Brian Molefe File photo: Timothy Bernard

Parliament - The head of Eskom's pension and provident fund admitted on Friday that former Eskom CEO Brian Molefe should never have been entitled to a pension from the power utility because he was employed on a fixed five-year contract.

"He should never have been a member of the fund in the first place," Sibusiso Luthuli, CEO of the Eskom Pension and Provident Fund (EPPF), told a parliamentary inquiry into Eskom's affairs.

Under questioning from the evidence leader in the inquiry, Nthuthuzelo Vanara, Luthuli also confirmed that Eskom had created the impression that Molefe had been permanently appointed, before giving instructions that he should be granted extraordinary pension benefits at the age of 50.

Read: Brian Molefe should never have been a member of pension fund: Eskom

"In other words you acted in good faith after an impression was created to you by Eskom that Mr Molefe was a permanent employee? ... And we know now today that such representations were not correct? In other words Eskom misrepresented the facts to the pension fund?"

Luthuli said the fund had no reason to doubt the information given to it by then Eskom chairman, Ben Ngubane, and had subsequently applied the rules of the pension fund as per usual.

He had earlier detailed how Eskom had instructed that an additional 156 months be added to the actual 16 months Molefe spent in Eskom's employ, to allow him to retire at 50 with the same benefits he would have earned had he remained at the company until the age of 63. 

The fund was also instructed, he said, to waive all penalties linked to the allocation, on the understanding that Eskom would reimburse the fund.

According to the fund's calculations, this should have given Molefe a pension of around R26 million but this rose to R30.1 million, for two reasons. Firstly, the fund had performed its calculations on the assumption that his salary had remained unchanged and that his spouse was five years younger than him.

It had to recalculate the sum, to factor in a salary increase and the fact that his wife was in fact "much, much younger" and that in the event of his death, the pension had to continue providing for her.

Molefe opted to take a third of the sum in cash, and to take a monthly pension from the remaining two thirds, which gave him a gross pension income of  R110,000.

Molefe left Eskom under a cloud in late 2016, after then Public Protector Thuli Madonsela implicated him in suspicious dealings between the power utility and the politically-connected Gupta family.

The board gave him back his old job at Eskom this year after Public Enterprises Minister Lynne Brown vetoed the pension payout, but a ministerial task team advised shortly afterwards that he be removed from the post after the pension and his re-appointment sparked a public outcry.

The probe by Parliament's portfolio committee on public enterprises into Eskom's affairs started this week. It was sparked in part by Madonsela's findings, and gained urgency following the leaking of emails detailing alleged improper dealings between government, state-owned entities and the Gupta family's business empire.

Economic Freedom Fighters' chief whip Floyd Shivambu asked whether the Eskom's now suspended chief financial officer Anoj Singh was a member of the pension fund, despite being appointed for a fixed term, like Molefe. Singh is facing disciplinary charges of financial misconduct, relating inter alia to a contract with Trillian, a company linked to the Gupta family.

The chairwoman of the EPPF, Mantuka Maisela, confirmed that he was, and said after the Molefe controversy it wrote to Eskom to seek clarity on Singh's terms of employment. She said the answer the fund received from the company was "not satisfactory".

"We subsequently asked Eskom to give us his contract of employment. We have not yet received the contract of employment," Maisela replied.

She confirmed that Ngubane had told the pension fund that Molefe was taking early retirement. The question of whether he had retired or resigned was a key part of the controversy that broke out after Molefe quit his seat in Parliament as an African National Congress MP to return to Eskom.

Luthuli confirmed that when Molefe returned to Eskom, the pension fund was assured that he would pay back his pay-out but had to date not reimbursed any of it. He also confirmed that the Hawks some time ago approached the fund to establish whether it was prepared to answer questions about the circumstances in which was awarded, but said the elite police unit had not been in touch since.

Shivambu commented that he suspected the Eskom pension fund was being used to funnel money to individuals involved in shady dealings.