South Africa

SAA: If we don’t fix it someone else will, Deputy Minister of Finance warns

By Marianne Thamm 21 September 2016

SAA regrets to announce the delayed arrival of Chairwoman of the Board, Dudu Myeni, at a vital briefing by the new board and the Deputy Minister of Finance to Parliament's standing committee on finance. The two-hour delay is as a result of apparent indigestion brought on by the late onset realisation that a further loss of R1-billion has now been added to the expected original loss of R4.7-billion for 2014/15. We regret to announce also that losses for 2015/16 will be a further R1.5-billion. We thank South African taxpayers for bailing us out... again... and again. Place your tray tables in an upright position, this is going to be a bumpy ride. In the event of crash, pray. By MARIANNE THAMM.

Deputy Finance Minister, Mcebisi “Whistle-blower” Jonas, put in a spirited performance briefing Parliament’s standing committee on finance on matters pertaining to SAA on Tuesday. The revelation of the day, however, was that the national carrier’s loss for the 2014/15 financial year was R5.6-billion, about R1-billion more than the expected R4.6-billion. And a further R1.5-billion in losses will be reflected for 2015/16.

Jonas told committee chairman Yunus Carrim that if SAA had not received the R5-billion going concern guarantee from Treasury, “it would have posed a systemic risk to all state-owned enterprises in South Africa”.

Did anyone say Futuregrowth?

Dudu “Wrecking Ball” Myeni was not present at the start of the briefing attended by Jonas, Treasury DG Lungisa Fuzile, SAA acting CEO Musa Zwane and acting CFO Phumeza Nhantsi. Finance chair Yunus Carrim requested Treasury to “communicate the committee’s disappointment at her late arrival”.

Myeni eventually snuck in at 11.44 and later told the committee that she had been struck by “something that happened at night. Either I ate something that was not correct….”

Alf Lees, DA Shadow Deputy Minister of Finance, said that Myeni’s late arrival had enabled her to avoid all questions and pack in a lacklustre and vague few minutes before the end of the session.

In reply to an earlier question by the DA’s proper Shadow Minister of Finance, David Maynier, as to who had appointed her, Myeni said, “I do never appoint myself. The appointment of the board is a Cabinet decision”. (Guided of course by President Zuma).

Remember that the back story here is that it was Jonas’s former boss, Minister of Finance Nhlanhla Nene, who in September 2015 approved a swap transaction with Airbus in which the company would refund R1.3-billion to SAA for payments already made towards 10 undelivered A320 aircraft. Also, the company had agreed it would cancel the R5.2-billion pre-delivery payments for the A320s. Things were looking up.

But it was an agreement that Dudu Myeni refused to sign off. Instead, she approached Airbus on her own to renegotiate the financing of the deal. At the start of December 2015, Nene and Treasury refused to budge on the matter.

On 3 December Nene ordered Myeni to ratify the original swap transaction by 21 December. A week later, on 9 December, and after an SAA board meeting, Nhlanla Nene was fired by President Zuma as Minister of Finance.

Coinkidink?

Nah.

One of President Zuma’s other anointed, Des van Rooyen, spent a weekend puckering the hot seat while the markets crashed and burnt around him. On 13 December Pravin Gordhan accidentally found himself parachuted back into the Treasury where he has been slaying Hawks and dragons ever since.

Earlier this month Gordhan approved a R5-billion guarantee for SAA after the appointment of a new board with the retention of Myeni as an apparent controversial compromise to appease President Jacob Zuma, who appointed Myeni in the first place and has shielded her during her disastrous four-year tenure.

Gordhan warned that it would not be “business as usual” for SAA and that the days of Myeni acting like a person shielded by the president were over.

“I do not see the SAA chair as an all-powerful person who can do what he or she likes. Board decisions are made on a democratic basis,” Gordhan warned, adding that Treasury would keep a close eye on the board to ensure that matters were executed in accordance with the rules of corporate governance.

In other words, the days of free range grazing.

Carrim, no doubt aware of the scandalous back story to the sorry SAA saga, opened the briefing on Tuesday appealing to committee members to be “robust and vigorous” but not disrespectful.

Myeni’s late arrival saved her from hearing Maynier describe her as SAA’s “ground zero” and accuse her of behaving like a “warlord” which, according to the oracle Wikipedia, is “a leader able to exercise military, economic, and political control over a subnational territory within a sovereign state due to their ability to mobilise armed forces loyal to them”.

The committee heard that two issues that would also have a significant impact on SAA’s financial statements are the anti-competitive claims by Nationwide and Comair that could see SAA pay around R1.1-billion in penalties. The South Gauteng High Court ruled in August that SAA should pay Nationwide damages of R104.4-million.

Comair has claimed R898-million and has asked the court to add 15% annual interest which could see the amount balloon to R2-billion. The case arose after SAA was found to have entered into agreements with travel agents between 2001 and 2005 to divert business away from other airlines to SAA.

Jonas warned that if those tasked with governance matters at SOEs failed, “someone else will do it for us. It might be the IMF or someone else… and I can tell you, it won’t be nice.”

Carrim and Jonas agreed to a follow-up meeting to be held on 16 November. The DA said that it expects the committee to be furnished with “final and complete reports for both 2014/15 and 2015/16 years of which both are now overdue for tabling”.

The reports should include finalised annual reports for SAA and all subsidiaries, audited annual financial statements for SAA and all subsidiaries, the auditors statement, SAA’s Shareholder Compact, the evaluation of the board’s conduct and performance by Stator (Pty) Ltd and the “benchmarking” exercises referred to in the preliminary annual report. DM

Photo: President Jacob Zuma with Executive Chairperson of the Jacob Zuma Foundation Dudu Myeni on arrival at the student beneficiaries programme graduations at the International Convention Centre in Durban. 4 October 2014  (Photo: GCIS)

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