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By Ciaran Ryan

Moneyweb: Journalist & Host of Moneyweb Crypto Podcast


Nuclear energy company’s not-so-secret plan to beat the courts

An ‘unlawful’ recording is doing the rounds as over R2 million is blown on legal fees. But with two court rulings against Necsa, why are board members hanging on?


It’s probably time for Mines and Energy Minister Gwede Mantashe to start paying more attention to what’s happening at the Nuclear Energy Company of SA (Necsa).

More than R2 million has been blown on legal fees, trying to get rid of suspended board members and Necsa head of legal Vusi Malebana.

Necsa has been defeated twice in court in recent months: once in the Labour Court, when Malebana challenged his unlawful dismissal and again in the Pretoria High Court in a case brought by suspended board members Kelvin Kemm and Pamela Bosman, and dismissed CEO Phumzile Tshelane.

In August the high court overturned former Energy Minister Jeff Radebe’s suspension of Kemm and Bosman, but made no ruling on Tshelane’s status as a disciplinary process was still ongoing.

Legal experts say this should have immediately resulted in the dissolution of the current Necsa board, since the court ruling means all decisions made by the Necsa board since December 2018 – when the previous board was suspended – are subject to review.

Plan

Despite losing two recent court cases, Necsa appears to have a plan to beat the court rulings. We know this because Moneyweb is in possession of a secret recording of a September boardroom meeting in which various legal strategies are discussed. We were advised against publishing this as it violates attorney-client privilege.

A recording and transcript of the meeting has however been circulating on social media for some weeks, so the secret is already out.

It has also reportedly been sent to Mantashe.

He will no doubt be alarmed that an organisation that made R300 million in profit two years ago is now asking Parliament for a R500 million bailout.

He should also be alarmed that an ‘unlawful’ board seems preoccupied with its own survival. Meanwhile, MNS Attorneys, representing Necsa in several of its labour disputes, continues to rake in the fees.

This is what occupies the top nuclear minds in the country.

It’s clear the incumbent board plans on going nowhere, despite the recent court decisions.

Malebana, meanwhile, was suspended after raising serious legal and governance breaches at Necsa. He’s the kind of person one would imagine Parliament would want as head of legal at the state-owned company.

He was doing his job, perhaps a little too enthusiastically for the likes of some.

But Necsa does not want him back. Nor, it seems, does it want to take back the previous board suspended by Radebe nearly a year ago for “defiance and ineptitude”, despite the high court ruling.

Current board ‘unlawful’

“Any decisions made by this current board are unlawful,” says Malebana.

“They were unlawfully appointed, they are unlawfully occupying their seats, and all decisions they make must be subject to review. This is quite apart from the fact that the board is inquorate [lacks enough members to make up a quorum].”

Nor, apparently, does the Necsa board have the support of labour.

The National Education, Health and Allied Workers’ Union (Nehawu) has called for the reinstatement of the board sacked by Radebe. It is particularly alarmed at a board turnaround plan that called for the retrenchment of 400 workers. This prompted it to come up with a turnaround strategy of its own – and it provides a fascinating insight into the inner workings of the company.

The Nehawu plans suggests Necsa can:

  • Save R40 million a year by halving the use of external consultants and contractors;
  • Save a further R15 million on needless legal expenses; and
  • Bring work currently being outsourced to the tune of hundreds of millions, in-house.

The Nehawu turnaround plan illuminates multiple areas of apparent wastage, not counting the business opportunities going begging, such as training opportunities in Africa. Zambia, Kenya and numerous other countries are planning to build their own nuclear medical plants and Necsa should be the continental leader in this.

In addition, Radebe nuked a non-binding agreement with Russian medical nuclear company Rosatom, that Nehawu says would have earned Necsa ongoing income from advisory and training services.

Radebe blamed

Much of Necsa’s current malaise is blamed on Radebe.

Former Energy Minister Jeff Radebe. Image: Moneyweb

While he assumes his new role as special envoy tasked with reassuring our neighbours and friends that we have xenophobia under control, Necsa is in perpetual crisis.

In the past year, Necsa has cycled through half a dozen CEOs and two chairs while its finances are in chaos. The medical isotopes plant at Pelindaba near Pretoria has been shut down multiple times in the last 18 months, largely for lapses in paperwork related to safety.

Malebana says he stands by his earlier claims of unlawful behaviour by the Necsa board.

“I have always said that this unlawfully-appointed Necsa board is behind my persecution. I am lawfully employed as Necsa’s legal officer and I have always discharged my duties in the best interests of the company and its shareholder, the state.

“This board has infringed upon my rights as an employee and they have unlawfully interfered in my contract of employment with Necsa.”

Union pushed into taking ‘extraordinary’ step

Zolani Masoleng, Nehawu branch chair at Necsa, says the current “Jeff Radebe board” and its executives have no credible solutions to the crisis.

“All they are offering is lip service, endless excuses, blame game and abdicating responsibility.

“Things are drifting to a costly disaster under their watch.

“It is for this reason we, as the majority union, took the extraordinary step of developing our own credible and practical turnaround proposal which they [the board] are paid to do and we are not,” he says.

“In addition to us developing this proposal we have written to the minister of mineral resources and energy, and the Parliamentary Portfolio Committee on Mineral Resources and Energy, bringing to their attention this crisis for their intervention.”

Masoleng adds that last week the union lodged complaints with the Office of the Public Protector and the Companies Intellectual Property Commission of SA to alert them to the maladministration as well as legal and cooperate governance violations at Necsa.

Nehawu says that if no action is taken this week, workers will decide by secret ballot whether or not to embark on a protected strike.

“The lives of 2 000 employees and their families cannot be put on the line by people who don’t have the interest of this organisation at heart.”

Necsa response

Responding to questions from Moneyweb about the secret recording, Necsa issued the following statement:

“Please note that the transcript in your possession constitutes an unlawfully recorded communication between the Necsa board of directors and its legal representative.

“The recording and transcript of that communication constitutes confidential information that was exchanged, in a private setting at a national key point, to enable the Necsa board to be advised on various legal matters from its legal representative.

“In light of the above, the communication is protected by attorney-client privilege and you are prohibited from possessing, distributing, and using this information for any purpose.”

Moneyweb response

We elected not to publish the transcript of the meeting on legal advice.

There are however broader issues at Necsa that impact Necsa workers and the South African public, and we will not flinch from airing these.

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