AGE OF ACCOUNTABILITY
Delinquent director Dudu Myeni’s woes deepen after R6m debt-dodging comes back to haunt her
Outa pushes for former SAA chairperson Dudu Myeni’s sequestration as the nonprofit civil action organisation says Myeni's sporadic cash payments towards cost orders suggest that she may be concealing cash and income.
- Myeni reveals a last-minute plan to tap into SAA’s director liability cover.
- Friday, 13 October, set as date for sale in execution of Myeni’s furniture as the Department of Justice finally acts to collect on a five-year-old writ.
Dudu Myeni, the former South African Airways (SAA) chairperson and a close associate of former president Jacob Zuma, may soon be forced to part with some of her assets. Myeni, who was declared a delinquent director for life by the Gauteng Division of the High Court in Pretoria, now also faces sequestration.
The Organisation Undoing Tax Abuse (Outa) has gone to court to have her sequestrated over non-payment of just more than R6-million in cost orders.
The orders flow from Myeni’s failed legal challenges to the delinquency case that Outa and the SAA Pilots’ Association brought against her and won after a drawn-out court battle.
If successful, the sequestration will likely aid the Department of Justice in its own dismal five-year mission to get R201,000 out of Myeni for a different cost order (see sidebar below). This is because sequestration allows for a more effective hunt and distribution of assets among creditors.
In its application for provisional sequestration, filed at the KwaZulu-Natal Division of the High Court in Pietermaritzburg in late June, Outa says it believes Myeni is insolvent and it is therefore in the best interest of all creditors that independent eyes take control of her financial affairs.
The Sheriff of the Court has executed three writs at Myeni’s Richards Bay home as a first step towards recovery in Outa’s case. However, those yielded inventories of goods attached are a fraction of the value of the overall debt Myeni owes.
She owns a R3-million home and four vehicles are registered in her name, all of which would go a long way towards settling with creditors in the event she is sequestrated.
An affidavit submitted by Stefanie Fick, the executive director of Outa’s accountability unit, states that Myeni has made no meaningful offer to settle the R6-million debt and sequestration will allow for her estate to be wound up in an orderly manner.
Myeni, court papers show, has made payments in unconvincing dribs and drabs that at times were as little as R100.
Those payments add up to just under R100,000 to date and Fick suggests that this, among other factors, provides reasonable grounds to conclude that Myeni may be concealing assets or income as a result.
A proper investigation of Myeni’s affairs may discover or recover assets for the benefit of creditors as well as cash reserves, Fick says.
Myeni, once one of the most powerful executives in the country because of her close relationship with Zuma, is out on bail of R10,000 after her recent arrest in connection with fraud and corruption charges linked to the Bosasa subsidiary Sondolo IT.
Read more in Daily Maverick: Dudu Myeni and ex-Sondolo IT director Trevor Mathenjwa get bail on Bosasa corruption charges
Outa, in its sequestration application, says, although the State Capture Commission accepted that Myeni had not personally benefitted from R300,000 in monthly payments that Bosasa made to the Jacob G Zuma Foundation during her tenure as chairperson, it is likely that she was compensated for her role in delivering the cash to the foundation or its ultimate beneficiary.
It is also possible that she continues to receive financial benefits from it.
Furthermore, in July last year, Myeni pleaded guilty to a charge of defeating the ends of justice in the Equality Court after repeatedly naming a protected witness during her testimony at the State Capture Commission. She was ordered to pay a fine of R120,000, half of which was suspended.
Read more in Daily Maverick: Dudu Myeni slapped with R120,000 fine or two years in jail after revealing identity of protected Zondo witness
Fick says it was widely reported at the time that Myeni’s legal team, in mitigation of sentence, submitted that she had been without a source of income since her time at SAA ended in 2017, and that she had been declared a delinquent director and was therefore unable to get involved in business and her bank accounts were closed.
Why the punitive cost order?
Outa, in collaboration with the SAA Pilots’ Association, brought the delinquency application owing to Myeni’s conduct as non-executive director and chair of the embattled airline between 2012 and 2017.
In May 2020, the Gauteng Division of the High Court in Pretoria declared Myeni a delinquent director for life, subject to certain provisions of the Companies Act. The court directed her to pay costs on an attorney-client scale, plus the cost of three counsel.
Having found that Myeni’s dealings at the state-owned airline were “reprehensible”, and that she had been dishonest with the court and disrespectful of its processes, the punitive cost order was a mark of the court’s disapproval.
Myeni’s conduct during the case, the court found, had been “calculated to cause maximum delay and disruption”. It ultimately prolonged the trial substantially and thereby contributed to the legal costs.
Although she failed to attend the trial despite repeated warnings from the court that this may compromise her defence, she unsuccessfully tried to appeal, first at the Gauteng Division of the High Court in Pretoria and later at the Supreme Court of Appeal (SCA).
Litigation was finally concluded in May 2021, about four years after the delinquency case was first filed.
