THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Case no: JR249/22
In the matter between:
MOLEFI DAVID NKHUBU Applicant
and
COMMISSION FOR CONCILIATION, MEDIATION
ARBITRATION First Respondent
COMMISSIONER JOSEPH WILSON THEE NO Second Respondent
ESKOM HOLDINGS SOC LTD Third Respondent
Heard: 16 October 2025
Delivered: 26 February 2026
This judgment was handed down electronically by emailing a copy to the
parties. The (date) is deemed to be the date of delivery of this judgment.
JUDGMENT
MAMABOLO, AJ
(1) Reportable: Yes/NO
(2) Of interest to other Judges: Yes/No
(3) Revised
____________ ______________
Signature Date
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Introduction
[1] This is an application to review and set aside the arbitration award issued by
the second Respondent on 5 January 2022 . The Second Respondent found
the dismissal of the Applicant to have been both procedurally and
substantively fair.
[2] The Applicant was employed as a senior General Mana ger: Assurance and
Forensic. He was dismissed on allegations of gross negligence. He was
accused amongst others of failing to independently review or verify
information presented to him by Mr Singh pertaining shareholders’ certificate,
failing to confirm non- compliance with the directive of the then Acting Chief
Financial Officer which insisted on compliance with the provisions of Treasury
Note 1 (2013/2014), failure to satisfy himself that permission had been
obtained from National Treasury as required by the National Treasury
Instruction Note 1 (2013/2014) and section 79 of Public Finance Management
Act, failure to identify the irregular appointment of Mckinsey for the Top
Engineering Program through the sole source procurement procedure and,
declaring in the advance payment review dated 14 September 2016 that there
exists security from Tegeta for advance payment in line with the contracts
when such security did not exist.
[3] The Second Respondent found the testimony of the Respondent’s witnesses
to be more probable than that of the Applicant. He further found the version of
the Respondent’s witnesses to be credible. On the contrary , the testimony of
the Applicant was found to be riddled with contradictions.
[4] Having found as he did, the Second Respondent proceeded to find that the
Applicant was negligent in the review of Tegeta contract and further that the
recommendations that led to the appointment of Mckinsey as the sole source
provider were not credible.
[5] Furthermore, the Second Respondent found that the Applicant failed to obtain
approval from the National Treasury as is required by National Treasury Note
approval from the National Treasury as is required by National Treasury Note
1 (2013/2014) and lastly, that it was highly improbable that security existed
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more especially when the shares were not valued at the time of conclusion of
the contract.
[6] The grounds for review as enunciated in the Applicant’s founding papers are
that the Second Respondent failed to apply his mind properly to the evidence
that was before him, in that:
6.1. he failed to appreciate the distinction between existence and valuation
of shares that is placed by international standards,
6.2. he failed to appreciate that the Applicant was not instructed to e valuate
the shares,
6.3. he failed to appreciate the fact that the Tegeta contract was cancelled
at the time the shares were assessed and thus pos ed no risk to the
Respondent,
6.4. he failed to take into consideration the fact that the Applicant had no
access and neither did he have sight of the memorandum that was
issued by the then Chief Executive Officer pertaining to compliance
with the provisions of National Treasury Note 1 (2013/2014),
6.5. he failed to appreciate that the 2003 Guidelines which the Applicant
relied on, allowed for an alternative contracting method which is not
rate-based, and which rendered approval from the National Treasury
inconsequential,
6.6. he failed to appreciate that , in terms of the client’s request, Applicant
was only required to perform a limited assurance review as opposed to
a reasonable assurance review in respect of the appointment of
McKinsey.
[7] In Sidumo and Another v Rustenburg Platinum Mine s Ltd and Others
1 the
Court held that “the reasonableness standard should suffuse s 145 of the
LRA, and the threshold test for the reasonableness of an award was … Is the
decision reached by the commissioner one that a reasonable decision- maker
1 (2007) 28 ILJ 2405 (CC) at para 110.
4
could not reach?”. This means that the award in question is tested against all
the facts before the arbitrator to ascertain if it meets the requirement of
reasonableness. In conducting this test, it is necessary for the Court to
enquire into and consider the merits of the matter and the entire evidence on
record in deciding what is reasonable.
[8] In Herholdt v Nedbank Ltd (Congress of SA Trade Unions as Amicus Curiae)
2
the Court said, “A result will only be unreasonable if it is one that a reasonable
arbitrator could not reach based on the material that was before the arbitrator.
Material errors of fact, as well as the weight and relevance to be attached to
particular facts, are not in and of themselves sufficient for an award to be set
aside, but are only of consequence if their effect is to render the outcome
unreasonable…” .
