In an 11th-hour compromise, Finance Minister Pravin Gordhan has conceded that President Jacob Zuma’s close friend Dudu Myeni can retain her position as chairperson of embattled national airline SAA.
But the battle over the state-owned enterprises and the nation’s coffers is far from over.
Gordhan accepted Zuma’s condition that Myeni be kept on, thereby narrowly averting a national crisis, sources say. SAA was at risk of being plunged into either liquidation or business rescue without new government guarantees, which were not to be released until a new board was installed – possibly causing even greater damage to the ailing rand.
“Protecting her was indeed a condition from Number One,” said a well-placed source with knowledge of the negotiations.
The list of new board members was compiled by the treasury and comprises a strong team designed to take Myeni on from the inside, “in a bid to stop the chaos there”, said the source.
The presidency did not respond to questions about the claims that Myeni’s reappointment came at Zuma’s insistence.
A close confidant of Gordhan said the finance minister was working on a two-week cycle, as he expected to be removed from his position at any time as the war over state resources held by key parastatals, including Eskom and Denel, continues. “He has no intention of backing down,” the source said.
The clash over Myeni’s position at SAA has resulted in months of protracted negotiations between Zuma and Gordhan, who had refused to allow her reappointment.
- Read more: High noon for beleaguered SAA
Myeni is shadowed by two bodyguards 24/7, so it is not surprising that she lives in a paranoid world amid such unhappiness over her tenure at the national carrier.
The controversial former teacher has almost single-handedly overseen the airline’s decline to the brink of bankruptcy, with the treasury withholding billions in government guarantees until the appointment of a competent new board.
- Read more: Crib notes: Who exactly is Dudu Myeni?
Her tenure at SAA is among a string of highly damaging debacles at state-owned enterprises, which has now spilled over into claims of an all-out war being waged on the treasury and Gordhan.
These have rattled the rand and, in an unprecedented step, local and international business chambers have condemned the perceived attacks on the independence of the treasury.
Also, Futuregrowth Asset Management announced on Wednesday that it was ending funding to state-owned entities, including Eskom. The company cited conflict between branches of government as one of the reasons. Its chief investment officer, Andrew Canter, said it was heavily invested in state-owned entities but, for the time being, would not extend more loans to them.
The American Chamber of Commerce in South Africa, representing more than 250 firms that employ South Africans, said, although it usually does things “behind the scenes”, it is publicly backing Gordhan because South Africa “is at the edge of an abyss”, the chamber’s chief executive officer, Carol O’Brien, told Fin24.
Reaction to the standoff between the treasury and parastatals follows mixed signals sent out by the ANC.
First, its deputy secretary general, Jessie Duarte, said Gordhan is not above the law and should submit to the Hawks for a “warning statement”. Her comments were at odds with those of the party’s secretary general, Gwede Mantashe, who questioned Gordhan’s “humiliation” by the Hawks, who are investigating a secret South African Revenue Service investigative unit set up during Gordhan’s tenure as head of the service.
Gordhan did, in fact, make a statement to them, albeit through his lawyers.
For now, the battles between the treasury and the state-owned entities have shifted back behind closed doors. But SAA remains in a precarious position because it is at risk of losing its lucrative Hong Kong route, to which it flies thousands of passengers seven days a week.
The Mail & Guardian has been told that authorities in Ghana have also demanded financials from the airline if it wishes to continue flying there.
The announcement of a new SAA board suggests that a last-minute deal has been clinched to avoid the airline having to apply for liquidation or business rescue.
SAA obtained a last-minute reprieve when a September 6 deadline was extended to month-end as Hong Kong tax authorities sought proof that it would be able to pay for landing rights for the year ahead, something the airline’s board and executive cannot do without government guarantees.
The treasury has repeatedly refused to sign off on them until a new board is in place and, for many, this would have meant Myeni’s removal. But a highly placed insider said Myeni is going nowhere – again.