SAA Board Chairperson Dudu Myeni.

Business Lead South Africa

MPs say SAA must hold annual meeting and replace Myeni

PARLIAMENT, October 5 – Parliament’s standing committee on finance on Tuesday called for South African Airways to hold an annual general meeting next month and to find a replacement for controversial chairwoman Dudu Myeni.

“The SAA’s Annual General Meeting (AGM) should be held on 3 November as proposed by Treasury, and the current board chairperson’s term should end with the AGM. People with appropriate aviation experience and expertise should be appointed to the board, management strengthened and allegations of corruption should be tackled speedily,” committee chairman Yunus Carrim said.

This came after the committee obtained a legal opinion on National Treasury’s R3 billion bailout to the debt-ridden airline last week.

The Democratic Alliance’s deputy finance spokesman Alf Lees contended that Finance Minister Malusi Gigaba may have tried to side-step Parliament when he approved the 11th-hour bailout, designed to prevent the airline defaulting on one of its loans, because National Treasury had known at least a month earlier that SAA would not be able to make its repayment to Citibank.

Parliamentary legal advisor Frank Jenkins told the committee on Thursday that section 16 of the Public Finance Management Act (PFMA) stipulated that a special allocation could be made in “exceptional circumstances”.

“The concern in the letter from Mr Lees is that this was not unexpected. But section 16 does not speak of unexpected but of exceptional circumstances. So I think one must take that into account. It is a critical difference,” Jenkins said.

He added that he would not like to rule on the legality but cautioned MPs not to “jump up and down about it”, given that the minister had an obligation to report on the matter to Parliament next week and that his submission, and whether the lifeline complied with the PMFA, would be scrutinised by the Auditor-General.

Carrim gave the parliamentary legal unit until October 17 to decide on the legality of the measure and said it must consult with the committees on appropriations and public accounts as well as the Auditor-General’s office before doing so.

The bailout is the second this year to debt-ridden SAA to allow it to honour its loan repayments. At the end of June, Gigaba also authorised money from the National Revenue Fund be used to allow the airline to repay R2.2 billion to Standard Chartered Bank.

Gigaba reported to Mbete on that lifeline in a letter dated July 20, and said it was necessary as Standard Chartered Bank wanted the airline to repay R2.2 billion extended in short-term bridging facilities in full at the end of June.

Regarding government’s decision to resort to the National Revenue Fund again, National Treasury’s director of legal services, Empie van Schoor, said there were several factors at play that made the allocation a last-minute step.

“There were protracted negotiations on how we could recapitalise and that took a long time, and also protracted negotiations with lenders, with Citibank, as well as with domestic lenders and that was concluded only very late in September,” Van Schoor said.

Lees said he was not convinced.

“I do not think the drafters of the legislation would have thought that protracted negotiations were exceptional circumstances,” he said.

Carrim said he tended to agree with Lees but thought the fact that Parliament was in recess played a role in Gigaba’s reasoning. He said if SAA had not been helped, the outcome would have been a call on guarantees of R16,4 billion guarantee exposure, but National Treasury needed to explain the conditions for the lifeline.

Senior ANC MP Derek Hanekom stressed that had SAA been left to default the consequences for the country would have been “catastrophic”. But he added it was troubling that it happened without concerns about  the current board, and particularly Myeni, being addressed.

“I am more concerned about the prospect of further transfers to SAA in the absence of a board in which investors will have confidence. I am very worried about the extension of the November 3 date for the AGM and the extension of the contract of the chairwoman given the very low level of public and investor confidence in the board and the chairperson,” the former tourism minister, who was fired in a Cabinet reshuffle in March, said.

Legal advisors this week told the committee that Myeni’s term could legally stretch six months beyond August, when the board meeting should originally have taken place. The has again been delayed by SAA missing a deadline next week to file its financial results to Parliament.

– African News Agency (ANA)

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