[9] It is also trite that not all the defects in an arbitration award have the effect of
rendering the award reviewable. Labour Appeal Court in Gold Fields Mining
South Africa (Pty) Ltd (Kloof Gold Mine) v Commission for Conciliation,
Mediation and Arbitration and Others
3 (Gold Fields) cautioned against the
approach to the review of an arbitration award on a fragmented basis,
otherwise, this may take the form of an appeal in the guise of a review. The
following was said:
‘Failing to consider a gross irregularity in the above context would mean that
an award is open to be set aside where the arbitrator (i) fails to mention a
material fact in his award, or (ii) fails to deal in his/her award in some way with
an issue which has some material bearing on the issue in dispute, and/ or (iii)
commits an error in respect of the evaluation or considerations of facts
presented at the arbitration. The questions to ask are these: (i) In terms of his
or her duty to deal with the minimum legal formalities, did the process that the
arbitrator employed give the parties a full opportunity to have their say in
arbitrator employed give the parties a full opportunity to have their say in
respect of the dispute? (ii) Did the arbitrator identify the dispute he was
required to arbitrate? ( this may in certain cases only become clear after both
parties have led their evidence)? (iii) Did the arbitrator understand the nature
of the dispute he or she was required to arbitrate? (iv) Did he or she deal with
2 (2013) 34 ILJ 2795 (SCA) at para 25.
3 [2014] 1 BLLR 20 (LAC) at para 20.
5
the substantial merits of the dispute? and (v) Is the arbitrator’s decision one
that another decision-maker could reasonably have arrived at based on the
evidence?’
[10] In Bestel v Astral Operations Ltd & Others 4 the court considered the narrow
scope of review and accepted that an arbitrator’s finding would be
unreasonable if it is unsupported by any evidence, based on speculation,
disconnected from the evidence, supported only by evidence that is
insufficient to justify the decision, or if it was in ignorance of evidence that was
uncontradicted. The court held that:
‘… the ultimate principle upon which a review is based is justification for the
decision as opposed to it being considered to be correct by the reviewing
court, that is whatever this court might consider to be a better decision is
irrelevant to review proceedings as opposed to an appeal. Thus, great care
must be taken to ensure that this distinction, however difficult it is to always
maintain, is respected.’
[11] The court in Gold Fields5 held that the concept of reasonableness embraces a
wide range of outcomes, many of which may be reasonable. The outcome
should not be evaluated on a piecemeal basis, but on the totality of the
evidence.
[12] It is uncontroverted that Applicant was requested to review inter alia the
procurement process that was followed in awarding the coal supply contract
to Tegeta Exploration & Resources (Pty) Ltd (“Tegeta”) and the advance
payment that was made to Tegeta. In terms of the memorandum dated 14
September 2016, the objective and scope of the mandate was to determine
“(1) The robustness of the procurement process followed in awarding the
Tegeta contract relating to the advance payment, (2) whether the advance
payment made was in line with the government processes contract terms and,
(3) whether the recoveries are in terms of the contract
6”.
4 [2011] 2 BLLR 129 (LAC) at para 18.
5 [2014] 35 ILJ 943(LAC) at para 14.
6 See Record volume 7 pages 107 – 112.
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[13] The Applicant argues that it was not part of the scope to conduct a valuation
of shares. He cited five reasons explaining why, as auditors, they do not value
shares. Amongst those reasons is that the auditors do not perform
management’s work and further that valuation of shares for security purposes
cannot be conducted after the fact. I .e. after the advance payment had been
repaid in full.
[14] He referred the court to clause 4.3 of the Agreement which reads thus “As
security for the performance of its obligations, Tegeta pledges to Eskom with
effect from the date of signature of this Agreement, the pledged shares and
cedes in secur itatem debiti to Eskom all its present rights and interests, as
continuing general covering collateral security for all the due, proper, and
punctual performance in full of all the obligations in terms of this Agreement
read together with Addendum 2 to the Coal Supply A greement, which pledge
and cession Eskom accepts”.
[15] It is apparent from the objectives of the review that more is required. The
Applicant was required to ascertain, inter alia whether the process that
resulted in the advancement of payment in an amount of R659 million in April
2016 to Tegeta was in line with governance processes and contract terms.
The envisaged robust process would undoubtedly entail an enquiry by the
Applicant on whether or not there existed, at the time the loan was advanced,
sufficient security to satisfy the debt.
