SAA to take action after audit

2010-04-21 09:34

Johannesburg - While the KPMG investigation into activities at South African Airways (SAA) has indeed highlighted irregularities, these are apparently limited in extent.

SAA is however determined to take disciplinary action.

In Johannesburg on Tuesday SAA chairperson Cheryl Carolus said that the airline had already appointed attorneys and asked the offenders to get themselves legal representatives as well.

Where possible, SAA will attempt to recover monies by means of disciplinary steps, she said. Although the report highlights some really distasteful issues, these do not indicate wide-ranging breaches.

She declined to name any wrongdoers. She said the matter went beyond mere individuals, also involving aspects of corporate governance.

On Wednesday SAA will officially take receipt of the KPMG report.

In February 2009 SAA appointed KPMG to conduct a forensic audit looking, among other things, into alleged corrupt activity by Khaya Ngqula, the airline's then chief executive. He was put on special leave until the report was concluded.

One of the allegations against Ngqula was that his wife had been part of a consortium receiving a large contract for the supply of meals on domestic flights.

Carolus, who was appointed chairperson in October last year, and the new chief executive, Siza Mzimela, said they had been surprised at what they found at SAA.

Mzimela said that SAA was not in nearly as much trouble as she had expected. She had heard dreadful stories of goings-on, but these were not evident.

She added, however, that much needed to be done to turn the airline's finances around, but she saw no reason why SAA could not operate profitably.

Carolus stressed that corporate governance would improve at SAA.

The board of SAA had negotiated a healthy agreement with government in terms of which the regulations would be rewritten and the roles of the state, the board and management would be thoroughly defined. This would play a large part in improving corporate governance.

She added that the new board was one of the best at any state-controlled company, and that that had been the only reason why she agreed to take the chair. SAA would also shortly announce a 16th board member.

That person would be a competition specialist whose appointment would follow shortly after the competition authorities' announcement of a further investigation into SAA's activities.

Regarding Mzimela's appointment, Carolus said the board had had five names on its short list, four of whom were South Africans.

All the candidates had been world class, and there had been no prescriptions in terms of affirmative action. She was delighted to say that Siza Mzimela was the best candidate, and a woman.


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