Necsa Organised Labour briefing

Meeting report

The Chairperson welcomed the delegations from the Nuclear Energy Corporation of South Africa (NECSA) `nx the NECSA Branch of the National Education, Health and Allied Workers’ Union (NEHAWU). He reminded members that the meeting was arranged so that NEHAWU and NECSA management could make presentations to Committee detailing their grievances.

NEHAWU Submission

Mr Zolani Msoleng, NEHAWU NECSA Branch chairperson, stated that the appointment of former Minister of Energy, Mr Jeff Radebe, turned out to be a disaster for the NECSA group in general and workers in particular. His leadership and interventions in the entity created a disaster that will be very difficult, and take time, to reverse. On one front of the crisis, the Minister’s interventions escalated governance, license and even personal differences between Directors and Executives of Necsa and NTP Radioisotopes On the second front, the Minister’s actions created tensions also between Necsa executives and the National Nuclear Regulator (NNR) /NTP leadership coalition. Energy ministers before Minister Radebe visited Necsa and tried to resolve differences without taking sides, but not so with Mr Radebe.

[Refer to NEHAWU submission attached]

Mr Msoleng described the “turnaround strategy” developed by the new Necsa board as a “sham document which was nothing but a document facilitating asset stripping, retrenchment of 400 employees and closure of some divisions.” He said that Necsa is currently embroiled in a dismissal dispute at the Commission for Conciliation, Mediation and Arbitration (CCMA) with the previous CEO Mr Tshelane which might be protracted and go as far the labour court and labour appeals court.

NECSA Submission     

Mr Ayanda Myoli, NECSA Acting CEO, said that at the first meeting of the new Necsa board which was held on 13 December 2018, the then Minister of Energy, Mr Radebe, issued a directive to the board that they should urgently develop a sustainable corporate plan for the organisation. Since this meeting the board has devoted considerable attention to delivering on this directive and as a result has held numerous special board meetings and workshops. It was first necessary to develop and understanding of the complexities associated with the organization and also the underlying problems areas. The board is now in a position to propose a turnaround strategy which is based on a thorough understanding of the current organization and a clear vision of the future shape of the organization.

[The 19 page document on the proposed Necsa turnaround strategy is available on the PMG page for the meeting.]

The document defined the structure of an organisation which would enable Necsa to deliver on the revised mandate and operate on a financially sustainable basis within the constraints of the allocated Government grants. The primary focus of the new organisation would be Research and Development, comprising activities focused on the support of the NTP Mo-99 value chain and the development of new products by the R&TD group which would augment the product portfolio and revenue generation capability of the organisation.

The document recommended that once the necessary Governmental approvals have been obtained, the services of professionals, well versed in organisational design, should be engaged to facilitate the process. Implicit in the design of this new organisation is that significant cost savings should be realised. This would necessitate that all activities be thoroughly reviewed so as to optimise and eradicate unnecessary costs.

Discussion

Mr D Mthenjane (EFF) thanked NEHAWU for the presentation and said that since the beginning of the Committee this year, this is the first time he has heard such contradictory statements and those statements are coming from a NECSA executive. Had he been a minister, he would fire the entire board of NECSA today. All that he said today does not make any sense because this entity is supposed to help people and all what is said by the Acting CEO is very clumsy. First he said he only became aware of the meeting on Sunday but he later admitted he received the meeting invitation on Friday. Which day comes first between Sunday and Friday? He is taking this Committee for a ride and doing it to the wrong people because this Committee will never allow that. There is a lot of contradictions in the NECSA Acting CEO’s narrative such as he joined NECSA in 2003 and no wonder the organization is failing because the problem is the with Acting CEO. If NECSA is divided as he claims, what do you want the Committee to do when your sole duty is to preserve the integrity of the organization as its head? What we expect is how you will address the challenges presented here by NEHAWU but instead you are telling the Committee that the entity is divided. It is correct that this board must be disbanded because what is admitted is that the organization is failing. Another thing is that the organization is roped into legal cases because of the failing board and it is costing the company a lot of wasted money.

Mr J Bilankulu (ANC) welcomed all the presentations and acknowledged that they have real problems at NECSA not just challenges. This is the first time to hear about cabals operating in a government entity. As a pastor is it true that the company’s facilities are sometimes put in a church? It is disappointing that the entity is failing the people SA in terms of transformation. He is not advocating that only blacks should be appointed but we have to close the gap.

Ms C Phillips (DA) said NEHAWU said that a number of people are retiring and that will bring down the wage bill; are those retirements going to be considered as natural attrition? If not, those people are going to be replaced and the wage bill will the stay the same. To NECSA, is there indeed radioactive waste building up? This will seriously scare SA citizens if they should find out that radioactive waste is building up. Has money been spent on decommissioning and decontamination? If not why not? The expenditure is at 21% vs 13% income. The poor control of HR costs, who is responsible? What has and is being done about it? The production has not resumed to full capacity in two years; this is really concerning. If it were a private company, everyone will be looking for a new job and we cannot afford to lose more jobs in this economy. Everything within the book should be done to bring production up to date. Who was responsible for the incident of the closing down of the NTP and what action has been taken against that person?