[16] In his examination in chief, the Applicant testified that if an auditor is
presented with a set of audits and no supporting documentation, the auditor is
required to issue a disclaimer. Evidence established that the Applicant was
presented with share certificates. Further evidence established that these
shares were not valued prior to the advancement of payment. Thus,
presentation of share certificates was accepted at face value to constitute
security. In summary, a n enquiry into the value of the shares and whether
security. In summary, a n enquiry into the value of the shares and whether
such value would be sufficient to cover the advanced payment of R659 million
was never conducted.
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[17] Based on this evidence alone, it is safe to deduce that a vigorous enquiry as
requested in the memorandum of 14 September 2016 was not conducted.
The share certificate is proof that some shares are held by Tegeta Exploration
& Resources (Pty ) Ltd. However, this is not the end of the enquiry. The
contract involved a huge amount of money, which made it imperative for the
shares presented to be valued. This exercise would have assisted in
establishing whether Tegeta had sufficient shares to satisfy the debt. The
exercise would have established whether security indeed exists.
[18] In the absence of a valuation of shares, the Applicant was not in a position to
make a finding that security exist s. It is common cause that at the time of the
review, the Applicant did not know the value of the security.
[19] The Applicant wants this court to believe that the existence of a share
certificate is proof that there is sufficient security. If this was indeed the case,
then why would the Respondent , who was in possession of the share
certificates, call for a robust enquiry. This confirms the Respondent’s
argument that a mere presentation of share certificates does not serve to
prove the existence of security. The value thereof must first be ascertained in
order to establish the existence of security.
[20] In addition to the above, he argues that he was not requested to value the
shares and, in any event, so goes his argument, valuation cannot be carried
out after the fact. The Applicant’s testimony established that the client did not
evaluate the shares but relied on available information. With this in mind,
more should have been done. The Applicant was required to identify the risk
which he failed to do.
[21] The valuation of shares should have taken place at the time the contract was
concluded to ensure that the value of the shares that are pledged as security
is equal to or exceeds the amount advanced. The fact that the amount
is equal to or exceeds the amount advanced. The fact that the amount
advanced was already repaid in full at the time the review was conducted is
inconsequential. The truth of the matter is that the Respondent was exposed
to risk in April 2016 when an advance payment in the amount of R659m was
made.
8
[22] It was put to the Respondent’s witness during cross- examination that
determining the value of the shares at that late (review) stage would have
amounted to a wasteful expenditure. This version implies that Applicant was
aware of the need to value the share certificates but failed to do so, as full
repayment had been made and coal delivered in terms of the contract.
Essentially, this means that he did not perform his duties in a diligent manner
but relied solely on the share certificates that had been presented.
[23] The Applicant further argues that the valuation of shares is management’s job
and therefore does not fall within his scope of work. This being the case and
equipped only with share certificates, it was incumbent on the Applicant to
issue a disclaimer.
[24] Much emphasis was placed on whether the Applicant performed a limited
assurance or reasonable assurance exercise. Evidence established that it
was indeed a limited assurance exercise. However, its limited assurance does
not imply that the Applicant was prohibited from taking the necessary steps
when executing his mandate. He is obligated to obtain more information or
documentation that would assist him in making an informed decision. His
primary responsibility is to act diligently and with honesty. He had to ensure
that the outcome of the limited assurance exercise was truthful and accurate.
[25] A perusal of the memorandum of 14 September 2016, in particular the scope
of work, establishes that A & F performed a review of , amongst others, “The
existence of the security from Tegeta for the advance payment in line with the
contract terms ”. This statement makes it clear that they were required to
establish the existence of security for the advance payment. It therefore does
not make sense to accept the share certificates as proof of security without
knowledge of the value thereof.
[26] In his examination in chief, the Applicant mentioned that he had requested his
[26] In his examination in chief, the Applicant mentioned that he had requested his
staff to get one contract that would establish that Tegeta had more than what
was advanced. Interestingly , this statement appears nowhere in the written
responses he submitted to the investigators. Furthermore, this version was
not put to the Respondent’s witness under cross examination.
9
[27] Again, this goes to prove that presentation of share certificates is not sufficient
proof that security exists otherwise, the Applicant would not have requested
his staff to get him a contract with more money.
[28] The Second Respondent was faced with two mutually destructive versions.
He found the version of the Respondent to be more probable than that of the
Applicant. Having found as he did, he proceeded to find that the Applicant
acted negligently during the review of the Tegeta coal contract and further that
it was highly unlikely that security existed as the share certificates were never
valued.
[29] Based on the facts stated above, this court finds that the decision arrived at
by the Second Respondent is one that a reasonable decision maker could
make.
[30] In December 2016, Assurance and Forensic were requested by the Group
Chief Financial Officer, Mr Anoj Singh, to conduct a review on procurement
process that was followed in appointing Mckinsey. T he Applicant found that
the procurement of Mckinsey as a sole supplier was in compliance with the
applicable policies, procedures and National Treasury guidelines.
