Pillay payout apparently in line with GEPF rules and Public Service Act

As the country immerses itself into the drama of its finance minister being charged with fraud, or theft, much of the debate has been about the political motivation behind the charges and the fact that the charges do not hold much water.

At face value, the latter view is supported by a snippet from a Government Employee Pension Fund (GEPF) booklet, which appears to exonerate Gordhan for the fairly commonplace practice of paying employees more than what is expected for taking early retirement.

It states: “Where the employer granted permission for your early retirement….your employer will pay an additional penalty.”

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Thulisile Mbuli from the GEPF, says that, according to the Government Employees Pension (GEP) law and rules, an executive authority can allow for an employee to go on early retirement and, concomitantly, the GEP Law requires that actions taken by the employer which places an additional financial obligation on the Fund must be made good by the employer.

“The GEPF plays no role in the decision to approve or disapprove the early retirement of an employee, as such it is clearly a matter between the employee and his/her employer,” says Mbuli. “The GEPF will give effect to the pension dispensation applicable for the specific mode of exit of the member based on the information and supporting documentation provided by the employer and further give effect to the stipulations of the GEP Law by claiming any costs that may be due to the GEPF.”

Considering that the National Prosecuting Authorities’ (NPA’s) case against Gordhan is centred around his approval of a R1.1 million pension payment to then-South African Revenue Service (Sars) deputy commissioner Ivan Pillay, while Gordhan was the Sars commissioner in 2010, there may be some substance to claims that the charges are flimsy.

The NPA suggests that the payment was done without following correct procedures. However, it is difficult to see how it could argue given the Public Service Act of 1994, which also states that “an executive authority may, at the request of an employee, allow him or her to retire from the public service before reaching the age of 60 years.”

The same piece of legislation then goes on to say: “If an employee is allowed to so retire, he or she shall, notwithstanding anything to the contrary contained in subsection (4), be deemed to have retired in terms of that subsection, and he or she shall be entitled to such pension as he or she would have been entitled to if he or she had retired from the public service in terms of that subsection.”

Pierre De Vos,the Claude Leon Foundation Chair in Constitutional Governance at University of Cape Town, cites this legislation in his reasons for believing a Gordhanconviction is unlikely.

Given the above, it would appear that the NPA’s case is thin at best. And this makes one wonder what the NPA’s end-game is. If charges against the finance minister are unlikely to hold in court, why go ahead?

Conspiracy theories

The conspiracies being bandied around are that President Jacob Zuma is angling to replace Gordhan with someone more amenable to the president’s budgetary spending directives.

Independent political analyst Dr Somadoda Fikeni says there could be any number of reasons for the charges being laid against the finance minister, all of which are with the intention of replacing him.

“One strategy could be to embarrass and tire the minister of finance  until he gets tired and simply resigns, at which point the president can appoint another person,” says Fikeni. “Another possibility could be that he has been charged in the hope that one of the charges will stick, and the ANC would say that people who are found guilty of charges, no matter how small or big, should recuse themselves.”