Picture: THINKSTOCK
Picture: THINKSTOCK

THE Nuclear Energy Corporation of SA’s (Necsa’s) CEO, Phumzile Tshelane, faces sanction by the Companies and Intellectual Property Commission (CIPC) for behaviour inconsistent with his duties as a director under the Companies Act.

The watchdog has applied to the High Court in Pretoria for Mr Tshelane to be placed on probation for violating Necsa’s motor vehicle policy and refusing to comply with a board instruction to reimburse it for the personal use of a company vehicle.

Should the application succeed Mr Tshelane will be able to continue as a director subject to court supervision.

Necsa, which hopes to play a leading role in the government’s nuclear procurement, is in disarray, without a functioning board or a permanently appointed CEO as Mr Tshelane’s contract has been renewed monthly since July last year.

It also has not finalised its annual financial statements for 2014-15, which were due to be tabled in Parliament by the end of September.

The case against Mr Tshelane is the latest in a string of accusations of abuses of corporate governance at Necsa and conflict between executives and the board of directors.

The CIPC application follows a detailed investigation after a complaint by another director, Phumlani Zwane, in 2014. Mr Zwane’s complaint was found to be without substance. However, in the process of investigating it, the CIPC uncovered Mr Tshelane’s behaviour.

The commission claims that a short while after his employment as CE of Necsa in 2012, Mr Tshelane authorised the leasing of a Lexus motor vehicle for the use of "the office of the CE and chairman when available".

In May 2013, the board of Necsa was made aware of the Lexus and allegations that Mr Tshelane was using it for his personal needs. He was also claimed to have engaged a Necsa staffer as permanent driver. Necsa’s motor vehicle policy makes no provision for this and states explicitly that company vehicles are not for personal use.

Following an investigation, the board ordered Mr Tshelane to reimburse Necsa for the personal use of the vehicle.

The dispute dragged on for another two years, while Mr Tshelane and the board haggled over an appropriate calculation of the costs. At the time of the CIPC’s investigation in July last year the matter had still not been settled and Mr Tshelane had not paid back the money, leading to the CIPC application.

Neither Necsa nor Mr Tshelane responded to questions about the application on Thursday.

Xolisa Mabongo, Necsa’s group executive for corporate services, said after the airing of allegations around Mr Tshelane in the media last year, Energy Minister Tina Joemat-Pettersson had established a task team to look into the matter.

"The work of the task team has not yet been finalised," Mr Mabongo said.

Ms Joemat-Pettersson did not respond to questions sent to her office on Thursday.

Steps by the CIPC to take punitive action against directors in state-owned companies are rare, despite the increasingly frequent reports of corporate governance transgressions.

In 2014, the commission wrote to several state-owned companies requesting them to comply with the Companies Act. Senior manager for enforcement at the CIPC Lana van Zyl said that the enforcement function was a relatively new one. It was not part of its previous iteration as the Companies and Intellectual Property Organisation (Cipro).

The investigation preceding application to the court involved "quite a long process … and cannot be easily or quickly done," she said.

Under the Companies Act, directors who do not carry out their duties can be declared delinquent by a court, preventing them from holding office.

The sanction of probation applied for by the CIPC in the case of Mr Tshelane was softer, she said.

"Probation provides for a court-controlled process that puts in place certain responsibilities that the director in question must report on.

"It gives an opportunity for the person to continue in their role as a director, whereas if they are declared delinquent they can no longer continue," she said.