[31] However, in his report of 4 April 2018, which was requested at the instance of
the Audit and Risk Committee, which is a sub- committee of the Board, the
Applicant arrived at a different conclusion. He found that the use of a sole
supplier may have compromised the principles of section 217 and section 51
of the Constitution and the Public Finance Management Act , as no market
research was conducted as required.
[32] Evidence established that on 29 June 2015, the Acting General Manager
Legal, Wawa Xaluva, sent a letter to the Respondent’ s Acting Group Chief
Finance Officer advising that National Treasury Note 1 of 2013/2014 should
be complied with in relation to consultants’ fees. On 27 September 2017, a
memorandum was issued advising that the Respondent is required to obtain
approval from the National Treasury prior to implementing risk -based
approval from the National Treasury prior to implementing risk -based
contracts. Mckinsey contract was risk-based.
10
[33] Cognisance should be taken of the fact that when formulating the second
report, the Applicant relied on the same documents that he had used in 2016.
He argues that due to the nature of the enquiry, the 2016 report would have
less information/ evidence, and that 2018 would have more
information/evidence.
[34] It is thus difficult to fathom why the same set of facts would produce a
different outcome. What was required of the Applicant in 2016 and 2018 was
basically the same thing, which is to determine whether procurement
processes and National Treasury Note had been complied with in the
appointment of Mckinsey . This can be established from a simple
consideration of procurement documents and applicable regulations/policies
and in the event of any uncertainty, the National Treasury, which is the author
of the Practice Note, or the compliance department could be approached.
[35] From the evidence presented, in 2016, the Applicant simply relied on the
representations that Mr Si ngh had prepared himself at the request of the
Board. He argues that it was a limited assurance review. This argument does
not assist the Applicant in any way. He should have familiarised himself with
the background facts prior to appending his signature. It makes no difference
that the report was issued under pressure and that it contains Mr Singh’s
representations to the board. The report is issued under his name.
[36] His explanation with regards to compliance and/or non- compliance with
National Treasury Instruction Note 1 ( 2013/2014) is that when he approached
management enquiring about their failure to comply with National Treasury
Note 1 ( 2013/2024) he was advised that the Respondent had enquired from
Treasury on applicability of National Treasury Supply Chain Management
Practice Note SCM 3 of 2003 and was advised that it was still in place. He
further testified that he had sight of the email from Mr Tshitangano , who was
further testified that he had sight of the email from Mr Tshitangano , who was
an employee of the National Treasury , which confirmed the applicability of
SCM 3 of 2003 and had no reason to doubt him.
[37] The fact that he approached the Respondent concerning compliance and/or
non-compliance with National Treasury Note 1 ( 2013/2014) means that there
11
was some uncertainty regarding its application. Tasked with a responsibility to
determine whether due processes had been adhered to, it was then
incumbent on him to ascertain its applicability from the National Treasury
and/or Compliance department and not simply rely on what was conveyed to
him and the email from Treasury.
[38] Furthermore, he concedes that the error was corrected in his 2018 report
7.
Essentially, the Applicant concedes that the report of 2016 was wrong. He
concedes that he was negligent and failed to act with honesty.
[39] A perusal of the arbitration proceedings, in particular the Applicant’s evidence
in chief, reveals that he was evasive in answering questions and at times his
testimony was contradictory. For example, when asked whether he had found
the appointment of Mckinsey through a sole supplier mechanism to be
irregular, he referenced two steps , stating that it was irregular for some other
reasons as “… a good process had been used to achieve an irregular
outcome”.
[40] He denied that in 2016 he was tasked to determine whether the procurement
process that was followed in appointment of Mckinsey was irregular
8. This is
in direct contrast to the objective as stated in his memorandum of 12
December 2016 9. The fact that he was requested to determine whether
procurement processes complied with policies and procedures and National
Treasury regulations means that he had to determine whether the process
was regular.
[41] When questioned whether it is stated in his 2018 report that the appointment
of Mckinsey through a sole supplier mechanism was irregular, he answered in
the negative
10. However, his report stated categorically that “The use of a sole
supplier might have compromised the principles as stated in S217and S51 of
7 See Record Volume 3 of 7 page 726 lines 1 – 25.
8 See Record Volume 3 of 7 page 737 lines 1 -5.
9 See Record Volume 7 of 7 page 158(b).
10 See Record Volume 3 of 7 page 739 lines 20 – 25.
12
the constitution and PFMA respectively as no market research was conducted
as required”.11
[42] Another contradiction in his testimony is when he tries to explain that the
finding on irregularity of the appointment is based on the fact that
management had lied when they said the file did not exist
12.
