Six of the seven non-executive directors of South African Airways (SAA)‚ singled out for removal by Public Enterprises Minister Lynne Brown at today’s special general meeting‚ have in the past made representations about poor governance at the airline and have raised the alarm over procurement processes for new aircraft.
Brown has called the meeting with only two items on the agenda: to consider presentations by the seven and to consider a resolution for their removal.
The move may bring to a close a fraught period for the board‚ in which two opposing groups – one aligned to chairman Dudu Myeni and one against – have been fighting over procurement and operational issues since 2012.
While Brown‚ who came into office in May‚ said from the start she intended to review the boards of all state-owned enterprises‚ her decision to consider the removal of seven of the nine non-executives‚ with little more than a week’s notice‚ rather than to reconstitute the board as a whole‚ has caused waves within SAA.
According to the notice issued for the meeting‚ those considered for removal are Andile Mabizela‚ Andile Khumalo‚ Carol Roskruge‚ Bongisizwe Mpondo‚ Raisibe Lepule‚ Nonhlanhla Kubeka and Rajesh Naithani.
The remaining two non-executive directors‚ Myeni and her close associate Yakhe Kwinana‚ the chairman of the audit committee‚ were not named in the notice. Myeni has a close personal relationship with President Jacob Zuma and is chairwoman of the Jacob Zuma Foundation.
Some of the directors facing removal resigned last Friday ahead of the special meeting.
In one director’s resignation letter‚ Brown is urged to “undertake a forensic investigation into the affairs‚ matters and dealings of the board and management over the past two years in order to get a full understanding and to obtain the truth around the cause of board instability and dysfunctionality at the airline”.
The new call for a forensic audit follows a letter written in January to Myeni and to then public enterprises minister Malusi Gigaba by six of the non-executive directors named in the notice. (Naithani did not take part).
The letter‚ which states “major dissatisfaction” with Myeni’s leadership‚ details an attempt made by the chairman to alter a board decision pertaining to the financing of new narrow-body aircraft used on domestic routes.
It also makes claims that financial losses occurred due to board decisions being late‚ caused directly by Myeni’s procrastination.
When the letter was made public‚ Myeni and SAA chief financial officer Wolf Meyer dismissed the claims as untrue.
What is irrefutable is the poisonous atmosphere. Myeni initiated several investigations into SAA executives – including CEO Monwabisi Kalawe – and rumours about bribery and corruption in aircraft procurement permeated the corridors.
Kalawe‚ who was strongly supported by the six non-executive directors in question‚ is now in an exceedingly vulnerable position. Asked to comment on the effect of board changes to SAA operations‚ Kalawe deferred all commentary to Brown.
Myeni said on Tuesday she was unable to comment. Brown’s spokesman‚ Colin Cruywagen‚ said the minister would not comment prior to the meeting.
Brown’s statement last Friday offered no explanation for the action against board members other than pointing towards SAA’s deteriorating finances.
This month SAA delayed the tabling of its financial statements for a third consecutive year.
Without a cash injection‚ the airline will not be a going concern‚ which has serious implications for its ability to operate‚ as some of the leases for its aircraft require certain financial metrics to be in place or SAA will be in contravention of lease terms.
But insiders said that to blame the board for the failure to begin the turnaround was dishonest as several of the key elements of this long-term turnaround strategy had been sabotaged by the absence of shareholder commitment.
Top of the list is to cancel loss-making routes‚ a decision which is to be made not by management but by the Department of Public Enterprises.
While routes to Buenos Aires and Kigali were stopped‚ the Beijing route‚ which loses R300-million a year‚ was retained for political reasons. — BDLive
SAA bosses await their fate
Brown has called the meeting with only two items on the agenda: to consider presentations by the seven and to consider a resolution for their removal.
The move may bring to a close a fraught period for the board‚ in which two opposing groups – one aligned to chairman Dudu Myeni and one against – have been fighting over procurement and operational issues since 2012.
While Brown‚ who came into office in May‚ said from the start she intended to review the boards of all state-owned enterprises‚ her decision to consider the removal of seven of the nine non-executives‚ with little more than a week’s notice‚ rather than to reconstitute the board as a whole‚ has caused waves within SAA.
According to the notice issued for the meeting‚ those considered for removal are Andile Mabizela‚ Andile Khumalo‚ Carol Roskruge‚ Bongisizwe Mpondo‚ Raisibe Lepule‚ Nonhlanhla Kubeka and Rajesh Naithani.
The remaining two non-executive directors‚ Myeni and her close associate Yakhe Kwinana‚ the chairman of the audit committee‚ were not named in the notice. Myeni has a close personal relationship with President Jacob Zuma and is chairwoman of the Jacob Zuma Foundation.
Some of the directors facing removal resigned last Friday ahead of the special meeting.
In one director’s resignation letter‚ Brown is urged to “undertake a forensic investigation into the affairs‚ matters and dealings of the board and management over the past two years in order to get a full understanding and to obtain the truth around the cause of board instability and dysfunctionality at the airline”.
The new call for a forensic audit follows a letter written in January to Myeni and to then public enterprises minister Malusi Gigaba by six of the non-executive directors named in the notice. (Naithani did not take part).
The letter‚ which states “major dissatisfaction” with Myeni’s leadership‚ details an attempt made by the chairman to alter a board decision pertaining to the financing of new narrow-body aircraft used on domestic routes.
It also makes claims that financial losses occurred due to board decisions being late‚ caused directly by Myeni’s procrastination.
When the letter was made public‚ Myeni and SAA chief financial officer Wolf Meyer dismissed the claims as untrue.
What is irrefutable is the poisonous atmosphere. Myeni initiated several investigations into SAA executives – including CEO Monwabisi Kalawe – and rumours about bribery and corruption in aircraft procurement permeated the corridors.
Kalawe‚ who was strongly supported by the six non-executive directors in question‚ is now in an exceedingly vulnerable position. Asked to comment on the effect of board changes to SAA operations‚ Kalawe deferred all commentary to Brown.
Myeni said on Tuesday she was unable to comment. Brown’s spokesman‚ Colin Cruywagen‚ said the minister would not comment prior to the meeting.
Brown’s statement last Friday offered no explanation for the action against board members other than pointing towards SAA’s deteriorating finances.
This month SAA delayed the tabling of its financial statements for a third consecutive year.
Without a cash injection‚ the airline will not be a going concern‚ which has serious implications for its ability to operate‚ as some of the leases for its aircraft require certain financial metrics to be in place or SAA will be in contravention of lease terms.
But insiders said that to blame the board for the failure to begin the turnaround was dishonest as several of the key elements of this long-term turnaround strategy had been sabotaged by the absence of shareholder commitment.
Top of the list is to cancel loss-making routes‚ a decision which is to be made not by management but by the Department of Public Enterprises.
While routes to Buenos Aires and Kigali were stopped‚ the Beijing route‚ which loses R300-million a year‚ was retained for political reasons. — BDLive
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