Mr K Mileham (DA) wanted NEHAWU to confirm that it obtained the WhatsApp conversations legally? NEHAWU also stated in their presentation that NECSA could be five time more profitable, on what basis did it come to conclusion? A lot of allegations and conjectures were made in their presentation of which the majority related to court cases and disciplinary matters. This it is understandable as that is the role of a trade union. But what is expected from this Committee given that it cannot interfere until those processes are concluded? The union suggested the Committee pressure the Minister to fire the board, but the board could be proven right in a court of law. To both NECSA and NEHAWU he said it was extremely difficult for the Committee to venture an opinion on a turnaround strategy, profitability, staff costs and on anything given that there is no annual report, AG’s report and financial indicators in front of the Committee. Could the accusation levelled by NEHAWU about the illegitimacy of the board be unpacked because a court has found that despite the fact that the appointment of the previous board was irregular it also held that it would have no impact on the board because its term of office had now expired anyway? On what basis then is the current board illegitimate? To NECSA, he asked what was the current state of the board’s turnaround strategy and how quickly can it be implemented?

Mr M Mahlaule (ANC) said the Chairperson is characterising it in a nice way to say that people come here and lie. The Acting CEO received correspondence on Friday inviting him to this meeting yet he came here to say that he has no response because he had only one day to respond, this is a lie. It is not easy to say this a lie because this Committee went to NECSA for an oversight visit and agreed with the entity that on the 13 September they should make a submission to the Committee. That was not done neither did the Committee receive any apologies. The first speaker is right to say that this is being done to the wrong people because this Committee will hold you to account. NECSA cannot come here and undermine this Committee with lies and that is very wrong. On NECSA’s sustainable strategy, it is said that from November 2019 the entity will not be able to pay salaries; this is confusing because it is supposed to be turnaround strategy. One can infer from the above that the entity has no turnaround strategy. This organization does not submit its annual reports on time. The Committee can refer far back to the 2013/14 financial year till the present financial year.

Mr M Wolmarans (ANC) welcomed the two submissions made. He bemoaned the fact that the union and management could not sit together to iron out their differences. What is the current status of the four members who constitute NECSA’s board while the Act specifies at least five members? What is the current state and status of NECSA’s strategy document? If Nedbank could withdraw overdraft facilities because the entity has no board, then there are very serious problems with this company. It means NECSA is not only a risk to government but to the banks as well and this is worrisome. We are dealing here with a very toxic working environment.

Ms V Malinga (ANC) welcomed all officials and the Committee members and said she wanted to interrupt the Acting CEO of NECSA and was very upset that he failed to acknowledge the presence of NEHAWU when he walked in and that shows the depth of the crack in the organisation. This Committee does not want to be seen as biased. On the turnaround strategy of the entity shared with the Committee, has organized labour had any input in the document? It is important because it also involves them. NECSA has been a law to itself in undermining Parliament because we cannot have an entity for three years that is constantly requesting permission to submit its financial report late, yet is bold to bring a pensioner to be the CFO. With an entity that struggling like this we should not be surprised that workers’ salaries will not be paid come November this year. What had been presented to the Committee was not a turnaround strategy but more or less a write up written by someone in his desk without input from colleagues. Rob Adams failed as a CEO but came back as the chairperson of the board, how then can we expect such a board to perform? Why pursue a case that bound to fail and waste R2m that could have been added to pay workers’ salaries in November? This entity has no working relationship with NEHAWU and it is unfortunate that the Committee cannot coerce the Minister to fire the board.

Response

Mr Myoli in response said that what he said was that on Friday he received the submission NEHAWU made via WhatsApp and that he got formal invitation via email of Parliament’s invitation on Sunday. His view is that the board is responsible for organisational strategy and the draft was developed with inputs from the CEO. That draft was submitted to Exco and it was not the CEO that was supposed to take it further for approval and implementation. The implication is that it did not go further and not that the CEO never implemented it. On the root cause, the same applies. It was presented to Exco, it was the former CEO’s responsibility to have taken it forward. Information was made available but it was not taken further by those responsible. On transformation, the point made is noted but it is also the entity’s responsibility to facilitate knowledge transfer between black and white and it is acknowledged that it is a challenge that must be addressed.

Ms Precious Hawadi, Group Executive for Finance at NTP Radioisotopes; said in terms of the question regarding radioactive wastes, there are no radioactive waste products rather when there is radioactive waste from processes at NTP, the waste is welded into certain canisters and those canisters are then transformed and transported to a long term storage facility. There is a plan of moving that waste to the long term facility so no issue around that exists. There is just a delay in moving that waste from the welding facility. On not having full production for two years; from 17 November 2018 the entity has been in production. Up until now there has been sustainable production of three runs per week. What that means is that the runs being produced is all sold to customers and it is a sustainable production taking place at this time. As more customers are coming back, others have promised to return back to us when we become more sustainable. On why customers are signing up with other suppliers; the way customer works, there are about four big suppliers in the world of which NTP is one. A lot of them went to other suppliers because our organisation was down in production. Now that NTP production is up and it has returned to sustainable programmes, NTP is now able to show that it is reliable and so customers have started coming back. So far no shutdown has been experienced by NTP.

