SAA's Kalawe affidavit puts Myeni conduct in question
Suspended South African Airways (SAA) chief executive, Monwabisi Kalawe, has launched an extraordinary attack on SAA board chairperson, Dudu Myeni, stating that he believes she intended to obtain an “incentive payment” by driving SAA business towards aircraft manufacturer Airbus.
This, together with allegations of repeated political interference at the parastatal, are contained in an affidavit filed at the Labour Court in Johannesburg on Thursday.
It should be noted that Kalawe produces no evidence of any such payment or intended payment and his allegations remain untested. Neither Myeni nor SAA could be reached for comment on Thursday, but they are both expected to file a legal response next week. Kalawe wants the court to interdict his disciplinary hearing, scheduled to resume on April 13 and to uplift his suspension. Kalawe alleges that disciplinary moves against him – comprising various charges of misconduct and wasteful expenditure – must be seen in the context of two transactions involving the purchase by SAA of new aircraft to replace its aging and fuel-guzzling fleet.
He claims that his suspension – and further disciplinary charges leveled against him – were triggered by two “protected disclosures” he made containing serious allegations against Myeni in relation to her alleged preference for Airbus over its rival Boeing. Kalawe states that battles over two sets of planned aircraft purchases have blighted his tenure since even before he took up office in June 2013: firstly, proposals to source a new wide-body long-haul fleet at an estimated cost of some R60-billion; and secondly, plans to implement an existing contract for a fleet of new medium-range A320 Airbus aircraft. In both cases, he says Myeni played a central role and he alleges that she wields enormous power because of her relationship with President Jacob Zuma.
He claims: “Myeni is alleged to be untouchable. It is well publicised that she has close ties to President Jacob Zuma, Not only does she sit as head of the Zuma Foundation, but she is also alleged to have previously sold her house to pay for Zuma’s legal fees. She openly brags about the fact that she is welcome at Nkandla, President Zuma’s house, and that she often meets with top cabinet officials and politicians.”
The wide-body transaction
Kalawe states that, prior to his appointment, and unbeknown to the majority of the board, the acting chief executive Nico Bezuidenhout issued a request for proposal (RFP) document for the acquisition of 23 new wide body jets. This was irregular, he claims, noting that Bezuidenhout, who returned as acting chief executive on Kalawe’s suspension, was seen as Myeni’s ally. It was also not approved by the then minister, Malusi Gigaba, who had presided over the appointment of the majority of the board – and Kalawe’s own appointment. Kalawe recounts that Gigaba instructed the board to withdraw the RFP, rework it to provide for greater local procurement and to appoint transaction advisors to oversee the entire process.
He says Myeni and her two alleged allies, on what was seen as a majority “Gigaba board”, voted against accepting this instruction.
That, he claims, was the beginning of his real conflict with Myeni.
Kalawe alleges: “Some weeks after the implementation of the resolution, Myeni approached Minster Gigaba to complain about my performance as CEO.
As a result of these complaints I was summoned to an urgent meeting with Minister Gigaba at his home. Myeni arrived an hour late. “While we were waiting for her, Minister Gigaba raised my poor working relationship with Myeni. I explained to him that the breakdown had arisen as a result of my insistence on proper governance controls over the wide body transaction, in particular my implementation of the resolution to appoint a transaction advisor.
“When Myeni eventually arrived at the Minister’s home, he was very critical of her conduct and spoke harshly to her. This precipitated a breakdown in the relationship between Myeni and the Minister. I believe that it was as a result of this breakdown that Minister Gigaba was ultimately removed as Minister of Public Enterprises and redeployed to the Department of Home Affairs.”
The A320 Narrow Body Fleet Transaction
Kalawe says that given the enormous cost of purchasing new aircraft, the board was considering leasing aircraft from financiers rather than acquiring them directly. During May 2013 a resolution was passed by the board to appoint Pembroke Financial Services as financiers for the lease of 10 new A320 narrow body Airbuses to add to the SAA fleet.
Kalawe alleges that on multiple occasions Myeni attempted unsuccessfully to have the resolution changed to reflect a board decision that Pembroke be utilized for just two aircraft, not 10. He states: “Determined to interfere with the transaction, on 23 June 2013 Myeni wrote to Minister Gigaba advising him that the Board had taken a decision to amend its resolution to reflect the financing of only two Airbuses.
“At no stage did the Board pass a resolution for the leasing of the A320 transaction of two Airbuses from Pembroke, nor did it ever agree to alter the resolution from ten Airbuses to two. Myeni’s letter and accompanying application was, to her knowledge, a patent misrepresentation of the facts.
“In my view, Myeni was intent on altering the board resolution so that she could secure a direct purchase arrangement with Airbus for eight new aircrafts. I believed then, and have no reason to believe otherwise now, that her desperation to deal directly with Airbus in this manner was motivated by the fact that it was only through a direct purchasing transaction that she would receive an ‘incentive payment’ from Airbus.”
Myeni’s conduct roused the ire of the then board, which scheduled a special board meeting on January 22 2014 to discuss Myeni’s alleged attempts to interfere in the A320 transaction. Myeni failed to attend that meeting. Kalawe states that as a result of this conduct six of the board’s then non-executive directors wrote to Myeni and the minister expressing their dissatisfaction with the “leadership of the chairperson”.
Gigaba scheduled an urgent meeting of the full board to discuss the concerns raised in the letter. Kalawe says Myeni did not attend and in May 2014, Gigaba was moved to the Department of Home Affairs and replaced by Minister Lynne Brown.
