/ 17 September 2011

Insurers must pay for SAA overspend, says Ngqula

South African Airways (SAA) insurers must pay for budgets exceeded during former CEO Charles Ngqula’s tenure, according to court papers filed on Friday, the Saturday Star reported.

Ngqula claims in his court papers that the insurers, Chartis, should pay up, just as the company would have been covered for other financial disasters such as plane crashes and mismanagement.

Chartis was refusing it pay. It argued the airline, in its application to renew its insurance, failed to disclose that it had started a forensic audit into Ngqula’s dealings and had pending litigation against him.

SAA served Ngqula with summonses last year in an effort to recover millions in overspending.

SAA chairperson Cheryl Carolus said last year that the airline hoped to recover R30.8-million from the former CEO but had to write off R141-million in sport sponsorships he negotiated despite allegedly lacking the authority to conclude these deals.

Millions lost
Carolus said the airline’s first aim was to recover R27-million Ngqula allegedly overspent on a retention bonus scheme. It also hoped to recoup R3.3-million he allegedly spent on hospitality suites at sports stadiums which were in the end “hardly utilised”.

He apparently entertained friends and associates at the 2006 World Cup in Germany and was responsible for the millions SAA spent on hospitality during the World Cup in South Africa in 2010.

Speaking to reporters in Cape Town last year, Carolus said the airline could not recover the cost of R120-million ATP tennis sponsorship or a R21-million deal with Argentinean golfer Angel Cabrera because in both cases the other party had contracted in good faith.

According to the Saturday Star, Ngqula said in his court papers the publicity SAA enjoyed from its association with Cabrera exceeded any payments made.

The airline’s head of legal services, advocate Sandra Coetzee, was quoted by the paper as saying, “As this matter is sub judice, at this point, SAA can only confirm receipt of the summons from Mr Ngqula’s lawyers and is preparing a response to be entered through court proceedings”.

After a five-year tenure, Ngqula left SAA in March 2009 with a golden handshake of R8.9-million, which he was made to repay. – Sapa