Mr Myoli further responded that ad hoc salary increases are frowned upon. They mostly happen within the top echelons of the company. It is a practice that needs to be dealt with. The Department of National Defence (DND) allocation is R70m for this year and it has not been spent but will be spent soon. On comments relating to lateness in submitting annual reports, this is a stain in the company. It is not a good practice and will be attended to and stopped. However, it also has a correlation to the organisation’s financial situation. The AG report is not positive as well, and everyone is committed to address it. On the status of the turnaround strategy, it was approved by the board the previous Friday and had been submitted to the Department the day before. On the status of the four board members, that is the Department’s responsibility to pronounce on board status. The strategy document will be made available to any member that requests it. NEHAWU will be given opportunity to make inputs prior to the finalisation of the strategy document.

Mr Msoleng responded by saying that NEHAWU have not seen the final strategy document sent to the board. The NEHAWU strategy proposals were taken to management, but the executives and the board are paid to develop the organisation’ strategy. The insinuation that this strategy document was given to the union is not entirely correct because when the union finished working on its proposals, it requested a formal meeting on the union’s turnaround strategy at the bargaining forum. This was done on 30 September. In addition, this document was tabled in the Exco where they were allowed to question the union to unpack the document. This lasted for six hours. Until now no response was received from management detailing where they agreed or disagreed with the union proposals. In the same meeting, the Acting CEO made a presentation and sent the union a draft document in the 1st week of October. Now this meeting has heard it has been finalized and submitted to the board, but the union have not seen it. On the question about 143 people going on retirement, the union proposal is no to retrenchments, no to sale of public assets but let employees be reconfigured and risk employees redeployed. There are certain positions that do not need to be filled, but instead the union and the employer should go into a scientific process to look at a better way of reconfiguration. The union also looks at structure and operational models but all in all, some positions need not be filled. If this is managed properly, huge savings could be made. The WhatsApp communication was leaked to NEHAWU last year and it was leaked in a moment of arrogance because they were triumphalist when Jeff [the then Minister] did what he did. It was a message to the union of how powerful the MD was. Its contents are problematic and require to be investigated. On the assumptions that require the union to say that NECSA could be five to six times bigger: in the document sent to the management, the union states that the future of the entity should centre around the multipurpose reactor to replace Safari one which is fifty five years old and very soon will be decommissioned. Here we are talking about a R7 billion project that keeps the manufacturing base and other aspects of the business afloat. It has a big role to play in terms of localisation and manufacturing. That project will inject a lot of resources into NECSA of which the bulk of the work will be done locally and this is an area of massive growth. In terms of the court cases, the Committee cannot interfere with disciplinary processes but the issue is that we have a situation in which stability is seriously needed and the CEO position is not being filled because the former CEO who was dismissed has taken that dismissal to CCMA. His contract is in ending December and it is likely to be taken to the labour court and labour appeals court. The union is asking at what point the entity will appoint a permanent CEO if this case drags on? We are saying if there is the possibility for this Committee to impress upon the Minister to intervene and ensure that both parties seek an amicable settlement. On the illegitimacy of the board, the court did not pronounce on the legitimacy of the current board but on the unlawful actions of the previous Minister in removing the previous board. Before the court case, the union expressed the unlawfulness of the Minister’s action. If the union had resources, it would have taken the decisions of the present board on review to test to which extent case law can apply. These were similar to the Popo Molefe case at PRASA where after the court action it was taken on review where the court found that because the board was appointed as result of the outcome of an unlawful decision, it was as well subject to review. That is one reason the union feels the board is illegitimate and secondly, it is the beneficiary of an unlawful action. If the previous Minister’s actions were lawful, then this board would not be here. Thirdly, their conduct is problematic to the union. There are so many areas of their actions that amount to recklessness, and finally they are not properly constituted. The Nuclear Energy Act specifies that there must be a minimum of five members yet they are four members, so on what basis do they derive legitimacy? These issues have been referred to the public protector.

The Chairperson said that when the Committee visited NECSA it never asked for a turnaround strategy, rather it asked what the challenges were. It wanted the entity to submit to the Committee all the challenges it is facing including the good and bad because the Committee exists to help the entity as well. The feeling of Committee members is that there is the deficiency of the truth. The letter from the board acknowledged that this meeting will take place today but they requested that a separate invitation letter be written to the executives from that written to board members. There is a crisis that NECSA and that is what has to be dealt with instead of this diversion. Right now NECSA does not have a legitimate board but a crises. No stability can be expected when there is no board. As the chief accounting officer, anything that is consistent with policy practice and is approved by you whether you agreed to it or not. it lies with you the Acting CEO.

Conclusion

The Chairperson then made the following rulings:

• That the Minister [of Mineral Resources and Energy] should be asked to speedily look at the turnaround strategy of NECSA and present to the Committee as soon as it is ready.
• The Committee requests the Minister to immediately appoint a board that is consistent with the legal framework
• The Committee appeals to the management of NECSA and the labour union to go back and engage meaningfully to find a solution to their differences.

The meeting was adjourned.