As details of the huge pension paid to former Eskom CEO Brian Molefe were confirmed at Parliament on Friday, MPs investigating the matter found it hard to believe that those managing the fund had not smelled a rat.
Members of the public enterprises portfolio committee are investigating allegations of state capture at the power utility. Its third sitting saw Eskom Pension and Provident Fund (EPPF) CEO Sibusiso Luthuli being quizzed on the pension payment Molefe received.
He told the inquiry that after contributing for 16 months to the EPPF, Molefe left at the end of 2016 with an after-tax pension cash pay-out of R7.9 million, and a regular monthly pension of R111,000 a month.
Molefe was seconded from Transnet to Eskom by Public Enterprises Minister Lynne Brown in April 2015. He resigned in the wake of Public Protector Thuli Madonsela's "State of Capture" report in November last year.
While the amounts involved in his pension pay-out are well-known from media revelations over the past nine months, what emerged on Friday were the details of how it came about.
Luthuli insisted that the fund he manages had followed all of its own rules when it came to Molefe's pension.
He said that around the time of Molefe's resignation, the EPPF had received a letter from Eskom – signed by board chairman Ben Ngubane – that "specifically requested the application" of certain pension fund rules.
"The letter came from Dr Ngubane; it was signed by Dr Ngubane," he insisted.
Ngubane's request essentially "bought 13 years of additional service" for Molefe, shifting up his pensionable age – on which total amounts were calculated -- from an actual 50, to 63.
Luthuli said Molefe's salary at the time he left was about R5.6 million per annum.
The request to "buy" Molefe an additional 13 years pension, which was permissible in terms of the EPPF's rules, required Eskom to pay R30.1 million into the fund. This was done in March this year, Luthuli said.
It was also revealed that after his move to Eskom from Transnet, in April 2015, Molefe had transferred R4.2 million he had in pension with that entity over to the EPPF.
On his resignation from Eskom 16 months later, Molefe's pension totalled R29 million, of which he had opted to take one third in cash.
This amounted to R9.7 million, which after tax was reduced to R7.9 million.
The two-thirds left in the fund had bought him a monthly pension of about R111,000 a month, Luthuli said.
Molefe's pension was stopped earlier this year, pending investigation.
The reaction by committee members to Luthuli's claim -- that EPPF had handled the matter in a manner consonant with good corporate governance and strictly by the rules -- was encapsulated by DA MP Natasha Mazzone.
Responding to a question on the matter, she told HuffPost that the calibre and education levels of EFFP's top management was such that they had to have known what was happening
"The sense I get from it is that people of this calibre of education, they know when something is amiss. The reports in the media were so blatant, the fact that the person they were paying out a pension to, was sworn into Parliament . . . it's been on the front page of newspapers.
"They [EPPF] had to have known that this was happening. So I don't buy that they just went according to the book, and that they didn't question Eskom."
Mazzone said EPPF had an obligation to question Eskom.
"And if they're not doing that, they're not adhering to the ethical standards set by their peers . . . This is not the way to be doing things."
Asked if she thought this might have been a case of deliberate ignorance, she responded: "Yes, deliberate ignorance is a very good term to use."
According to the EPPF's 2016 annual report, it is "the second-largest retirement fund in asset size in the country, with R129.9 billion assets under management as at June 2016".
Over the past six years, the fund's assets have more than doubled.
The report states the fund has a total of 84,998 members, of whom 46,941 are active, and 33,250 are pensioners.
Before the investigation got underway on Friday, Rantho revealed that the Black Land First movement has tried to stop the parliamentary inquiry.
The chairwoman said she had received a letter from the BLF, threatening court action if it did not halt its investigations.
"We have received a letter from the Black Land First movement, asking the committee to stop the inquiry as of yesterday [Thursday] at 1pm. If not [the letter warns], we will be taken to court."
The letter was addressed to her, the committee secretariat, as well as National Assembly Speaker Baleka Mbete.
Rantho said she would not read out the letter.
Mazzone described the letter as "blatant intimidation", which showed a poor understanding of the Constitution and parliamentary procedure.
"We do not scare easily," she said.
ACDP MP Steve Swart said the committee would not let anyone intimidate it.
He also revealed the title of letter: "Stop the witch hunt of the Guptas and let the judicial commission of inquiry into state capture run its course."Suggest a correction