Myeni delayed signing Airbus deal, costing SAA millions - court hears | Fin24
 
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Myeni delayed signing Airbus deal, costing SAA millions - court hears

Feb 24 2020 21:42
Phumi Ramalepe

Former South African Airways board chairperson Dudu Myeni was back in the hot seat in the Pretoria High Court for the third time on Monday to testify in her defence in a delinquency case brought by the Organisation Undoing Tax Abuse and the SAA Pilots Association.

The court heard a heated exchange between OUTA's legal representative, Advocate Carol Steinberg, and the former SAA chair during cross-examination regarding why Myeni had not signed off on a deal, approved by then-finance minister Nhlanhla Nene back in 2015 - between the national carrier and aircraft manufacturer Airbus.

The transaction, referred to as the swap transaction, originated from a 2002 deal, before Myeni joined the board - in which SAA entered into a purchase agreement for 15 aircraft.

In October 2009, the national carrier approached Airbus to revise the existing deal to allow SAA postponement of predelivery payments (PDP) to Airbus.

The negotiation to postpone payment came after SAA started facing financial pressure due to a hike in oil and jet fuel prices, along with pressures on the rand and the local economy.

Steinberg presented emails to the court as evidence, in which Myeni was asked by then-CFO Wolf Meyer to ratify the renegotiated deal and have it signed, but Myeni failed to do so on time before the PDP would become liable for payment.

One of the conditions of the Airbus deal – tied to the postponement of the PDP payment – was the swapping of old A320 aircrafts for five A330s.

Both Airbus and National Treasury agreed to this, but Myeni said board members were not satisfied and only signed late in December 2015, meaning the national carrier ended up having to pay millions of rands in late delivery fees to Airbus as the PDP would soon become due in the interim. When Pravin Gordhan was brought in as finance minister in December 2015, he negotiated for the deal to go through after months of delay

The court heard that Myeni did not sign the deal as she wanted it to be carried out by a local leaser.

Steinberg told the court that the board resolved to go for the original transaction, contrary to the outcome Myeni had hoped for.

"I place on record that I was never satisfied that this transaction was in the best interest of the South African Airways," said Myeni.

According to Myeni, she proceeded to seek a local leaser in order to "promote South African business opportunities" and because it was necessary to "consider alternatives to the currency risk".

"We were also not convinced that the Airbus party-related company necessarily provided the cheapest option," she said.

Myeni testified she was not the only one against the deal, as former chairperson of the SAA audit and risk committee, Yakhe Kwinana, shared her views.

Myeni read out an email from Kwinana to that effect.

Myeni also stated that the deal was subject to ratification by the board, which did not occur "for a number of reasons."

Court adjourned over 30 minutes after Myeni said she was tired. Cross-examination, however, will continue on Tuesday.

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