Barry Streek, Glenda Daniels and David Macfarlane
Coleman Andrews offered to resign eight months ago as CEO of South African Airways (SAA), because he was frustrated with government and Transnet interference in the running of the airline but he was persuaded to stay on for longer by former Transet managing director Saki Macozoma.
The Mail & Guardian has letters from Andrews to Macozoma saying that he wanted to leave in October 2000 because he had been the target of “slanderous and defamatory remarks”, including accusations that he was “defrauding SAA”.
Andrews refers to the airline’s “corporate governance running amok” and officials in Transnet and the government “making a mockery of the most basic principles of sound corporate governance”.
All of this had a debilitating effect on SAA’s leadership team, Andrews wrote in a letter dated March 31 last year, leaving him “sickened and disgusted by the resulting ill-effects on South African Airways”.
He refers to conversations involving SAA executives and Transnet board chairman Louise Tager (who is also a non-executive director of SAA), alleging that he was defrauding SAA and expressing unhappiness about his performance as CEO.
Tager says that this is the first she has heard of Andrews’s letter. “I do not recall a conversation to that effect [concerning accusations that Andrews was defrauding SAA],” she says and, “I didn’t say anything to that effect.”
Asked whether she recalled conversations referring to Transnet’s unhappiness with Andrews’s performance as CEO, Tager says she assumes Andrews was referring to her “querying of the appointment of consultants” to SAA.
Consultants retained by Andrews earned R218,9-million during his tenure as CEO.
Despite several attempts to contact Macozoma who is in the United Kingdom with President Thabo Mbeki the M&G was not successful.
Andrews writes that he and his officials were regularly subjected to dictates and demands by several Transnet executives and “there is hardly a day that passes that some government official does not engage in similar behaviour”. He refers in particular to officials from the Department of Public Enterprises and the Department of Trade and Industry.
He says the SAAremuneration committee gave him a rating of “exceptional performance” and that he made a R660-million improvement in operating profit, in a deteriorating industry environment.
Andrews was appointed in June 1998, in the run-up to the corporatisation and part-sale of SAA to SwissAir in March 1999. Transnet justified his appointment and sky-high total remuneration of R232,2-million on the grounds of global competitiveness.
“The myth of Andrews as a miracle man is now unravelling,” says Jane Barrett, national policy coordinator of the South African Transport and Allied Workers’ Union (Satawu). Although SAA reported a profit of R51-million in 1999, this was “thanks to asset-stripping, laying off more than 2 000 workers through mutual consent packages and retrenchment, and outsourcing the so-called non-core functions to foreign companies”.
An example of this is the closure of the jet engine workshop, which was outsourced to an American company, General Electric.
Satawu also charges that during Andrews’s tenure “more than 25 black managers were dismissed under mysterious circumstances. Most of these managers were former shop stewards who rose through the ranks of the union,” says Andrew Maswanganye, Satawu’s civil aviation secretary.
‘Morale reached rock bottom during Andrews’s tenure,” he says, “and workers have never recovered.”
SAA paid out R20-million in unfair dismissal suits during Andrews’s time as CEO just less than two years.
Serious industrial relations disputes erupted during Andrews’s tenure, Maswanganye says. “One involved the unprocedural retrenchment of 94 cargo workers in 1999. The case was finally settled in 2000 through the payment of a year’s salary to each of the workers. The settlement cost the company over R2-million.
Another highly publicised case involved the reinstatement of 42 cabin crew workers and roster clerks who were unfairly dismissed. This cost the company more than R10-million. Fourteen of the dismissed workers refused to accept the compensation and their case is continuing with the support of the unions.
These and other less publicised disputes are indicative of the poor industrial relations that existed under Andrews, Satawu says.
“We call upon the parliamentary committee of public enterprise to institute investigation on Andrews’s employment contract and the basis on which it was concluded. This investigation should also consider how appointments are made … [as well as] the serious lack of a transformation programme at SAA.
“Both Transnet and the Ministry of Public Enterprises would have to explain to the public why they allowed a foreign individual to accumulate personal wealth so unethically in the context of unemployment and poverty.”
According to the executive director of the Institute for Democracy in South Africa, Paul Graham: “Questions have to be asked about Andrews’s own responsibility and culpability in accepting, indeed demanding, this level of remuneration even if he was indeed doing the turn-around job which was required of him.
“Questions also have to be asked about the relationship between him, the boards and individuals to whom he reported during his term of office and the oversight which they exercised, and the shareholders in the enterprise.”
He says: “This is an opportunity for the individuals concerned to explain their actions. Macozoma, who is being identified as primarily responsible, has already begun to do this. He was given high levels of responsibility and discretion by the government.
“Those who created this operational framework also need to take responsibility for the present outcome. The investigations still to be carried out need to focus not only on Macozoma’s actions but also on the accountability and transparency arrangements between Transnet, SAA and the government as shareholder,” Graham says.
Minister of Public Enterprises Jeff Radebe told Parliament this week that “decisive action will be taken against parties or individuals, whoever they may be, who are found guilty of acting improperly”.
He reiterated his charge that Macozoma was responsible for Andrews’s exorbitant salary and the extraordinary amounts paid to consultants.