Hillview Building, 318 Oak Avenue, Randburg

PO Box 2627, Northriding, 2162

+27 (87) 170 0639 info@outa.co.za
www.outa.co.za

12 May 2017
ATTENTION: MS LYNNE BROWN

THE MINISTER OF PUBLIC ENTERPRISES.
DEPARTMENT OF PUBLIC ENTERPRISES
INFOTECH BUILDING
1090 ARCADIA STREET
HATFIELD, PRETORIA
0083

PER EMAIL:
kim.davids@dpe.gov.za;
lebohang.ruele@dpe.gov.za;
thelma.malatsi@dpe.gov.za

Dear Minister Brown,

RE: APPOINTMENT OF MR. BRIAN MOLEFE AS CHIEF EXECUTIVE OFFICER OF ESKOM
HOLDINGS SOC LTD

1. We refer to the above.

2. The Organisation Undoing Tax Abuse (OUTA) is a non-profit civil action organization
that operates and conducts its activities in relation to public-interest matters.

3. OUTA believes that the new appointment of Mr. Brian Molefe as the CEO of Eskom as
referred to in the media on 12 May 2017 is of serious concern and in our opinion
unlawful based on the following reasons:

3.1 Mr. Molefe terminated his contract through resignation on 11 November 2016,
and the Chairman of the Board, Dr. Ben Ngubane stated on record that he
accepted Mr. Molefes termination;

3.2 Our understanding is that a new appointment to the CEO position needs to
follow due process, part of which requires, inter alia, formal advertising and
screening of the candidate;

3.3 Ratification of the appointment by the Minister;

ORGANISATION UNDOING TAX ABUSE (OUTA)

Co Reg: 2012/064213/08 NPO #: 124381NPO
DIRECTORS: Wayne L Duvenage (Chairman), Robert N Hutchinson, Leopold J J Pauwen,
NON EXECUTIVE DIRECTORS: Phumlani M Majozi, Robert V Handfield-Jones, Ms Ferrial Adam
 3.4 With regards to Mr. Molefes difficulties and/or disputes with his pension fund
has nothing to do with his terminated employment relationship with Eskom;

3.5 According to Eskoms pension fund policy on early retirement, Mr. Molefe does
not qualify;

3.6 Therefore we fail to understand the statement made by Ms. Suzanne Daniels
on an application for early retirement for the reasons being given to the
reappoint Mr. Molefe.

4. Kindly take note that in terms of section 63(2) of the Public Finance Management Act 1
of 1999 (PFMA), the Minister of Public Enterprises, as the executive authority, is
responsible for the public entity under the ownership control of the national or
provincial executive must exercise that executives ownership control powers to
ensure that that public entity complies with the PFMA and the Department of Public
Enterprises financial policies.

5. Furthermore, it is important to note Eskoms Memorandum of Incorporation (MOI)

sates in clause 14.3.2 that:

The Shareholder [of which the Minister is the shareholders representative]

may request the Board to identify, nominate and evaluate potential candidates
for appointment of Group Chief Executive in accordance with the Guideline and
to submit a shortlist of candidates to the Shareholder to assist the Shareholder
with the appointment.

6. In addition, the MOI provides that [t]he Group Chief Executive shall report to the
Board and shall only become an executive Director of the Company if appointed to
the Board by the Shareholder in terms of clause 14.1.1 of the MOI.

7. In terms of clause 14.1.1 of the MOI, the Minister of Public Enterprises has the
exclusive power to appoint directors pursuant to the relevant provisions of the PFMA
and the Companies Act 71 of 2008 (the Companies Act). Furthermore, reasons of
rationality need to also be applied.

8. Included in the statement by Mr. Brian Molefe, to justify his departure from the
national electricity utility, was that it was in the interest of good governance to leave
the employ of Eskom.

9. According to recent media statements, OUTA was informed that Mr. Molefe is to
resume his role as CEO at Eskom on 15 May 2017. OUTA reiterates that the peculiarity
surrounding this series of events warrants nothing else than a proper explanation from
 an executive level, as it would seem that irregularities within state-owned entities
have become the norm and not the exception.

10. We hereby kindly request that you clarify the following:

10.1 Whether Mr. Brian Molefe had effectively been reinstated or not;

10.2 Whether Mr. Brian Molefe had been appointed anew or not;

10.3 Whether you, as the Minister of Public Enterprises, at any stage, approved the
appointment and/or reinstatement of Mr. Brian Molefe as CEO of Eskom;

10.4 If so, we kindly request that you provide us with written confirmation to this
effect, reflecting the reasons for such decision;

10.5 Provide evidence of the due process that was followed to appoint and/or
reinstate Mr. Molefe as CEO of Eskom.

11. In addition to the above-mentioned request, we furthermore request that you use or
apply any/all powers that you have in order to reverse this decision.

12. As a result of our requests above, we hereby demand that you reverse and/or halt the
decision to appoint Mr. Brian Molefe as the CEO of Eskom.

13. Failure to receive your response to the demands as set out above by 17h00, 12 May
2017, we reserve our rights to approach the court for the appropriate relief.

Yours sincerely

No signature sent from the

undersigned e-mail address
Wayne Duvenage
OUTA: Chairperson