Publications
Partners
Cape Town – Former South African Express CEO Inati Ntshanga received a payout of R776 000 when he stepped down in March this year, Parliament was told on Wednesday.
The board and management of SA Express received a grilling from Parliament’s standing committee on finance (Scopa) about fruitless, wasteful and irregular expenditure incurred in the 2015/16 financial year.
SA Express told members of Parliament that Ntshanga was asked to resign and had five months left of his employment contract, for which he received the payout. “We had to part ways with the previous CEO, as we had to introduce new management and new processes,” said SA Express board chairperson George Mutema.
Significant irregular expenditure occurred under Ntshanga’s watch, who was with the airline for seven years. In the 2015/16 financial year, R35.6m of irregular expenditure was incurred as a result of among other things expired contracts (R7m), procurement processes not followed (R8.8m) and deficiencies in procurement processes (R2.7m).
Altogether R18m of the irregular expenditure has been internally condoned, as the airline received “satisfactory explanations” as to why the spending took place and received the assurance that it wasn’t linked to any fraud.
Irregular spending of R16.5m however is under investigation due to procurement processes not followed and appropriate action will be taken against responsible individuals, SA Express said.
There are currently 216 investigations into individuals' conduct, with one dismissal so far.
Scopa members bemoaned the fact that individuals like Ntshanga leave their workplaces when irregularities have occurred under their watch, and are then not held accountable for their actions.
Late payments
In addition to the irregular expenditure, SA Express incurred R30m of fruitless and wasteful expenditure as penalties for late payments (R19.8m) and interest on late payments (R10.7m).
Due to SA Express’ liquidity problems, suppliers and creditors could not be paid on time, the airline’s chief financial officer Mark Shelley said.
“That’s the reality of our cash flow. We’d pay creditors as and when funds become available, and had to manage our cash flow on a daily basis.”
Ageing aircraft
MPs heard that SA Express needs to urgently address the issue of aircraft shortages. The airline owns three aircraft, leases 17 and makes use of four chartered aircraft.
Maintenance costs of aircraft owned by SA Express are unsustainable.
“The ageing fleet and the lease of aircraft are impacting significantly on the business of SA Express,” said Mutema. “Our fleet is becoming older and we need to spend more and more on expenses to maintain the aircraft.”
Fin24 earlier reported that Solenta Aviation Services, which provides chartered aircraft and other services to SA Express, brought an application for liquidation against the airline for failing to pay outstanding debt of allegedly R87.3m.
Acting SA Express CEO Victor Xaba however said the airline would oppose the application as it disputes the amount due to Solenta.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.
Read Fin24's top stories trending on Twitter: Fin24’s top stories
