Former executives of Necsa are
attempting to overturn their
suspensions in court

Former South African nuclear executives to appeal suspensions in court

January 16, 2019
by John R. Fischer, Senior Reporter
Former board members of the South African Nuclear Energy Company (Necsa) have resorted to paying 1.5 million rands (more than $108,000) in out-of-pocket expenses to hold a court hearing this week in an attempt to overturn their suspensions, according to Moneyweb.

Energy minister Jeff Radebe dismissed chairman Kelvin Kemm, CEO Phumzile Tshelane and audit and risk director Pamela Bosman this past November, accusing them of exhibiting “defiance and ineptitude” through their actions. In response, the three claim their dismissal is related to the minister’s involvement in a plan to sell NTP Radioisotopes, a Necsa subsidiary and medical isotope production plant, to an American buyer.

The allegations made against the trio include unauthorized foreign trips, the relaying of false information to the press, and the approval of unauthorized increases in remuneration. Radebe says recommendations were made by the Department of Energy to replace the three ahead of 2019 when their positions would be up for renewal, and argues that reinstating them would disrupt the workflow of the nuclear company under its new board.

One of the primary reasons provided to justify the suspensions centers around the monthslong shutdown of the NTP facility, one of the few profitable state-owned companies, which suspended operations in November 2017 due to a suspected hydrogen leak. The facility started up production once more in February 2018, upon receiving approval from the NNR.

“We remain eternally grateful to our customers in the United States, Europe, Japan, Middle East and South Africa who showed their unwavering support and wished us well,” said Tshelane at the time of its reopening. “To all our stakeholders globally, who were affected, we thank you for your understanding and patience. Your empathy throughout this period is highly appreciated.”

Operations, however, ceased once more at the end of May, when it was discovered that operators were not ensuring the facility was in safe mode before starting production runs. The employees found responsible were subsequently removed from the plant, with three re-engaged after accepting blame and one opting for early retirement. Production recommenced at NTP in November.

Radebe attributes the cause to an apparent lack of leadership by Necsa, though Kemm argues in his affidavit that Necsa retains its own legal personality, board and balance sheet, as evidenced by the fact that that the regulator instructed NTP directly to shut down Cell 19 of its reactor, rather than Necsa.

He claims that such an action is proof of the legal flaw in the minister’s assertion that direct blame rests on Necsa for the facility’s safety issues, and that Tshelane did take steps in November to address the initial shutdown by relieving NTP M.D. Tina Eboka of her responsibilities over safety and compliance, as the safety issues were connected to the completion of compliance and safety reports.

Eboka and several other NTP employees were placed on special leave while the board investigated, only for Radebe to instruct Tshelane months later to reappoint her as M.D.

The board objected, holding her responsible for the safety lapses at the plant but Radebe notes in his affidavit that it is highly unusual for the Necsa CEO to suspend, discipline or interfere in disciplinary proceedings against NTP’s M.D., and criticized the technical competence of the management imposed on NTP by Necsa.

Kemm clapped right back at Radebe for his decision to appoint his deputy minister to supervise the NTP business, calling it “unlawful.” He also disputes the claim made by Radebe that putting her in charge caused production to restart, saying that operations had already recommenced prior to her involvement. The DM has since resigned from her position as of December 2018.

Another point of tension is the members’ signing of a memorandum of understanding of intent to the Russian nuclear healthcare enterprise, Rusatom, for the expansion of oncology centers in Africa. Radebe argues that the signing violated the Nuclear Energy Act, as well as his wishes, and that such a collaboration conflicted with another agreement in place with the Australian Nuclear Science and Technology Organisation.

Kemm says the MoU did not require approval from Radebe as it was nonbinding, and that the minister was made aware of the agreement in May but remained silent until the day of the signing at the Brics summit in Johannesburg, when he allegedly relayed his opposition to the deal. This claim, though, has been disputed.

“I … justifiably believed that it would have been politically embarrassing for the signing ceremony not to have occurred, more particularly for the Russian president across the road from the Brics summit and extolling the cooperation between SA and Russia, and the signing which had originally been scheduled for Sochi in May 2018 already having been postponed to considerable embarrassment,” said Kemm in his affidavit.

In addition, the minister has accused the three of approving unauthorized salary increases in board and CEO remuneration, with Kemm saying that the increases abide by the rules for state-owned companies, and that a one million rand (more than $72,000) increase was approved for Tshelane by the previous energy minister.

Radebe says that Kemm created a conflict of interest by providing services through his company, Nuclear Africa, to Necsa, and that Tshelane breached protocol as CEO by trying to convert 70 percent of a 115 million rand debt (more than $8 million) in a subsidiary company, Pelchem, into equity to pay off its debts, violating the Public Finance Management Act and the Companies Act in the process, as well as exceeding approved delegation authority for Necsa, which is 91 million rand (more than $6 million).

Kemm says that the services were fully disclosed to the board with most taking place before his appointment to it in 2016.

Initially under the impression that the company would pay for the proceedings with money set aside for such matters, the three are relying on borrowed funds for the case, which will take place in High Pretoria Court.