The seemingly invincible chair of SAA, Dudu Myeni, faces a fresh reputational battle after being found to be in breach of the Companies Act.
Myeni must formally notify her board and Finance Minister Pravin Gordhan about the adverse findings against her by the enforcement arm of the Companies and Intellectual Property Commission (CIPC), the registrar of companies.
She has to present written confirmation to the CIPC that she has done so within 10 days of the January 31 deadline — and noncompliance could result in an administrative fine or a criminal investigation and prosecution.
President Jacob Zuma’s close friend was served with the compliance notice by the regulator following claims she had lied or misrepresented a board decision to former public enterprises minister Malusi Gigaba relating to a lucrative aircraft deal in 2013.
At the time, the airline’s board had decided to lease 10 new planes through a financier but Myeni repeatedly tried to have this decision altered so it would appear that the board had approved the lease of only two planes.
She was called out on this alleged “gross misrepresentation” of the board decision on two separate occasions, first by a group of nonexecutive directors who wrote a harsh letter to the minister and later by the airline’s former chief executive, Monwabisi Kalawe.
The CIPC this week confirmed that Myeni was found to have contravened two sections of the Companies Act and that she was deemed to have “acted in a manner materially inconsistent with the duties of a director”, thereby breaching section 76(3) of the Act.
This relates to her failure to produce evidence of a board resolution to the CIPC to back up the 2013 letter she wrote to Gigaba in which she claimed the board had resolved to acquire just two planes.
Myeni submitted this letter as part of documents requested by the CIPC after receiving an anonymous complaint as well as one by Kalawe.
In the letter Myeni told the minister that the SAA board had resolved to lease two new aircraft — it later emerged the board had actually approved 10, raising questions about Myeni’s intentions when she allegedly misrepresented a board decision to the minister.
The M&G has established that Myeni may be able to appeal the findings against her, either through the Companies Tribunal or with court action.
George van Niekerk, an attorney with ENSAfrica, the firm representing Myeni, confirmed that she had been informed of the findings against her.
“At the time of the letter to the Minister of Public Enterprises dated 20 June 2013, Ms Myeni genuinely believed that there had been a decision by the board and this is what she conveyed to the Minister.”
He said they had written to the CIPC as a first step to challenge the finding against Myeni but could not share further details thererof.
Van Niekerk said Myeni strongly disagrees that her conduct was in breach of her duties as a director. “Ms Myeni insists that she always acted in good faith, for a proper purpose, and in the best interests of the company. She denies that there is any basis on which to impugn her conduct as a director.”
How this latest development may impact on Myeni’s continued stint as chair of the national carrier is unclear.
The treasury said it had been informed of the findings against Myeni by the CIPC. In a short statement, the treasury said: “The minister is studying the report and will respond at the appropriate time, taking into account his view on the record that governance processes should be upheld both in government and SOEs [state-owned enterprises] at all times.”
Myeni, whose fitness for the job has often been questioned publicly owing to her combative leadership style and the string of executive casualties she has left in her wake, is a close Zuma ally — she chairs the president’s personal charitable trust.
Under her leadership the airline has lurched from one crisis to the next. Yet she retained her position in September when the Cabinet appointed several new board members in what was widely seen as a trade-off to end months of tension between Myeni and the treasury.
Days later the opposition Democratic Alliance announced its intention to legally challenge the decision to reappoint Myeni as SAA chair. To date, no court papers have been filed.
Meanwhile the CIPC, in response to questions, told the M&G that a company or a director’s failure to adhere to a compliance notice may result in court action. If found guilty, they could face an administrative fine, criminal sanction or, in extreme cases or in the case of repeat offenders, an individual may be placed on probation or be declared a delinquent director.
As Myeni’s case is pending, the CIPC could not comment further.
It confirmed having 18 criminal cases as at March 2016 against noncompliant companies or individuals but added that none of the matters involved state-owned companies.
The CIPC has a database of more than four million registered entities and has two dedicated units for compliance and enforcement.
The deal that came back to bite ‘desperate’ Dudu
In 2015 former SAA chief executive Monwabisi Kalawe made startling claims that the airline’s chairperson, Dudu Myeni, had irregularly tried to split a deal for 10 new aircraft so she could cash in on an incentive payment.
The airline’s board had approved a lease deal for the aircraft in May 2013 but Myeni allegedly repeatedly tried to have this decision changed to reflect that it was only for two planes.
“In my view, Myeni was intent on altering the board resolution so she could secure a direct purchase arrangement with Airbus for eight aircraft,” Kalawe claimed at the time. He went on to say that her “desperation” to alter the board decision was so she could get a cut from a separate deal for the remaining eight planes.
Kalawe’s allegation first surfaced during a labour dispute with SAA in 2015 and subsequently landed up with the Companies and Intellectual Property Commission for a probe into Myeni’s conduct.
His claim was contained in an affidavit, filed during his Labour Court case in Johannesburg in which he sought to challenge the disciplinary process SAA had initiated against him. Yet it was never tested because the case was abandoned after Kalawe agreed to step down later that year. Attempts to obtain comment from Kalawe this week were unsuccessful.
At the time, the airline submitted a detailed responding statement challenging Kalawe’s interdict application. The statement included denials of wrongdoing on the part of Myeni.
SAA, through then nonexecutive director Anthony Dixon, rejected Kalawe’s interdict bid and labelled the tone of his affidavit as “far from measured” and said it “demonstrates an unwavering determination to discredit” Myeni.
“The applicant describes her as ‘disgraceful’, ‘underhand’ and ‘guilty of palpable acts of wrongdoing’,” said Dixon.
“The inference is inescapable that the applicant [Kalawe] is engaged in a vindictive campaign to discredit the third respondent [Myeni] and the board.”
Dixon strongly denied all allegations of “impropriety and corruption” against Myeni and said that “all rights [were] reserved”.
But Myeni’s earlier frantic efforts to change the board resolution also raised suspicion with fellow board members — some of whom fired off a harsh letter to Malusi Gigaba, then the minister of public enterprises and responsible for SAA.
In the letter dated January 2014, the group of nonexecutive directors raised concerns about Myeni’s “lack of leadership” and her alleged undermining of the board decision relating to the aircraft deal, which they billed a “gross misrepresentation” of a board decision.
Their letter to Gigaba stated that she had tried three times to have the board change this decision and that some of them had warned her, in writing, of the initial board resolution.
Despite not succeeding in having the board agree to a split deal, Myeni still wrote to Gigaba for approval of the transaction in June 2013. That letter has now landed her in hot water, because she has allegedly not been able to provide evidence of such a board resolution. — Jessica Bezuidenhout