Cabinet hits out at SAA

Cape Town - Cabinet on Wednesday took a hard line against apparent misconduct in SA Airways (SAA).

Briefing the media after cabinet's fortnightly meeting, government spokesperson Themba Maseko said cabinet took exception to the reported financial settlement reached between the SAA board and former CEO Khaya Nqula.

"The reported settlement was reached at a time when serious allegations of misconduct were being investigated by the board," he said.

Government would have preferred the CEO to have remained on leave while the allegations were being investigated.

"Cabinet, as shareholder, has asked the minister of public enterprises to seek an urgent audience with the board to establish the reasons for and the details of the settlement.

"Government [is] not prepared to accept impunity with regard to any instances of misconduct in the state-owned enterprises," Maseko said.

It wanted to take steps to ensure that state enterprises, especially those that were under-performing and continued to receive cash injections from the state, did not use those resources to pay large bonuses to non-performing managers.

The state would also seek legal advice on the processes that were followed by the board in reaching the settlement with the CEO without the express approval of the state as shareholder.

He described the payout to Nqula as "a major decision that should have been discussed with the shareholder first before it was taken".

Cabinet had also decided that the public enterprises department should submit a report on the state of affairs at the national airline to it at its next sitting.

Slightly exaggerated

The report should examine issues such as governance, management and the reasons for the reported under-performance of the airline.

Business Day reported last week that Nqula could get a package of nearly R8m based on his current salary and taking into account that his six-year contract was due to run until the end of August next year.

This was likely to exclude the more than R1m in retention bonuses he would have to pay back due to his leaving before the end of his contract.

The pay out would only be made known in the airline's annual report later this year, it said.

Asked to confirm the size of the payout to Nqula, Maseko declined to put a figure on this, but said figures reported in the media "may be slightly exaggerated".

Asked whether government would try to recover the money paid to Nqula, he said legal advice would be sought.

"Cabinet's opinion is we need to take legal advice first... Depending on what the legal advice says, decisions will be taken on whether we call for the recovery of the monies paid already."

He said cabinet had also instructed the department to prepare a report on all state enterprises with a view to addressing all the problems being experienced by these entities.

"Cabinet believes that all these enterprises are valuable assets to the South African taxpayer and play a key role in the economy.

"It is therefore important that urgent steps are taken to ensure that they can perform effectively."

A report on all these matters would be tabled at the next cabinet meeting, Maseko said.

- Sapa