(FILE photo) Finance Minister Malusi Gigaba. PHOTO: Supplied/National Treasury Twitter

In The News South Africa

Gigaba says he will take legal advice on extension of SAA chair’s term

PARLIAMENT, September 13 – Finance Minister Malusi Gigaba said on Wednesday he would seek further legal opinion on whether his decision to extend the term of South African Airways chairwoman Dudu Myeni after MPs raised concern that he did not have the power to do so without Cabinet approval.
Gigaba was grilled about it by Parliament’s standing committee on finance after parliamentary legal adviser Frank Jenkins disagreed with the view of Deputy Finance Minister Sibusiso Buthelezi that SAA’s memorandum of incorporation allowed the minister to take a unilateral decision in this regard.
Myeni’s term was due to end on August 31, but Buthelezi confirmed that the minister extended it until the loss-making carrier’s annual general meeting in November.
MPs asked whether Cabinet had approved Gigaba’s decision and said had it not, the extension would be irregular.
Jenkins said the deputy minister’s assertion that a suspensive clause in the memorandum of understanding empowered the minister to extend her contract was false, as this clause only kicked in if all non-executive members of  the board had left at once.
“In the light of that … you cannot just single out the chairperson,” he said, and was then asked by MPs to draft a formal opinion.
Buthelezi said National Treasury had not wished to act illegally but added that other lawyers may reach a different conclusion to Jenkins, and the ministry’s did in this instance.
Appearing before the committee later in the day, Gigaba told MPs: “If there is desire to seek a different response to the ones provided by the deputy minister… I stand by the responses.”

He reiterated that he had consulted lawyers before he extended Myeni’s term, and said he would again consult with them to get their view on Jenkins’s opinion.
 
“We think it is a matter of legal opinion, we will seek our own legal counsel on the matter of the chair. We will revert back to check the opinion that we had received against the opinion of the legal advisor of the committee.”

Gigaba was challenged by former Cabinet colleague Derek Hanekom who said the clause was so simple, there was no need to consult lawyers, and asked the finance minister to read it again himself.

“We would appreciate the minister to look very carefully at that. A good reading will lead one very quickly to whether the appointment was a legal one or not.”

Gigaba, however, insisted that it was a matter for lawyers.

He left the committee before Jenkins returned but urged MPs not to consider the case of the chairwoman as an isolated one, but part of wider attempts to bring stability to SAA.”

“I would request that the committee does not treat this matter individually. There is a comprehensive  approach we are taking to SAA
What I have asked  the department to do is a comprehensive evaluation of the current board and a skills audit of the board.”
Earlier, fellow ANC MP Thandi Tobias rejected the ministry’s stated motivation for the extension — to ensure continuity up to the AGM — and said it appeared that the committee was not being told the true reason. 
“For now, as it stands, it is not the AGM that we can use as an excuse,” she said, before proposing that Jenkins be asked to draw up a formal opinion to give to the treasury.
Democratic Alliance MP Alf Lees noted that SAA’s lenders were loathe to extend the airline’s loans further, for as long as Myeni served as chairwoman.
“Lenders are reticent about rollovers when Ms Myeni remains. That should influence our recommendation about whether Ms Myeni stays on,” he said.
Myeni has served on the board of the airline for eight years. She was re-appointed by former finance minister Pravin Gordhan, with the proviso that it would be for a single term. It was widely believed that he acted under pressure from President Jacob Zuma.
Myeni has persistently blamed SAA’s financial woes on decisions taken decades ago under apartheid. The airline is reliant on loans guaranteed by the government to remain operational, and Lees pointed out than a portion of its debt was due to mature in September.
Buthelezi said National Treasury was meeting regularly with lenders to ensure that the loans not be called in, and an understanding had been reached with the majority.
Gigaba and Buthelezi on Wednesday announced that they would table a special appropriations bill at the end of the month to give R10 billion to SAA.

Members of Parliament’s standing committee on finance on Wednesday raised serious concern about the legality and the wisdom of extending Dudu Myeni’s term as chairwoman of South African Airways.

Director general of finance Dondo Mogajane confirmed that Finance Minister Malusi Gigaba asked Myeni to remain at the helm until the struggling carrier’s annual general meeting in November.

This sparked questions as to whether Cabinet approved the extension, and Deputy Finance Minister Sibusisu Buthelezi conceded that Cabinet was not consulted. He said, however, that it was the ministry’s understanding that SAA’s memorandum of incorporation empowered the minister to take a unilateral decision to extend the term of the chairperson.

Parliamentary law advisor Frank Jenkins disagreed. He said the MOI only allowed the minister to act in this manner when the terms of office of all non-executive members of the board expired at once.

“In the light of that … you cannot just single out the chairperson.”

Buthelezi said National Treasury had not wished to act illegally but added that other lawyers may reach a different conclusion to Jenkins, and the ministry’s did in this instance.

Dissident ANC MP Derek Hanekom reminded Buthelezi that it was standard practice to take decisions such as these to Cabinet for approval.

Fellow ANC MP Thandi Tobias rejected the ministry’s stated motivation for the extension — to ensure continuity up to the AGM — and said it appeared that the committee was not being told the true reason.

“For now, as it stands, it is not the AGM that we can use as an excuse,” she said, before proposing that Jenkins be asked to draw up a formal opinion to give to the treasury.

Democratic Alliance MP Alf Lees noted that SAA’s lenders were loathe to extend the airline’s loans further, for as long as Myeni served as chairwoman.

“Lenders are reticent about rollovers when Ms Myeni remains. That should influence our recommendation about whether Ms Myeni stays on,” he said.

Economic Freedom Fighters (EFF) chief whip Floyd Shivambu agreed: “I think it is one of the most important issues.”

It was Shivambu who had raised questions about the legality of Myeni’s further tenure. He said there no possibility Cabinet could step in to confirm Gigaba’s decision as she had already served a maximum of three terms.

Myeni was re-appointed by former finance minister Pravin Gordhan, with the proviso that it would be for a single term. It was widely believed that he acted under pressure from President Jacob Zuma.

Myeni has persistently blamed SAA’s financial woes on decisions taken decades ago under apartheid. The airline is reliant on loans guaranteed by the government to remain operational, and Lees pointed out than a portion of its debt was due to mature in September.

Buthelezi confirmed that National Treasury was meeting regularly with lenders to ensure that the loans not be called in.

Earlier, The contract of South African Airways chairwoman Dudu Myeni has been extended until the company’s annual general meeting, set down for early November, director general of finance Dondo Mogajane confirmed on Wednesday.
Mogajane told Parliament’s standing committee on finance Myeni’s term was due to end at the end of August but “it was then extended to the AGM, we hope the AGM will be held on November 4”.
He said Finance Minister Malusi Gigaba wrote to Myeni and asked her to serve until the AGM, prompting Economic Freedom Fighters (EFF) chief whip Floyd Shivambu to ask whether the minister had the power to make the decision alone or whether Cabinet approval was needed.
“What was the letter that was extended and what is the legal standing of the letter,” he asked.
MPs then asked to be given copies of the minister’s letter to Myeni who was not at the briefing.
The airline was briefing the committee on its latest quarterly report.
SAA currently relies on government guarantees of some R20 billion to stay in operation and international ratings agencies have cited it as a threat to the country’s economy. Gigaba is expected to make an announcement on recapitalising the airline in October.

ANA

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