe insisted, were not formal documents. Molefe pointed out Ngubane had testified under oath in court papers that Molefe took early retirement and did not resign.
Molefe appears to arguing for approval by default. According to a Beeld report, he is relying on the assumption that a failure by the Department of Public Works to approve his controversial pension arrangement meant in fact it had been approved. He said he received a letter from the Minister in October 2015 about his permanent and indefinite appointment as CEO, but heard in November 2015 that his appointment was only for a five-year period. The pension arrangement was then crafted and sent to the Department of Public Enterprises. According to Molefe’s interpretation of the Public Finances Management Act, failure by a department to respond within 30 days meant that his arrangement had been approved.
Members of the Eskom board were ‘in awe’ of the achievements of Molefe in stabilising the utility and therefore supported the move to make his interim contract more long term, former Eskom director Venete Klein told the committee. In 2015, Molefe was seconded for a three-month term from Transnet, where he had been CEO. He was then given a five-year contract, although the nature of this contract became the subject of a dispute, says a second BusinessLIVE report. Klein, a director of a number of prominent boards, conceded that the allegations of state capture had changed people’s minds about a lot of things. However, she insisted that the decision to appoint Molefe was based on information available at that time, not what was available now. ‘The entire board, including me, was in awe of what Mr Molefe had been able to deliver, especially as he had done so with substantially the same executive team who had previously not known how to turn the load-shedding situation around,’ Klein said in her statement submitted to the committee. ‘The turnaround experienced under Mr Molefe’s tenure had been particularly pleasing. Along with the rest of the board, I was impressed by Mr Molefe’s performance and the immediate and significant strides that Eskom had made under his leadership. Mr Molefe demonstrated the expertise, urgent resolve and certainty of direction required to set Eskom on the right course.’ Klein, appointed a director by Public Enterprises Minister Lynne Brown in December 2014, told the committee that she had opposed a board resolution to retrospectively ratify an earlier decision for Eskom to pay R43m to host breakfast events over three years with the Gupta-owned newspaper, The New Age. She also opposed the fact that there was no exit clause in the contract.
Another board member testified to her ignorance of the Optimum-Tegeta deal. Viroshni Naidoo said she had no idea that they were financing the purchase of Optimum coal mine when they signed off a pre-payment of nearly R600m to Tegeta. According to a TimesLIVE report, she said she had attended the late night meeting in April 2016 where the pre-payment was authorised. She said late night meetings had become the norm at Eskom and they were regularly asked to sign off on issues without having had sufficient time to read through documents properly. She said the board had been told the Friday night meeting was necessary as two contracts were due to expire‚ and therefore could not be dealt with in the board's scheduled meeting on the following Monday. She said they had been made to understand that the pre-payment was necessary to secure coal – without which Eskom would lose 600 Megawatts of power‚ which could launch load shedding. Optimum's business rescue practitioner had testified before Naidoo that a Gupta representative had approached him earlier in the day to indicate that they were short about R600m of the purchase price‚ due to be paid that Monday. Asked by Vanara whether the board had ‘willingly aided and abetted’ the shifting of funds which would allow Tegeta to purchase the Optimum coal mine‚ she responded ‘absolutely not. I was buying coal.’ She said the first she had heard of the money being used to fund the purchase of the mine was when it came out in the Public Protector’s report. ‘I was horrified‚’ she said.
Naidoo, a corporate lawyer, was grilled extensively about a conflict of interest in that her husband is an adviser to Mineral Resources Minister Mosebenzi Zwane, who was linked to the deal by Madonsela. Naidoo said after this was in the public sphere, she asked the board to recuse her from certain deliberations, says a report in The Citizen. She became emotional when the ACDP’s Steve Swart asked whether she believed she was compromised by knowing the Gupta brothers’ close associate Salim Essa socially. ‘Mr Essa is not a friend of mine. It is really unfair to assume that I am captured,’ Naidoo said. She said she was testifying before the committee to clear her name amid the allegations that the Eskom board had allowed funds from the cash-strapped utility to flow to the Guptas’ business empire.
Earlier, committee members responded to allegations that State Security Minister Bongani Bongo had attempted to bribe the evidence leader. As recorded in Legalbrief Today, Bongo allegedly approached Vanara‚ offering him a blank cheque to resign from the inquiry. Vanara laid out the allegations in an affidavit he submitted to Parliament’s management, notes BusinessLIVE. It quotes ANC MP Mondli Gungubele as saying: ‘We must treat this as an allegation‚ but it is very‚ very serious if found to be true.’ He urged the Ethics Committee to conduct a thorough investigation and make ‘timeous findings’‚ so the matter could be properly addressed. ‘This will be one of the low points of our lives as government‚ if found to be true‚’ he added. The DA’s Mazzone said Parliament needed to act in terms of the Prevention of Combating of Corrupt Activities Act, and that because Vanara was not a member of the executive or an MP‚ he fell outside the Executive Members Ethics Act. The EFF’s Floyd Shivambu said the matter needed to be elevated to the Public Protector‚ as the Executive Members Ethics Act charged the Public Protector with investigating violations, before adding, ‘We have no reason to doubt Advocate Vanara.’
