Publications
Partners
Durban – A leaked memorandum to the board of South African Airways (SAA), penned by chair of the board Dudu Myeni, has exposed a breakdown in relationship between management and the board.
In the letter, in which Myeni addresses a R6bn swap deal between SAA and French aircraft manufacturer Airbus, Myeni said there was a trend to approve deals before the board’s approval.
“This has been a new trend where National Treasury has been approving serious requests, then the exco tells us to rubberstamp.
“Again, like this A330 Swap, if the National Treasury has approved it, we do not need to ... get involved. This is meant to create anarchy.”
News24 reported that the board was allegedly put under pressure to approve the deal, which it [the board] said, was unaffordable.
In 2002 SAA ordered a fleet of aircraft from Airbus. SAA decided to amend the contract, swapping the remaining order for bigger engines and more fuel efficient planes.
The board says it was pressured to approve the five aircraft deal, but included conditions, because it did not believe it was getting a fair deal from Airbus.
It was concerned that, due to the dollar rand exchange, SAA could only secure five aircraft for the initial amount that had been paid.
In a leaked document Myeni revealed that, during the deal negotiations, management communicated directly with SAA shareholders “completely ignoring the board”.
Myeni said, “Our understanding is that the SAA CFO, in sending the SAA CFO's letter to the SAA shareholder representative, completely ignored the SAA board."
She said there was apparent flouting of some governance rules, for example the CFO going directly to the shareholder.
"Because of the inaccuracies in the SAA CFO's letter to the SAA shareholder representative, the real possibility is that the SAA shareholder is under an erroneous impression that SAA's financial position is that of inability to discharge its financial obligations, because of the 'cashflow requirement' as a result of the Airbus meeting and the consequent parties' agreement.”
Myeni continues to say, “Taking into account the SAA CFO's role in the negotiations of the dollar lease between Airbus and SAA, and the apparent flouting of the fundamental rule of governance, that demonstrates a breakdown of a working relationship between the SAA CFO and the SAA Board.
"We should, as the board, take the advice that it is in the best interest of SAA for the SAA CFO not to participate in the dealings between Airbus and SAA in pursuance of the five A330s transaction, including any communication between SAA and the SAA shareholder representative regarding this transaction.”
Myeni requested a meeting with Finance Minister Nhlanhla Nene to raise her concerns with him.
Myeni was not available to comment on the memorandum.
