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Again Zuma, Gordhan clash over South African Airways


Critics say President’s close relationship with chair is an issue

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By Nsikan Ikpe, with agency reports


South African Finance Minister, Pravin Gordhan’s call that the troubled South African Airways needs a whole new board is being seen as the precursor of another serious and bloody political fight between President Jacob Zuma and his estranged economy chief.

Gordhan who has been at loggerheads with SAA’s chair, and Zuma protege, Dudu Myeni since his return to the office is, like many other South africans, well aware of Myeni’s close relationship with President Jacob Zuma that some say makes this type of call a lot more difficult to implement.

In the eye of the law however, Gordhan has the authority to fire Myeni, and given the recent Quartile and BnP allegations, taking that decision should ordinarily be a simple one. This is more so, when many South Africans have since been expressing their displeasure over the state of affairs at the national carrier where a whooping R14 billion of taxpayer funds that have already been barrelled down the abyss.

Worried over this, Gordhan, the come-back Finance Chief who returned to office in the wake of Zuma’s disastrous handling of the economy last year has said that going forward South African Airways (SAA) requires a whole new board if it is to have a fighting chance of survival.

Speaking at the EY and Johannesburg Chamber of Commerce and Industry (JCCI) business breakfast in Sandton on Tuesday, Gordhan said the airline needs an experienced management team.

In response to a question posed by investigator Paul O’Sullivan about quelling corruption at SAA, Gordhan said the new board and management team could include existing members and “new blood”.

“We will continue to find answers to the challenges at the moment,” he said.

“We must do political homework to get credible people on board.”

People with the right skills balance can take the airline’s development upward, he said.

His statement comes as the stalemate between Gordhan and SAA board chairperson Dudu Myeni is rapidly driving SAA to total collapse, according to the opposition Democratic Alliance.

This has resulted in Gordhan requesting extensions of the deadline for tabling of SAA’s annual report for 2014/15 on 15 February, 15 March, 29 April and yet again on 7 July – this time to 15 September 2016.

SAA has received a number of government bailouts worth at least R14.4bn as part of its turnaround strategy, but Gordhan warned in January the carrier cannot become a liability on the fiscus.

O’Sullivan is under investigation by the Hawks following his probe into SAA. He told BizNews in July how he uncovered the recent BnP Capital saga, which was formally exposed by Outa recently.

“I’ve got no doubt whatsoever that the appointment of BnP Capital is nefarious, it’s unlawful and it’s criminal and everybody that signed documents permitting it to take place should be held criminally liable,” he told BizNews.

SAA on Thursday announced it has decided to terminate the services of BnP Capital as both transaction adviser and its appointment to source funds on behalf of the airline.

Myeni has been at the centre of various allegations of poor governance, from the Airbus swap deal that caught former Finance Minister Nhlanhla Nene in a tangle to the recent BnP Capital saga, where SAA has been forced to cut ties over a R256m deal due to legal proceedings by Outa.

Gordhan told BDLive he had not had an opportunity to get into the “full details of the R256m and its cancellation and alleged cancellation fee” but he would be looking into it.

If any non-compliance with the Public Finance Management Act was found to have occurred, steps would be taken, the minister said.

Myeni’s close friendship to President Jacob Zuma could make any decision Gordhan wants to make a little more difficult.

The Sunday Times reported in February that Gordhan was determined to remove Myeni from the airline’s board.

Technically, the minister of finance has the power to appoint and remove board members since executive authority over SAA was transferred to the treasury in December 2014.

These powers are outlined in the SAA Act, Public Finance Management Act (PFMA) and Companies Act.

The Sunday Times reported that Gordhan allegedly informed Zuma about axing Myeni.

According to a source, Zuma ignored Gordhan, forcing him to repeat his intentions. “This time the president simply responded that he had heard him. He never said yes or no, or asked why,” reported the Sunday newspaper.

Since then, Gordhan has been through a torrid period with the Zuma-friendly Hawks, who sent him questions regarding an intelligence unit at Sars that was started when he was commissioner.

Eventually, after months of political unease ahead of the ratings downgrade countdown, the Hawks said in May it was not planning on charging Gordhan. In the same month, Zuma visited the SAA head office, where he promised the state-owned company would not be privatised.

Since then, the heat has been off the finance minister, who managed to persuade the ratings agencies in June not to downgrade the country to junk status. In addition, it would appear the heat has been off Myeni too.

But then there are also larger political considerations given the ANC’s poor public opinion showing ahead of crucial local government elections in August.

Fresh pressure is mounting on South African President, Jacob Zuma to sack his protégé and chairman of the long-troubled South African Airways, Duduzile Myeni.

But there are deeper implications of the state of affairs on South African economy.

According to the veteran business analyst, Alec Hogg, ‘it would really help South Africa if people in high places understood how much damage is wrought by a clueless leader. SAA is the obvious example. After four and a half years and one too many run-ins with chairman Duduzile Myeni, SAA’s former Chief Financial Officer Wolf Meyer threw in the towel last November.

South Africa’s loss is quite evident: Meyer was soon headhunted, and is now CFO at Saudi Arabian Airlines with more than double the responsibility of his old job. A similar “fate” may well await SAA whistleblowing Treasurer Cynthia Stimpel, another of the chairman’s targets.’

And he spreads it out even thicker:

‘Developing countries must retain all the talent they can. Especially those which have the disadvantage of a weak currency in a world where skills are highly mobile and in short supply. SAA deserves so much better than Myeni. South Africa too.’

But would Zuma listen?


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