Business

Former SAA chief executive to sue ex-chair for defamation

Lynley Donnelly

Former South African Airways CEO Khaya Ngqula's lawyer has told the airline's former chairperson Cheryl Carolus he intends to sue her for R40-million.

Former SAA CEO Khaya Ngqula has told former chairperson Cheryl Carolus he plans on suing her for defamation. (Madelene Cronje, M&G)

Lawyer Themba Langa told Business Day on Tuesday that "we are going to sue her" for defamation.

This was reportedly because Carolus – who quit the SAA board last week – told the Business Times on September 30 that the SAA board had made progress in tackling labour, competition, fraud and corruption problems which the airline had "inherited from previous management".

In the letter to Carolus, Langa said, on behalf of Ngqula: "We are of the view that reference to 'previous management' was intended by you to imply management that operated under the leadership of our client.

"It is this false and unreasonable imputation that has caused us to write this correspondence to you."

Langa said Carolus had until Tuesday to respond to the letter or pay Ngqula R40-million.

"She must withdraw and apologise or she must provide proof or we will sue her."

The SAA board is suing Ngqula, who left the airline in 2009, to recover about R252-million from him in four separate claims following a forensic investigation by auditors KPMG.

Mass resignations
Crisis-wracked SAA has seen the resignation of its newest CEO Siza Mzimela and at least two other members of its executive management team.

Theunis Potgieter, general manager for commercial and Sandra Coetzee, general manager for legal risk and compliance at the airline have also quit alongside Mzimela.

This comes in the wake of the resignations two weeks ago of a large portion of the company's former board, and a report by Business Day that the airline is expected to post losses of over R1.25-billion in its annual results next week.

New chairperson Vuyisile Kona accepted Mzimela's letter of resignation on Monday morning. Her departure would, however, not be for another two weeks, the company said in a statement, in order "to allow for a seamless hand over process and business continuity".

The leadership exodus also follows last week's decision by the state to grant the company a R5-billion guarantee, a move roundly criticised by other players in the industry as well as opposition politicians.

Until a replacement for Mzimela is found, all operational decisions relating to the day to day running of SAA would reside with Kona.

"The board's immediate focus will be on the completion of a new business approach which, amongst other elements, is intended to ensure that the airline is compliant with the conditions that attach to the guarantee issued to SAA by government," SAA said.

Acting executives
Spokesperson for the airline Tlali Tlali said the company had become aware of Potgieter and Coetzee's resignations on Monday.

Acting executives have been appointed in their positions. They are Jerome Simelane as general manager for commercial and Fikile Thabhethe as acting general manager for legal risk and compliance, according to Tlali.

The motivation for Mzimela's resignation has not been made public, but the Mail & Guardian understands Mzimela cited concerns over a lack of shareholder support among her reasons for leaving.

In a letter she wrote to staff regarding her exit, reported by Business Day, Mzimela said while she was sad she was also relieved "because steering this mega national asset is, to state the obvious, a very demanding and daunting task even under the best of times".

"But as many of you know, there has not always been a uniform understanding and appreciation of this mandate from stakeholders, which bred a myriad of challenges – as if the operating environment was not daunting enough without this unnecessary discourse and misinformation," BDLive reported.

Doubts regarding shareholder support echoes the unhappiness expressed by many of the former board members when they recently quit.

Well-respected business figures on the erstwhile board, including David Lewis, Russell Loubser, Bonang Mohale, as well as Carolus, left amid a widely publicised breakdown in the relationship between the ministry and the board. 

Unhappiness
The members were particularly unhappy over the delay in securing a government guarantee to finalise the company's financial statements, and allegations that it had failed to provide a detailed strategic plan for the airline.

The bureaucracy and politicised decision making that came with government as the sole shareholder, in a highly competitive sector that required rapid responses to growing challenges, was also a difficulty for the former board. 

Tlali Tlali could not comment on the reasons for the resignation of either Potgieter or Coetzee and referred all questions on Mzimela's resignation to the department of public enterprises. 

Spokersperson for public enterprises minister Malusi Gigaba, Mayihlome Tshwete refused to comment on the reasons for her departure, saying that as she was still CEO for the time being, it would "not be fair" to discuss these. Mzimela's exit has only added to the uncertainty, given the reported looming deficit on the company's books, and a very tough environment for the aviation industry worldwide. 

The airline assured its customers that the "latest developments will not affect the airline business as all of its operations remain intact".

"The company has different layers of management with strategic and operational competencies and for that reason the airline has no doubt that as a collective, those executive managers will continue to give SAA the necessary guidance and provide required leadership," it said. 

'Thoughtful and measured intervention'
Natasha Michael, Democratic Alliance spokesperson on public enterprises, said in a statement that the airline was at risk of being grounded by the end of the year if "thoughtful and measured intervention" did not take place immediately. 

"The purported R1.25-billion loss in the 2012 financial year is likely to have been the catalyst behind [Mzimela's] exit," said Michael.

"The former CEO has presided over an airline characterised by spiralling debts, operational inefficiencies and an entrenched reliance on bailouts from the national treasury. These factors have finally brought the wasteful airline to its knees. The airline is now well and truly in a crisis."

Tshwete however denied emphatically that Mzimela had been fired or pressed to leave ahead of the results announcement. 

Mzimela took over in 2010, after Ngqula was fired. – Additional reporting by Sapa

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