“This resulted in no further formal steps being taken to call Myeni to account for her improper conduct,” Kalawe alleges. Kalawe’s adversaries hit back, with board member Yakhe Kwinana, who is also associated with the Jacob Zuma Foundation, writing to Myeni and the rest of the board on March 23 2014 implicating Kalawe in decisions resulting in financial loss to SAA. Some of these concerns became the subject of the disciplinary charges that were ultimately brought against Kalawe, notably a highly controversial pilot project to wrap SAA baggage passing through OR Tambo in plastic.
Passengers were not asked if they wanted this service – and charges were automatically added to their fare. Kalawe claims: “In any event, the letter is nothing more than yet another elaborate scheme by Myeni and Kwinana to secure my removal. When the letter was tabled at the next meeting of the board, Kwinana was once again told to make use of internal processes to investigate complaints against me.”
During October 2014 Minister Brown announced that, save for Myeni and Kwinana, all non-executive SAA directors would be required to justify why they should be retained on the board.
They resigned, leaving Kalawe without any backing on the board. He states: “At this stage it became clear to me that my job might well be on the line and that, with a new board in place, I may be the next head to roll. “On 26 October 2014 I addressed an email to Brian Patterson, an attorney at ENS attorneys, informing him of the recent changes that had taken place at SAA and explaining my understanding of the negative forces at play.
“In the email … I also reveal my suspicions that Myeni [and her allies] have benefited or stand to benefit from an acquisition by SAA of twenty-three wide body Airbuses provided Myeni can gain full control of the board.”
ENS are SAA’s attorneys.
In the letter, Kalawe alleges that Brown wanted to remove Myeni and Kwinana and had wanted to keep some of the “smart and hard working” non-executive directors who had resigned. “We are informed that the President rejected her plan and instead instructed her to get rid of all directors that were troubling (Myeni),” Kalawe wrote to Patterson.
It is this letter, Kalawe states, that was the first of the so-called “protected disclosures”, but which he suspects was made known to Myeni and prompted his suspension two days later at an “emergency meeting” of SAA’s new board convened by Myeni on October 28.
He says that at the emergency board meeting he was not granted a hearing and at that stage no charges had been formulated. “I was simply informed that my suspension was a cautionary measure and that a forensic organisation was going to be appointed to investigate charges against me.”
Kalawe says that he agreed to submit to this investigation process provided that a separate investigation committee comprising only the two new non-executive board members was established and that they also investigate the allegations against Myeni. Following the resignation of the “Gigaba board” Brown had appointed just two new interim directors – Tony Dixon and John Tambi – alongside Myeni and Kwinana.
The next day, Kalawe alleges, Dixon and Tambi informed him that the board had decided to prioritise the investigations against him. Later that day, on landing in Cape Town, Kalawe says he was informed that the SAA board had scheduled a special executive committee meeting and he was contacted by two journalists who said they understood he was about to be fired.
“On learning of these events I went directly from the airport to Minister Brown’s office. I filled her in on what had transpired. She told me that she had previously spoken to Myeni and had instructed Myeni to not suspend me. “Minister Brown reassured me that she would resolve this issue and would order my immediate reinstatement.”
Despite this, Kalawe received a letter from the board confirming that he had been suspended pending the outcome of an investigation.
“A meeting was held between Minister Brown and the full board where it was eventually agreed that I would be placed on ‘special leave’ and not on suspension.
“Minister Brown also insisted that the previous undertaking by the board to investigate … Myeni and Kwinana alongside me be confirmed by the board. “An agreement to this effect was drafted by the shareholder representative …
“The board rejected this agreement. Before Minister Brown could take the matter any further, a decision was taken at Parliament to move SAA from her portfolio to that of Treasury. My suspension remained in place and continued.”
Kalawe alleges: “In spite of this controversy, and in the face of undisputed evidence of her unlawful conduct, Myeni continues to serve on the board of SAA. She continues to wield control over all major decisions taken by the board and anyone who attempts to stand in her way is hastily removed or discharged from office.”
The fake bank records
The main disciplinary charge Kalawe now faces relate to his attempts, during his suspension, to secure evidence that Myeni had foreign bank accounts, which he believed would show evidence of her receipt of “incentive payments”. Kalawe was put in touch with an information technology specialist, Abe Mbulawa, who claimed to have close contacts within the intelligence services.
Kalawe paid over R150 000 for copies of foreign bank statements purporting to be in the name of Myeni, but which turned out to be fake. He passed them on to forensic investigator Paul O’Sullivan, who immediately distributed the documents widely, including to Myeni and the lawyers investigating Kalawe on behalf of SAA.
In his affidavit Kalawe states: “In essence, I have been charged with procuring bank statements purporting to be those of Myeni and making those statements available to O’ Sullivan knowing or anticipating that he would disseminate them.
“I am charged with unlawfully paying an amount of R150 000 to obtain the statement and in doing so breaching in my duties to SAA.”
This action was seized on by SAA and now appears to be the main plank of the disciplinary case against Kalawe. In his application to the labour court, Kalawe argues that his delivery of the bank statements to O’Sullivan was done in good faith for the investigator to probe their authenticity. He argues that this too was a “protected disclosure” and should not be used in a disciplinary case against him.
* Sarah Evans is a reporter with the Mail & Guardian; Sam Sole is a managing partner of amaBhungane, the M&G Centre for Investigative Journalism.