DAYS OF ZONDO
Gigaba remained silent as SAA was pressured to sign nonsensical Gupta-linked Mumbai deal
Through his silence, former public enterprises minister Malusi Gigaba tacitly endorsed those pressuring SAA to scrap its Joburg-to-Mumbai route and hand it over to the Gupta-linked Jet Airways.
Former public enterprises minister Malusi Gigaba and his staff were focused on South African Airways (SAA) scrapping its Mumbai route while the national carrier had far more pressing challenges, such as securing a government guarantee, the State Capture Commission heard on Wednesday.
Former SAA CEO Sizakele Mzimela told the commission how Gigaba was silent while an adviser berated the airline’s leaders for continuing to operate the Johannesburg-Mumbai route rather than withdraw and enter into an agreement with India’s Jet Airways, which has been linked to the Gupta family.
Mzimela, who led the airline between April 2010 and October 2012, said board members approached her when she became CEO and expressed concern about a recommendation from her predecessor Chris Smyth and general manager of mergers and acquisitions Jan Blake to cancel the Mumbai route.
“Although there was a proposal put in front of them indicating the route was not profitable, they questioned why that particular route was the one that was given priority because at that time SAA had challenges on a number of international routes,” Mzimela told commission chairperson Deputy Chief Justice Raymond Zondo.
SAA was losing more money on other routes and the airline saw India as a strategic growth point for travellers coming from South America and West Africa, as well as India.
Mzimela tasked her finance, risk and investment committee to review the recommendation and they advised against it, particularly the decision to scrap the route and partner exclusively with Jet Airways.
“If you look at all of that in totality, it actually didn’t make sense at all to be putting a recommendation to terminate the route,” said Mzimela.
No other carriers had been considered as partners and Jet Airways had not paid an outstanding debt to SAA for leasing an aircraft. The Gupta family used Jet Airways in 2013 to fly guests into South Africa for a wedding, landing at Waterkloof Air Force Base, a national key point.
Mzimela met Gigaba in January 2011 to discuss the issue in a meeting that she thought was internal, but was attended by Jet Airways chairman Naresh Goyal, who kept the minister, former deputy minister Ben Martins and SAA leaders waiting for two hours before he arrived.
Gigaba was silent and didn’t support SAA staff as Goyal used “a very instructive tone” and quizzed Mzimela why SAA had not stopped operating on the Mumbai route despite a previous commitment to withdraw.
Mzimela said: “I was trying to understand then who at SAA had given a commitment that SAA would withdraw from the route. (Goyal) mentioned the name of Mr Chris Smyth.”
Smyth denied he had made the commitment when Mzimela quizzed him, she said.
Former ANC MP Vytjie Mentor testified at the commission that one of the Gupta brothers offered her the post of public enterprises minister in October 2010 on condition SAA cancel its Mumbai route.
Weeks later, former president Jacob Zuma reshuffled the Cabinet and replaced then public enterprises minister Barbara Hogan with Gigaba.
Mzimela was called to meet Gigaba and his staff again in April 2011. She didn’t know what was on the agenda, but thought he may want to discuss SAA’s attempts to get a government guarantee to give the airline the security to keep operating. But they only discussed the Jet Airways deal.
“We had far more urgent issues,” said Mzimela.
She said Gigaba’s adviser Siyabonga Mahlangu was “disrespectful” as he berated the SAA executives for failing to withdraw from the Mumbai route and have SAA passengers fly on Jet Airways through a code-sharing agreement, which Mahlangu supposedly said was an issue of national importance.
“Essentially, he was basically alluding to the fact that we should just basically be implementing an instruction and not trying to present our own viewpoint on what decision should be taken on Jet Airways,” Mzimela told the commission.
Days later, Mahlangu asked to meet Mzimela and apologised. Mzimela said he explained he was merely doing his job and was acting on instruction. He didn’t say on whose instruction, but she assumed it was Gigaba’s as he was the minister’s adviser and reported to the minister.
“It continued to puzzle me on the amount of time the department was spending on trying to find a workable solution between SAA and Jet Airways,” she continued.
The SAA board had already rejected the recommendation, but Gigaba allowed his adviser to attack the executives and only suggested the national carrier and Jet Airways “try and find each other”.
Mzimela and her SAA colleagues weren’t against a code-sharing agreement, a common agreement where airlines partner in various forms to operate on different routes, but said the Jet Airways proposal made no sense.
“Jet Airways comes with the proposal to say, ‘SAA, you terminate your operation. You terminate your physical operation on Johannesburg to Mumbai and you code-share on us. Put your passengers on us’,” said Mzimela.
Jet Airways has since stopped operating and gone into liquidation.
She said there had been a breakdown of good governance when Gigaba became a minister. Gigaba, who elected not to go to Parliament after the recent elections, has faced criticism for granting early citizenship to members of the Gupta family.
When Hogan was minister, said Mzimela, there were clear levels of communication and transparency between SAA and the Department of Public Enterprises. That changed when Gigaba was appointed and his staff and advisers, some of whom were unknown to SAA, started demanding information.
“Not everybody could just come into the organisation and request information and for me, that was the difference between one minister and the other minister,” she said.
“Because under minister Gigaba what we then suddenly found is we had lots of people from the ministry who in the past had never had any, let me not say right, but had never come into the organisation.
She continued: “So things were beginning to fall through the cracks in terms of the management of information, the management of requests that were coming through from members of the ministry who in the past really had no relationship with the organisation, which was for me a breakdown in good governance.”
Feeling she no longer had support, Mzimela resigned in October 2012 after most of the board resigned in September after complaints about the motives of the Department of Public Enterprises.
The commission continues on Thursday. BNP Capital director Daniel Mahlangu and former SAA general manager of human capital Mathulwane Emily Mpshe are due to testify. DM