May 12, 2017 / 2:52 PM / 4 months ago

UPDATE 3-South Africa's Eskom reinstates ex-CEO Molefe, divides ANC

* ANC calls reinstatement reckless but minister backs him

* Molefe named in anti-corruption report last year

* His return could open divides in the ANC

* Molefe supports nuclear power plant plan (Adds comments by ANC source, political analyst, minister Brown)

By Nqobile Dludla

JOHANNESBURG, May 12 (Reuters) - South Africa’s state power company on Friday reinstated its former chief executive Brian Molefe just five months since he stepped down after being implicated in a report by the country’s anti-graft watchdog into alleged influence-peddling.

The return of Molefe, an ally of President Jacob Zuma, is likely to deepen a division within the ANC ahead of a conference in December where the party will choose its next leader.

It will also raise concerns among investors about mismanagement and transparency at Eskom given the allegations of Molefe being influenced by the Gupta family, who are close to Zuma.

Molefe resigned in November last year after a report by the Public Protector, a constitutionally mandated corruption watchdog, raised questions over coal deals between Eskom and a company controlled by the Gupta family.

Molefe and the Gupta family have denied any wrongdoing.

The ANC formally criticised Eskom’s decision to reinstate Molefe, calling it “unfortunate and reckless”, given that the Public Protector’s report has not yet been completed.

But Public Enterprises Minister Lynne Brown supported Molefe’s reinstatement and a senior ANC source told Reuters President Zuma also backed the return of one of his allies.

Zuma’s spokesman did not answer Reuters’ calls requesting comment.

The ANC has become increasingly divided as it prepares to pick Zuma’s successor. A faction supportive of Zuma wants former African Union chairwoman Nkosazana Dlamini-Zuma to take over, while another section backs Deputy President Cyril Ramaphosa.

“Molefe’s comeback is just going to make a bad situation worse in the party,” the ANC source said.

His return follows a refusal by Brown to approve his 30 million-rand ($2.24 million) pension payout.

“Most of the options discussed were not mutually agreeable and the board decided that it was actually optimum to rescind its decision to grant him early retirement,” said Khulani Qoma, spokesman for Eskom’s board. “By virtue of that, then legally ... you need to then proceed and reinstate him.”

NUCLEAR POWER

Molefe is supportive of a proposed project to build a fleet of nuclear power plants in the country that could cost up to $75 billion. Investors see the project as a major risk to South Africa’s financial stability.

“The Brian Molefe-Eskom saga as it unfolded further on Friday would be rejected as too improbable if submitted as a script for soap opera,” NKC African Economics political analyst Gary van Staden said in a note.

“It is the reality of a twisted and distorted political environment in South Africa.”

The main opposition Democratic Alliance called for Molefe’s reinstatement to be set aside by a court.

“In view of the spurious reasons given and the complete irrationality of the decision, we will once again be approaching the courts, this time to set aside Brian Molefe’s redeployment’ by the ANC government to Eskom,” DA shadow Minister of Public Enterprises Natasha Mazzone said in a statement.

Molefe, who quit as a member of parliament on Friday after less than three months in the role, was widely touted to replace Pravin Gordhan as finance minister but lost out to Malusi Gigaba in a cabinet shake-up in late March.

When he stepped down from Eskom a week after the release of the Public Protector’s ”State of Capture’ report, he said that quitting was not an admission of wrongdoing but was in the best interests of Eskom and good corporate governance.

Eskom said it was excited to have Molefe back as the CEO and he would resume his duties on the terms of his original employment agreement. Reuters was not immediately able to contact Molefe for comment via Eskom.

Molefe’s first stint at Eskom began in April 2015, when he was drafted in from state rail freight firm Transnet as the utility battled against power shortages. He is largely credited with stabilising electricity supply.

He returns to Eskom in the middle of the construction of three coal-fired power stations. ($1 = 13.4182 rand) (Additional reporting by Mfuneko Toyana, Wendell Roelf; Writing by Joe Brock and Tiisetso Motsoeneng; Editing by Jane Merriman and David Goodman)

Our Standards:The Thomson Reuters Trust Principles.
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