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South Africa's ANC rejects `Reckless' Molefe return to Eskom

International

Cape Town - Brian Molefe, who resigned as head of South Africa’s power utility after a graft probe questioned his conduct, will return to the role in a move the ruling party called “unfortunate and reckless” because none of the accusations against him have been set aside.

Molefe, who left Eskom Holdings SOC Ltd. in November, will serve out the remainder of his contract, Public Enterprises Minister Lynne Brown told reporters in Cape Town on Friday. It ends in 2020.

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The Public Protector found in a report last year that Molefe favoured the Gupta family, which is in business with President  Jacob Zuma’s son, by awarding coal-supply contracts and helping them buy Optimum Coal Holdings Ltd. He and Eskom denied wrongdoing, with Molefe moved to tears in a Nov. 3 briefing.

South Africa has directed billions of rand to help struggling state-owned entities and their poor governance has been cited by rating companies as a risk to their assessments.

Last month, thousands of people took part in nationwide protests against corruption, a lack of accountability within the government, and cabinet changes that saw respected leaders, including former Finance Minister Pravin Gordhan, lose their jobs.

The board’s decision “is tone deaf to the South African public’s absolute exasperation and anger at what seems to be government’s lackluster and lackadaisical approach to dealing decisively with corruption perceived or real,” the ruling African National Congress said in an emailed statement.

Reappointing Molefe to his previous position was a cheaper option than the 30 million-rand ($2.2 million) pension payout the company’s board had recommended, Brown said. Acting Chief Executive Officer Matshela Koko will take leave pending an investigation of Eskom contracts awarded to a company linked to his stepdaughter, she said.

“The board decided to rescind the initial decision to grant him early retirement” and that “triggered his reinstatement back to the employer’s organization,” Khulani Qoma, a spokesman for the producer’s board, said by phone on Friday.

MP Resignation

Molefe was sworn in as a lawmaker representing the ANC in February and had been named as a possible replacement for Gordhan as finance minister. He has resigned from parliament, effective Sunday, National Assembly Speaker Baleka Mbete said in an emailed statement.

The 105-year-old party that’s ruled Africa’s most-industrialized economy since apartheid ended in 1994 is due to elect a new leader at a Dec. 16-20 conference in Johannesburg.

While Zuma hasn’t openly anointed an heir, his comments that the party is ready to be led by a woman have been widely seen as support for Nkosazana Dlamini-Zuma, his ex-wife, to replace him in December. Her main rival in the battle is current Deputy President Cyril Ramaphosa.

Leadership Battle

The ANC’s reaction to Molefe’s reappointment signals “a proxy ANC leadership-contest battle between the Zuma-dominated faction” and the reformers led by Ramaphosa, Darias Jonker, an Africa director for Eurasia Group, said by phone.  

“The ANC is responsible for the mess we’re in,” United Democratic Movement leader Bantu Holomisa told reporters in Johannesburg.

Read also: NUM says #Brian Molefe's return to Eskom is a joke

The result of a process to hire a new CEO haven’t been made public and in terms of the ethics, “the ANC continues to fail the nation,” he said. The Democratic Alliance, South Africa’s main opposition party, plans to file for a legal review of the appointment on Monday, Federal Executive Chairman James Selfe said by phone from Cape Town.

The board had held negotiations with Molefe over the options in a process that “wasn’t automatic,” Qoma said. “In the end, he appreciated that he could be given an opportunity to finish the good work that he was doing.”

Yields on Eskom’s $1.75 billion of bonds due in January 2021 declined 4 basis points to 5.39 percent at 3:23 p.m. in Johannesburg.

The producer isn’t helping itself by bringing Molefe back, and for Zuma to reappoint someone implicated in graft “is just giving ammunition to his detractors,” political analyst Ralph Mathekga said in an interview.

It “effectively means that the president is putting aside” the Public Protector’s graft report, and the board is also saying there is no merit to it, he said. “That is not the right way to do it,” Mathekga said.

 

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