Johannesburg - South African Airways (SAA) announced on Tuesday it plans to sue its former CEO Khaya Ngqula for R30.8m, following a forensic investigation by KPMG which found Ngqula exceeded his mandate.

SAA chairperson Cheryl Carolus said steps would be taken to recover R27m spent on retention bonuses for SAA employees under Ngqula, which exceeded his authority.

"This R27 million was in excess of the maximum financial limit and such excesses were not authorised by the board," said Carolus.

The board would also seek to recover R3.3m for the hiring of hospitality suites in various sports stadiums, and institute action to regain at least R500 000 spent on free junkets for Ngqula's friends.

"Against advice given to him both internally and externally, he signed these leases for suites that were seldom utilised," Carolus said. "He (also) organised overseas trips for friends and associates to the 2006 FIFA World Cup, the Rugby World Cup in 2007 and the ATP Tennis Tournament in 2008.

"Our attorneys have requested an interview with Mr Ngqula to seek his response to matters raised in KPMG's reports but he stipulated conditions for the interview that were unacceptable to the SAA board, so no interview took place," Carolus said. "We then proceeded on the basis of the evidence."

Summons was in the process of being served on Ngqula in respect of the retention bonus claim, and it was anticipated that a second summons dealing with the remaining matters would be served on him soon. 

Controls and processes

The investigation, which commenced in February 2009, consisted of two parts.

The first phase was an investigation into allegations that Ngqula was guilty of tender irregularities and fraud. He left the state-owned airline under a cloud in February 2009, after accepting a golden handshake of about R8m.

The probe's second phase investigated procurement and management issues at SAA, and included all significant transactions between 2003 and 2009.

André Viljoen was CEO of the airline at the time. SAA at present refuses to divulge other officials and parties fingered by the report.

Carolus said while the KPMG forensic audit had been prompted by allegations largely against Ngqula, the outcome had shown that there were various weaknesses in SAA's internal controls and procurement processes.

"As a consequence of this, SAA has already introduced measures to improve financial and risk management in its business," Carolus said.

 - Sake24.com