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SAA: Shallow, simplistic to view Myeni as cause of all woes

Jul 14 2017 20:31
Carin Smith

Cape Town - The Organisation Undoing Tax Abuse (OUTA) welcomes what it calls Finance Minister Malusi Gigaba’s confirmation that South African Airways (SAA) chair Dudu Myeni will not serve another term on the board.

Ben Theron, OUTA’s chief operating officer, told Fin24 on Friday that Gigaba said as much in media comments during the week. Fin24 also reported in June this year that Gigaba said Cabinet had appointed Myeni as SAA board chair for a final term.

"At the upcoming AGM (in August), we will attend to the matter of appointing her successor,” Gigaba, the shareholder representative for SAA, said during an update on the economy at the time.

OUTA pointed out that Myeni was appointed to the SAA board in October 2009 and has chaired it since 2012. A one-year extension to her term expires on August 31.

OUTA blames Myeni for many of SAA's challenges and the airline's repeated need for more government support - the most recent a Treasury lifeline of R2.2bn a few weeks ago. This followed after Standard Chartered pulled out as a lender to the airline. SAA has R19.1bn in guarantees from Treasury. Gigaba maintained that the latest bailout was “fiscally neutral”.  

“She (Myeni) is not fit to hold any public office whatsoever. The sooner she leaves the better,” said Theron.

In response to OUTA's statement, SAA spokesperson Tlali Tlali told Fin24 on Friday that Myeni is not a self-appointed director at SAA and will respect the shareholders' decision on her future role at SAA, if any.

"It is too simplistic a view and too shallow an understanding of the situation at SAA for anyone to reduce or anchor on one individual, the challenges faced by the airline. Even more, it is opportunistic in the extreme or convenient to ignore that Ms Myeni served and continues to serve as part of a collective with other directors," Tlali pointed out.

"No one has been able to gainsay the fact that some of the challenges facing the company are legacy issues that predate her appointment as a non-executive director at SAA."

In its statement OUTA claims SAA continuously posted losses during Myeni’s tenure, that the airline was repeatedly bailed out by taxpayers and, in December 2014, the airline’s administration had to be transferred from the Ministry of Public Enterprises to the Ministry of Finance to stabilise the finances.

"Myeni lied to her board and the minister regarding the procurement of airplanes and authorised the payment of exorbitant cancellation fees to questionable suppliers," said OUTA.

In June the Companies Tribunal dismissed Myeni’s application to have a compliance notice issued by the Companies and Intellectual Properties Commission (CIPC) set aside. The CIPC issued the notice to Myeni in November 2016, as she had misrepresented a deal with Airbus to Gigaba, who was then minister of public enterprises.

Myeni indicated that the board had resolved to have Airbus supply SAA with two aircraft, instead of 10.

In June OUTA and the South African Airways Pilots’ Association launched legal proceedings against Myeni, asking the Pretoria high court to declare her a delinquent director. This would bar her from serving as a director, a senior executive or on any boards for at least seven years. Myeni has denied wrongdoing and the case continues, according to OUTA.

Critical position needs competent candidate

OUTA has also emphasised that the critical position of CEO of SAA must still be filled "with a competent and knowledgeable candidate who can start turning this organisation around".

On Thursday Gigaba said the appointment of a CEO for SAA will be finalised by the end of July 2017. He said many CEOs have come and gone at SAA, and none of them have stayed long enough "to achieve what is possible".

“So many turnaround strategies have been developed. So much money has been invested into the airline in the form of guarantees and bailouts,” said Gigaba.

He said a CEO experienced in running companies as large as SAA is needed.

READ: SAA to have new CEO by month-end - Gigaba

On Thursday Gigaba said at a briefing at the JSE that partial privatisation of state-owned enterprises (SOEs) is on the agenda to revive the economy.

He said Treasury will conduct an audit on “non-strategic” assets of SOEs, to strengthen their balance sheets.

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