Former SAA chairperson Dudu Myeni cost the airline billions in savings by thwarting deals with Emirates and Airbus that were meant to improve the state-owned enterprise’s (SoE’s) profitability and reduce its reliance on government bailouts, the airline’s former chief financial officer (CFO) Wolfgang Meyer testified on Friday.

Meyer, who served as SAA CFO from June 2011 to November 2015, was appearing in the North Gauteng High Court, where the Organisation Undoing Tax Abuse (Outa) and the SAA Pilots’ Association want Myeni to be declared a delinquent director.

“She displayed a total lack of independence. She would interfere in operational matters. She would engage directly with suppliers, she would blatantly lie to the minister and to the board. She would unilaterally try and change and misrepresent board meetings,” said Meyer, who is now the CFO at Saudi Arabian Airlines and returned to South Africa to testify.

“She ignored governance procedures, for instance in the appointment of advisers. She managed through fear and victimisation and she managed board meetings very poorly,” Meyer continued.

The delinquency case against Myeni is in the third of an expected five weeks of hearings and testimony has recently focused on her role in SAA’s failed deals with Emirates and Airbus, which both fell apart in 2015.

SAA and Emirates were set to agree to a new deal that would expand its connectivity and provide a guaranteed additional $100-million in revenue per annum. “It would have put SAA in a different league,” said Meyer.

Meyer was in France with then SAA CEO Nico Bezuidenhout in June 2015 for the Paris Airshow and Emirates had organised an event to announce the deal the next morning, when Myeni called Bezuidenhout.

Meyer said he put the call on speaker and Myeni told him not to sign the deal “based on an instruction from the president”. Myeni is seen as a close ally of then president Jacob Zuma. Meyer did not believe Zuma had instructed her to scrap the deal and that she was using his name to legitimise her decision.

“I was horrified. I couldn’t believe what I was hearing; so much time went into this transaction,” Meyer testified.

“It was like a bomb exploding, we just couldn’t believe it. We were so disappointed. We were so excited about this deal. The benefits of this deal were so great; it could have done so much for SAA.”

The next morning Bezuidenhout went to the press event, where media had already started gathering, and told the CEO of Emirates they couldn’t sign the deal.

“It was probably the most embarrassing moment of my life, just to say the least, apart from being horrified and cross,” Meyer testified.

He told Judge Ronel Tolmay, “To say the least, my lady, I think it’s criminal.”

While cross-examining corresponding claims from Bezuidenhout, Myeni’s lawyer, advocate Nqabayethu Buthelezi, suggested the decision hadn’t come from her and Zuma but the board, which wasn’t committed to the deal, and nevertheless it still could have been agreed to at a later date.

Meyer said SAA executives had addressed the board’s previous concerns and had tacit approval from all members except Myeni, who had opposed the Emirates agreement.

The court also heard how Myeni allegedly obstructed an agreement to lease aircraft from Airbus, which could have saved SAA billions.

In 2002, SAA agreed to purchase 15 A320s from Airbus, which would be delivered over time. SAA had received 10 of the planes but escalating costs meant what the airline was paying for them exceeded market value and was draining the airline’s budget.

SAA proposed a swap transaction structure where it would swap the purchase of 10 A320s and instead lease five of the more efficient A330s. In 2015, multiple teams from SAA, Treasury and Airbus were working on the deal and Meyer said it would have resulted in a $106-million cashflow benefit for SAA, which also would have been able to reclaim around $100-million in what it had already spent on pre-delivery payments.

The deal had conditional approval from the then finance minister, Nhanhle Nene, and Airbus was on board, said Meyer. In 2015, he warned the SAA board that the consequences of failing to conclude the deal would be “disastrous”. The airline would not be able to reclaim the pre-delivery payments it had already spent and would recognise a R1.4-billion impairment over the next two years, money SAA didn’t have.

Meyer said Myeni held a meeting with Airbus executives during the negotiations and it was irregular for a board member to speak directly to a supplier.

Airbus told SAA to either sign the new deal or pay its hefty fees under the 2002 agreement, but Myeni instead wrote to the company to say SAA had instead “decided to do this transaction slightly differently, by engaging an African aircraft leasing company to engage with you directly”.

Meyer said: “It was very cheeky of her to write a letter like this knowing that they repeatedly warned us they would revert back to the A320 transaction if we don’t conclude this as soon as possible.”

He said he and the board were in the dark about adding a middleman to the proposed lease deal and hadn’t agreed to changing the draft agreement.

“She just acted as if she was an executive, ignoring the actual executives, and just went on her own tangent. There’s absolutely a total disregard for any procurement compliance procedures,” said Meyer.

If Myeni is found to be delinquent, she will not be able to sit on a board for at least seven years. She is reported to serve on the boards of the Jacob Zuma Foundation and Mhlathuze Water Authority Board.

The hearings continue. DM