Myeni fought SAA deal to bitter end
The SAA board appears to have lost its battle with the treasury to have a deal with the aircraft manufacturer Airbus restructured. But whether its chairperson, Dudu Myeni, is on board is yet to be seen.
A statement by the treasury on Monday evening said Finance Minister Pravin Gordhan directed the board to conclude the swap transaction with Airbus in line with the approval granted in July this year. SAA has told the treasury that its board has approved the execution of the transaction, as directed, and that it will be concluded in the next few days.
“Airbus is comfortable with last night’s treasury announcement and assurance by the finance minister that the swap will go ahead as directed,” the Airbus spokesperson, Linden Birns, said on Tuesday. “SAA has subsequently been in contact with Airbus and signalled its intention to comply with the finance minister’s directive.”
Airbus told the treasury that it was amenable to the implementation of the transaction but required all legal documentation to be in place by December 28.
But questions remain over Myeni’s willingness to co-operate. Sources close to the negotiations say Myeni, who is seen to have spearheaded an attempt to restructure the deal since November, was still resisting the conclusion of the treasury-approved deal until Monday evening.
If this deadline for the deal is not met then $40-million in additional predelivery payments would become due.
For the deal to be concluded, it requires both the finance minister and the SAA chairperson to sign it off, and it must be accompanied by a legal opinion from a recognised law firm in South Africa.
The treasury would not say whether Myeni has signed all the relevant documents, other than referring to the statement it issued. “All the information we have is in there,” said the chief director of communications of the treasury, Phumza Macanda.
The SAA spokesperson, Tlali Tlali, said he did not deem it necessary for the airline to entertain “accusations” that were baseless and from an unknown source.
He said the content of a forthcoming statement reflects SAA’s collective position. No statement had been released at the time of going to print.
The minister of finance has the power to appoint and remove board members.
Former finance minister Nhlanhla Nene was believed to have been on the verge of announcing a new SAA board before he was removed from his post on December 9.
According to Macanda, the executive authority over the airline was transferred to the treasury in December last year. “These powers are outlined in legislation, in particular the SAA Act, PFMA [Public Finance Management Act] and Companies Act.”
Macanda said, although Gordhan is empowered to appoint the board, all appointments must first be endorsed by the Cabinet. Its next meeting is expected to take place in January next year.
In response to the treasury’s statement, the Democratic Alliance welcomed Gordhan’s decision, but called for the removal of Myeni.
“Tonight Minister Pravin Gordhan has stood up to Myeni’s political manoeuvring, and has sent Myeni crash landing to the hard ground of reality … Her close ties to President [Jacob] Zuma, and her political manoeuvring, and her design of fronting local companies for aircraft purchase agreements disqualify her from overseeing our national flag carrier,” the party said in a statement.
Myeni, who is also the chairperson of the Jacob G Zuma Fund, has had a string of clashes with senior politicians and officials in recent years. As reported by the Mail & Guardian earlier this month, officials, company executives, board directors and three Cabinet ministers have come out second-best after taking her on.
The latest politician to lose a battle with her is Nene, whose removal is suspected to have been related in part to his rejection of the board’s proposed restructuring of the Airbus swap deal. But the presidency has denied that this was the reason for Nene’s removal.
Long-running saga of tension and acrimony
2002: SAA enters an agreement with Airbus to buy 15 A320 aircraft.
2007- 2008: The deal is amended to increase this to 20 aircraft.
September 2012: Six members of the SAA board quit after a reported breakdown in their relationship with former minister of public enterprises Malusi Gigaba. The resignation of key executives follows. Dudu Myeni remains on the board and is appointed its acting chairperson.
December 2012: Myeni is officially appointed SAA chairperson amid questions over her suitability for the role and her closeness to President Jacob Zuma.
2013: Airbus begins the delivery of the first 10 of the A320s.
October 2014: Under a new minister of public enterprises, Lynne Browne, mounting tensions between SAA board members and Myeni reportedly lead to six directors quitting.
November 2014: Reports emerge that Brown and Myeni have clashed over the SAA board’s refusal to reinstate the airline’s former chief executive, Monwabisi Kalawe, despite Brown’s instruction that it do so.
December 2014: Responsibility for the troubled airline is transferred from the minister of public enterprises to the treasury under the watch of then finance minister Nhlanhla Nene.
April 2015: After the terms of the Airbus deal become too onerous for financially distressed SAA, the board asks Nene for permission to cancel the procurement of the final 10 A320s and instead to enter into an operating and leasing agreement for five A330-300 aircraft.
July 2015: Nene approves the deal – also known as the swap transaction or swap deal.
November 2015: The SAA board seeks permission to amend the swap deal to let SAA buy the A330-300 planes and then sell them to an unidentified local third party, which would lease the planes back to SAA. Chief financial officer Wolf Meyer quits amid the exit and suspension of a number of other executives.
December 3 2015: Nene refuses the board permission to restructure the deal – citing the speculative terms of the local leasing structure and the likelihood that it would not be in place in time to prevent SAA having to pay over millions of dollars to Airbus, under the terms of the existing deal. A deadline of December 21 looms for the issue to be finalised or payments to Airbus become due.
December 9 2015: Nene is fired amid speculation that it is because he refused to sanction the restructuring deal. He is replaced with little-known ANC backbencher Des van Rooyen.
December 13 2015: Pravin Gordhan is appointed finance minister.
December 21: Gordhan says that the SAA board has been directed to conclude the swap transaction in line with the approval given by his predecessor, Nene. December 28 is the deadline for legal documents to be in place.