Golden handshakes: Taxpayers to feel the burn?
Johannesburg - South Africans will have to wait a little more than a year to find out the size of the payouts to Eskom’s former boss Tshediso Matona and two other top executives.
An interest by active citizens in Eskom’s finances in these times of regular load shedding is not misplaced.
While Eskom’s bid for another 2015 electricity tariff hike this week was unsuccessful, it had already secured an effective R52.5 billion taxpayer-funded lifeline, R23bn in additional cash funding this year, and the conversion into equity of a R29.5bn 10-year loan dating back to 2008. This effectively amounts to a forgiving of debt.
The loan was part of a R60bn bailout, alongside equity provisions by the government, the sole owner of the power utility.
The parliamentary process to approve the required Eskom financial appropriation legislation was transparent, public hearings were held, there were debates in the National Assembly and a vote just before Parliament went on its winter recess last week.
But such transparency was not provided by Eskom with regard to the payouts to its former top executives. Instead, the power utility did a fancy tap dance to delay the inevitable.
But coming clean on the golden handshakes is inevitable. The Public Finance Management Act (PFMA) requires state-owned enterprises, when releasing their annual reports and financial statements, to give a full account of their financial affairs and whether goals were reached.
Because the three Eskom executives – Matona, group capital executive Dan Marokane and finance director Tsholofelo Molefe, all of whom were suspended for unclear reasons in March – left in May and June after the start of the financial year on April 1, 2015, the golden handshakes will not be revealed when Eskom’s 2014-15 financials are released in a few months.
Instead, details will only emerge next year when the 2015-16 annual report and financial statements are released.
Technically, and in a ticking-the-box approach, there’s nothing untoward in delaying details until next year. The constitution’s founding provisions, however, talk of a “democratic government to ensure accountability, responsiveness and openness”.
Entities like Eskom are state owned and funded by taxpayers. And while golden handshakes are not uncommon in the corporate sector even amid lacklustre performance, good governance in these privately funded companies depends on activist shareholders.
When it comes to declaring golden handshakes, Eskom is not alone in how it does this. The SABC, SAA and other state-owned entities also don’t reveal golden handshakes paid to top officials at the time of their departure, but wait until the next annual report.
This happened in SAA’s 2008-9 annual report over its former chief executive Khaya Ngqula, whose approximately R13 million settlement, including salary, retention premiums and termination benefits, came amid claims of mismanagement and losses at the airline.
Official details of the settlement for ex-SAA boss Monwabisi Kalawe, who resigned at the end of April after being suspended, are expected to emerge in the 2015-16 annual report.
It is alleged he received R2.7m – far less than other chief executives at SAA, which, for example, paid Coleman Andrews R232m in 2001.
A little quicker into the public domain came information on the SABC payout to its chief executive Lulama Mokhobo, who resigned in February last year, meaning her nearly R8m settlement of R5.3m basic salary and R2.2m expenses was included in the 2013-2014 annual report tabled in Parliament by the end of September 2014. Former executive Phil Molefe’s R4.8m payout also emerged in that annual report.
In one exception, the SABC on August 16, 2009 issued a public statement on its current R13.4m settlement with its former chief executive Dali Mpofu for the remainder of his contract, a restraint-of-trade agreement and legal costs.
The statutory-required annual reports and financial reporting requirements from such state-owned entities contain some measure of transparency, even though one must look for it amid scores of pages in the annual report.
Such transparency is not readily available with regard to settlements with senior public servants, also paid by tax revenues, caught in the midst of political turmoil – unless a minister frankly answers a parliamentary question or the matter lands up in court.
Corruption Watch’s David Lewis said payouts may well be based on calculations of time, costs and effort needed to pursue legal routes.