[43] This court is thus satisfied that the decision arrived at by the Second
Respondent is within the bounds of reasonableness.
[44] The last issue for determination is the alleged procedural unfairness that
pertains to a failure to institute disciplinary proceedings within 3 months as
stipulated in the disciplinary code, and secondly, a failure to afford the
Applicant an appeal hearing.
[45] Even if it can be said that the Respondent failed to comply with its own
disciplinary code and procedure, the main issue is always whether the
Applicant has suffered prejudice as a result of the alleged procedural
unfairness. The Applicant must allege such prejudice and ultimately it has to
be found that such prejudice exists, in order for disciplinary proceedings to be
held to have been procedurally unfair . In Bogoshi v Commission for
Conciliation, Mediation and Arbitration and Others
13 the Court held that “ …
any provisions in an employer’s disciplinary code and procedure containing
detailed procedural prescripts in conducting a disciplinary process does not
always result in a finding of procedural unfairness simply because those
procedures have been contravened. I am not saying that the employer should
simply ignore those provisions. It is of course true that where an employer
defines its own processes and sets its own procedural requirements, it should
be expected to adhere to the same. An employer that does not comply with its
own disciplinary code and procedure would thus always run the risk that such
failure could be found to be procedurally unfair. However, this obligation on an
employer must always be tempered by considerations of workplace
efficiency… ”.
employer must always be tempered by considerations of workplace
efficiency… ”.
11 See Record Volume 5 of 7 page 1838.
12 See Record Volume 3 of 7 page 740 lines 4 – 20.
13 (JR 1106/16) [2012] ZALCJHB 186 (2 August 2021) 110 at para 85.
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[46] The following dictum in Delport and Others v S 14 is instructive “The question
in regard to irregularities is always whether they have resulted in a failure of
justice. Bearing in mind that irregularities do not in and of themselves lead to
a failure of justice, there is little likelihood of this court, or any other, holding
that they did in this circumstances”.
[47] The evidence before the Second Respondent established that the Applicant
reported to the CEO , and further in terms of the disciplinary code, an appeal
should be directed to the Employee Relations Practitioner in case of a hearing
or the manager in case of enquiry.
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[48] Uncontroverted evidence established that the Applicant was afforded a fair
opportunity to present his case before the chairperson of the disciplinary
hearing. He was given time to prepare for the hearing; he understood the
charges levelled against him and had an opportunity to question the
Respondent’s witnesses. This is basically what is envisaged by a fair process.
[49] The Court in Avril Elizabeth Home for the Mentally Handicapped v
Commission for Conciliation, Mediation and Arbitration and Others
16 held that
“… the conception of procedural fairness incorporated into the LRA is one that
requires an investigation into any alleged misconduct by the employer, an
opportunity by any employee against whom any allegation of misconduct is
made, to respond after a reasonable period with the assistance of a
representative, a decision by the employer, and notice of that decision”.
[50] Furthermore, it was common cause that Applicant reported directly to the
CEO. The Applicant’s letter of dismissal was issued by the CEO. This being
the case, the CEO would not have been an appropriate person to conduct the
Applicant’s appeal. The question that arises is whether an external person
should have been appointed and if so, whether such non appointment has
resulted in the Applicant suffering any prejudice. The court finds that Applicant
resulted in the Applicant suffering any prejudice. The court finds that Applicant
suffered no prejudice. His matter was ventilated fully and anew before the
CCMA with the assistance of a legal representative.
14 [2015] 1 All SA 285 (SCA) at para 35.
15 See Record Volume 3 of 7 page 854 lines 1 – 6.
16 (2006) 27 ILJ 1644 (LC).
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[51] There was no evidence before the S econd Respondent to prove prejudice, if
any, that the Applicant had suffered. Accordingly, t he authorities cited above
do not favour the Applicant. The Second Respondent was quite alive to the
requirement that Applicant had to prove prejudice suffered and he found that
the Applicant was not prejudiced by Third Respondent’s conduct.
[52] Therefore, based on all the reasons set out above, the Court finds that the
award of the Second Respondent is not reviewable. The finding by the second
respondent is supported by the evidence that was before him.
[53] Consequently, the following order is made:
Order
1. The application by the Applicant to review and set aside the arbitration
award is dismissed.
2. There is no order as to costs
N.O. Mamabolo
Acting Judge of the Labour Court of South Africa
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Appearances:
For the Applicant: Ms. Michelle Lage
Instructed by:
For the Third Respondent: Adv L.T. Sibevo SC
Instructed by: Verveen Attorneys