Necsa proposes reappointing its fired former CEO as a paid consultant
by Chris Yelland, managing director, EE Business Intelligence

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Johannesburg, 31 May 2020

The Nuclear Energy Corporation of South Africa, Necsa, is proposing to reappoint its suspended and subsequently fired former CEO Phumzile Tshelane as a highly paid consultant to the state-owned enterprise.

This has emerged following a Necsa board meeting on Thursday, 28 May 2020, where the board authorised its chairman, David Nicholls, to approach the minister of minerals and energy, Gwede Mantashe, to seek the reappointment of Tshelane as a consultant to Necsa on a limited-term contract.

When asked for comment, Minister Mantashe indicated that he is not a member of the Necsa board and is unaware of the details. However, he confirmed that the proposed reappointment was raised with him on Friday 29 May 2020 by the Necsa chairman, and that a meeting to address the matter has been scheduled for this week.

It is understood that, at this stage, the consulting contract envisaged by the Necsa board for former CEO Tshelane would be for a term of about six months. His first task would be to make progress on establishment of a state-owned pharmaceutical company, Ketlaphela Pharmaceuticals, to manufacture anti-retroviral (ARV) drugs in South Africa.

Ketlaphela Pharmaceuticals is a subsidiary of Pelchem, a company in deep financial distress. Pelchem, in turn, is a wholly owned subsidiary of the Necsa Group, a company itself in severe financial distress, that received a damning qualified audit in its 2017/18 financial year, and again in 2018/19, from the Auditor General.

The Necsa group undertakes R&D and commercial activities in the field of nuclear energy and radiation sciences, and produces medical nuclear radioisotopes and associated services. Necsa is also responsible for processing source material, including uranium enrichment, nuclear waste disposal and co-operating with other institutions, locally and abroad, on nuclear and related matters.

Sources indicate that Finance Minister Tito Mboweni is sitting on a proposal to give Ketlaphela Pharmaceuticals a two-year monopoly for the import of ARVs from India into South Africa, while arrangements are made with the Indian ARV supplier to set up a local ARV manufacturing facility in South Africa.

It is well known that there has been is a longstanding dispute between Necsa and its former CEO, who was suspended in December 2018 by former energy minister, Jeff Radebe, when he dismissed the whole board of Necsa at the time, including then board chairman, Kelvin Kemm. 

Kemm, Tshelane and another former board member, Pamela Bosman, who had been convicted of fraud in June 2018 and was subsequently appealing her conviction, challenged the dismissal of the Necsa board and the suspension of Tshelane by Radebe in the Pretoria High Court.

However, despite finding that due procedure had not been followed by then minister Radebe in his removal of the board, the judge dismissed Tshelane’s application for his suspension as CEO of Necsa to be lifted. The minister was not found to have acted ultra vires, nor did the judge find that then Minister of Energy Jeff Radebe had ulterior motives in the actions that he took, as alleged by the applicants.

“Hasty he definitely was, but [this was] in pursuance of restoring the stature of Necsa as an institution”, ruled Judge Mtati.

Following the judgement on 16 August 2019, the new Necsa board instituted disciplinary action against the suspended CEO, and Tshelane was subsequently fired. However, ongoing legal actions by Tshelane have continued in further efforts by him to be reinstated.

Necsa chairman David Nicholls has acknowledged that the board had considered offering its former CEO a substantial sum in settlement of all issues and litigation against Necsa by Tshelane, which proposal is understood to have been rejected by Tshelane.

It has been suggested that the proposal for Tshelane to be reappointed as a consultant to Necsa, which the board authorised its chairman David Nicholls to present to Minister Mantashe for approval, may be some kind of settlement in disguise, and possibly also a way back in as CEO for Tshelane.

The reappointment of a former CEO as a paid consultant to the company, after having been suspended and then dismissed under a cloud, is generally considered to be misaligned with the principals of good corporate governance.

Necsa chairman David Nicholls has flatly denied that an amount of R13-million, or indeed any amount, has been discussed or agreed upon as remuneration to Tshelane for a limited-term consulting contract with Necsa of about six months.

Nicholls did however indicate that it is critical that the debilitating ongoing dispute and litigation by the suspended and then dismissed former Necsa CEO, Phumzile Tshelane, has to be settled urgently, to enable a new permanent CEO to be appointed for the embattled Nuclear Energy Corporation of South Africa.

© Copyright 2020 - EE Business Intelligence (Pty) Ltd. All rights reserved. This article may not be published without the written permission of EE Business Intelligence.

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