Bills of costs approved by the taxing masters of the two courts translated into three different writs of execution totalling R6.2-million.
Myeni, although given notice of the taxation, did nothing to oppose the bills.
Outa then instructed its lawyers to seek writs of execution. The Sheriff of the Court tried to serve two SCA writs on Myeni in September 2021, but found her home locked on two separate occasions.
Days later, Myeni began making some payments into the account of Outa’s lawyers.
Then, in July last year, the big bill of costs relating to the delinquency case was taxed at R6.1-million.
Two months later, Outa again instructed its lawyers to collect from Myeni, and a letter of demand was issued, giving her 14 days within which to pay up. She did not respond and Outa obtained another writ.
In November that year, the Sheriff of the Court tried to serve the three writs on Myeni, but an employee said she had not been home for two weeks.
At Outa’s instruction, a locksmith was called to open the premises to allow the sheriff to attach moveable property.
Days later, Myeni sent word to Outa’s lawyer that she would pay some “fees today”, but also to note that “the 6-million in question is being reviewed. An application is being sent to court. Thanks.”
Myeni was told she had no right to review the taxation at that late stage, but she was given 10 days within which to act on her threat to file a review application.
To date, no such application has made it to court. Myeni made further payments towards the debt.
Well, maybe SAA can help…
The sequestration application briefly came before court on 2 October. Myeni produced a hurriedly compiled affidavit setting out her intention to secure money via SAA’s director liability insurance.
The high court, she says, had declared her a delinquent director in terms of section 162 of the Companies Act, and she believes therefore that she is still entitled to legal cover from SAA’s insurer. Outa will probably deal with this claim in its replying papers.
Her previous lawyers, Myeni says, were instructed to secure cover from SAA, but they withdrew their services in mid-2020 and nothing came of it.
“I will again be instructing my attorneys to negotiate the indemnity with SAA on my behalf and, if that fails, to institute legal proceedings to give effect to indemnification.”
The case was postponed until 19 October and the court handed down an order that Myeni put up any further supplementary affidavits by then, and again ordered her to pay the wasted costs of the day. DM
Sheriff to conduct sale in execution at Myeni’s Richards Bay home
The Department of Justice appears to have been the most incredibly patient creditor – at least in its handling of a debt owed by former South African Airways chairperson Dudu Myeni.
On Friday, 13 October, the Sheriff of Lower Umfolozi is scheduled to conduct a sale in execution at Myeni’s home in Richards Bay.
Her fridge, freezer, microwave, Jeep Cherokee and maroon leather lounge suite will be among a handful of personal belongings, valued at no more than R81,000, to be sold.
Whatever cash is raised on the day will go towards settling Myeni’s R201,000 bill with the Department of Justice.
It has taken an astonishing five years to get here. The debt, never disputed by Myeni, could have been settled in instalments of roughly R3,300 a month over the same period.
The debt stems from Myeni’s failed legal challenge against a compliance notice that the Companies and Intellectual Property Commission (CIPC) issued to her in 2017.
Essentially, she was sanctioned for failing to produce minutes of an SAA board meeting to back up her claims to former Public Enterprises Minister Malusi Gigaba that the board had resolved to split the purchase of aircraft into more than one deal.
Myeni’s attempt to split the deal raised questions and triggered a complaint to the CIPC. She was sanctioned as a result.
Myeni tried to appeal against that compliance notice but lost the case, and the CIPC was awarded a cost order. The State Attorney, on behalf of the government, was tasked with collecting.
A few months after the Department of Justice obtained the writ in 2018, the Sheriff was instructed to attach Myeni’s goods as part of the recovery efforts.
Then the file gathered dust, until Daily Maverick inquired about the collection of the money due to state coffers.
It turned out that the attached goods had remained at Myeni’s home because the Sheriff had received no further instructions on whether to remove the goods or to sell them. (Sheriffs are often nervous about removing goods without indemnity from a client in case of loss or damage.)
At the time, the Department of Justice, on behalf of the State Attorney, said storage was a problem and there was no consensus between the CIPC, the client department and the State Attorney on who should pay for storage.
Why, then, was there no instruction to sell the goods on site?
At the time, the department told Daily Maverick there were still attempts to negotiate payment with Myeni’s lawyers.
Daily Maverick did another check a few months later and, again, there had been no progress. This time, there was also no response to questions.
Then, in August this year, we asked whether the accounting officer had authorised a waiver of Myeni’s debt and whether the department knew that a failure to collect money due to the government is an offence under the Public Finance Management Act. Again, we received no answers from the Department of Justice.
Remarkably, 48 hours after Daily Maverick’s latest inquiry, the Sheriff finally received an instruction to sell Myeni’s goods on site at her Richards Bay home.
Daily Maverick asked the department what had suddenly changed. Again, we received no response.
In the grand scheme of scandal and corruption in South Africa, R201,000 is not all that much. But it is enough to pay the R500 monthly government grant to 33 children for a full year. DM
This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.