Myeni stays at SAA

Cabinet has reappointed Dudu Myeni as SAA chair after months of wrangling between President Jacob Zuma and Finance Minister Pravin Gordhan over who should make up the new SAA board.

Myeni, chair of the Jacob Zuma Foundation, has been sheltered by Zuma during her tenure at the state-owned airline, which started in 2009, and has seen the carrier face countless challenges.

Gordhan had refused to provide further guarantees to SAA until a new board was in place.

This week, 11 new non-executive directors were appointed to SAA’s board for three years, starting this month.

SAA last reported a full-year profit in 2011 of R779 million. From 2012 to 2014, the airline sustained losses totaling R4.6 billion. Over the past four years, the ailing airline has had seven acting or permanent CEOs.

The governance of SAA has been in question for quite a while. The latest failure revolved around little-known BnP Capital, which stood to make R256.5 million from a deal to raise R15 billion for SAA earlier this year.

However, SAA treasurer Cynthia Stimpel blew the whistle on the deal and, after the transaction came to the public’s notice, SAA cancelled it.

The formation of the board means Treasury could release extra guarantees to the airline on top of the R14.4 billion in guarantees it has already provided.

The new guarantees would allow it to file its much-delayed annual financial results for 2015 and 2016. SAA has until September 15 to file these reports in Parliament.

Wayne Duvenage, the chair of the Organisation Undoing Tax Abuse, said that he was concerned about the retention of Myeni as SAA chair for another two years.

“A number of significant and questionable actions, combined with loss-making performances, have taken place under Myeni’s watch, which has cost the taxpayer several billion rands in bailouts over recent years,” he said.

“We believe Myeni should be held accountable and largely responsible for the poor governance and performance issues that have transpired at SAA over the past few years. It is a pity that government did not seize this opportunity to remove her from the board,” he added.

“We hope and trust that the new board will go a long way in rectifying the extremely poor performance of SAA, and turn it around into the profitable organisation it once was.”

Alf Lees, DA deputy shadow minister of finance, said Myeni’s reappointment was “irrational”.

“It appears that some strong people have been appointed to the board,” he said. “However, it doesn’t obviate our fears that Myeni will dominate the board, especially because of her close relationship with Zuma.

“The other board members will find themselves unable to perform their duties sufficiently to save the airline.”

The DA has called for the financially embattled airline to be placed into business rescue.

Earlier this week, authorities in Hong Kong granted SAA an extension until September 30 to submit regulatory documents and prevent the airline from being deregistered there, in effect halting its flights to the region, SAA spokesperson Tlali Tlali said.

In another development, SAA has advertised for banks and other financial institutions to help it raise R16 billion.

Tlali said that, at present, four major local banks and two international banks provided SAA with working capital and other funding.

However, the airline wants to use the new money for “working and capital expenditure funding, and debt consolidation”.

Debt consolidation will allow SAA to reduce its interest bill.

The debt should have a duration of three to 15 years and the funding could be secured or unsecured. The closing date for applications is September 16.

Regarding SAA’s call for proposals seeking R16 billion in funding, an Absa spokesperson said:

“It would be inappropriate for us to speculate on how we may approach potential clients. As a bank, we cannot discuss the details of any past, present or prospective clients.”

Investec spokesperson Ursula Nobrega said that because SAA was a client, “we would not be in a position to provide any views, due to client confidentiality”.

Standard Bank spokesperson Ross Linstrom said the bank had no comment.

“Financial Services Board accreditation is a critical requirement for non-banking financial services intermediaries,” SAA said.

SAA will give preference to bidding entities that are 51% or more black-owned and 30% or more black female-owned, and to companies owned by youth, disabled persons, military veterans and those located in rural areas.

The DA’s Lees said the call for R16 billion in funding reinforced the urgent need for Parliament to intervene and to have an emergency meeting with SAA.

“The airline has had more than a year to restructure its loan funding, but has instead arrogantly presumed that the state would capitulate and provide the additional guarantees of R5 billion that Myeni had demanded first of then finance minister Nhlanhla Nene and then of Gordhan,” he said.

“Ms [Yakhe] Kwinana, who resigned from the board last week, was clearly not exaggerating the very real danger of SAA being liquidated,” Lees said.

It emerged this week that SAA had won an extension from the Companies Tribunal, which is part of the department of trade and industry, to hold its next annual general meeting by the end of next month.

The state-owned airline last held an annual general meeting in January last year.

The subsequent annual general meeting was required to be held not more than 15 months from January 30 2015, or on or before April 30 this year.

SAA company secretary Ruth Kibuuka applied for an extension to hold the company’s annual general meeting at a later date.

The Companies Act requires that a public company must convene an annual general meeting of its shareholders no more than 18 months after the company’s date of incorporation and, thereafter, once in every calendar year, but no more than 15 months after the date of the previous meeting, “or within an extended time allowed by the Companies Tribunal, on good cause shown”.

The Companies Tribunal found a number of deficiencies in Kibuuka’s application.

“It would serve no purpose, even in light of the serious deficiencies, to refuse the application. It is also noted in favour of the applicant that the application was brought before the 15-month period elapsed,” the Companies Tribunal said.