/ 10 February 2017

Myeni’s fate in Gordhan’s hands

Conduct under scrutiny: SAA chairperson Dudu Myeni at a meeting between the board of directors and Parliament’s standing committee on finance in September 2016.
Conduct under scrutiny: SAA chairperson Dudu Myeni at a meeting between the board of directors and Parliament’s standing committee on finance in September 2016.

The new board of SAA has given Finance Minister Pravin Gordhan another headache — leaving it up to him to decide on the fate of the airline’s chairperson, Dudu Myeni.

Myeni’s conduct as a director is being scrutinised by the treasury’s legal department after she was slapped with a compliance notice by the enforcement arm of the registrar of companies, the Companies and Intellectual Properties Commission (CIPC).

The CIPC found that she had violated sections of the Companies Act when she failed to produce a board resolution that would prove that she had not lied to former public enterprises minister Malusi Gigaba.

In 2013, Myeni wrote to Gigaba that the board had resolved to lease only two aircraft when in fact it had decided on 10. The letter triggered dissent among board members, who accused Myeni of unlawfully altering a board resolution, with some questioning her motives for doing so.

Myeni has repeatedly denied intentionally misleading the minister.

But the incident brought into question her fitness to hold office and led to a formal complaint to the CIPC, which ordered her to notify both Gordhan and her fellow board members of the finding against her by January 31 this year.

Although she has complied with the CIPC’s instruction to notify them, she is yet to produce the disputed resolution and there is renewed pressure for her position as SAA chair to be reconsidered.

SAA spokesperson Tlali Tlali confirmed that the board of directors was aware of the compliance matter involving Myeni and had decided to leave her fate in the minister’s hands.

“It is a prerogative of the shareholder to make a final call on the fitness or otherwise of any board member to continue to serve on the board,” he said.

Tlali said that, since the new board was appointed last September, members had focused on discharging their fiduciary duties and on turning around the embattled airline.

The treasury would only confirm that the issue had been referred to its legal department for a decision “on the appropriate route” to take.

Attorney Nicolene Schoeman-Louw, asked to comment on the legal action that could be taken against Myeni, said the Companies Act codifies the duties of directors.

“It outlines their fiduciary duties as well as that of care, skill and diligence in the execution of their jobs. It doesn’t only measure actions, or the lack thereof, it comes with statutory liability.”

Misrepresenting a board resolution is a serious issue — particularly when it involves a state-owned entity and officials governed by the Public Finance Management Act.

“It makes it even more disconcerting,” Schoeman-Louw said.

A director who had breached fiduciary duties resulting in damage to a company could be held liable, but she cautioned against the feasible practicality of that.

Another option was to bring a dilinquency application — a legal move in terms of the Companies Act that may lead to a person being barred from holding a directorship for a particular period.

Much of Myeni’s nearly eight-year stint at SAA has been marred by scandal. In spite of being controversially retained as chair last year, she continues to draw attention for the wrong reasons.

There are currently two separate legal bids in the works to challenge her reappointment, one of them by civic action organisation Outa. Outa also intends to bring a delinquency application against her.

Meanwhile, the legal bills appear to be piling up around Myeni. She was at the centre of a high court case between SAA and several media houses when it emerged that she had tried to scupper a swap deal with aircraft manufacturer Airbus.

The deal was widely seen as part of the reason for the sacking of former finance minister Nhlanhla Nene, who had insisted the board stick to the revised deal with Airbus to get out of onerous prepayment obligations for outdated aircraft.

In December 2015, the high court in Johannesburg handed down a cost order against the airline after it had tried to claim legal privilege in a bid to block media houses from reporting on internal legal advice relating to that deal.

Judge Roland Sutherland found that public interest outweighed SAA’s contention of its right to confidentiality in the case, in view of its dependence on taxpayer funds.

In addition, the office of the public protector is investigating a complaint lodged in July last year relating to the BnP Capital debacle, which also involves Myeni. Last year it emerged that SAA had appointed the ill-qualified company to advise the national carrier on how to restructure its massive debt.

Public protector spokesperson Oupa Segalwe said the complaint was about the “irregular awarding” of the tender “to advise [SAA] on the restructuring of its debt and to raise funding, in return for a R256‑million success fee”.

Segalwe said this complaint, lodged by Democratic Alliance MP Alf Lees, included a request for the contract between SAA and BnP Capital to be probed to ascertain whether there were grounds to prosecute Myeni and other board members criminally for their role in the matter.

The public protector’s office is in the process of requesting documents from SAA, Segalwe said.

The airline failed to respond to questions about legal bills involving Myeni. Questions included whether the airline is funding the legal bill for her continued engagement with the CIPC through the board’s lawyers, even though the commission has essentially closed the case.

SAA also would not be drawn on the complaint lodged with the public protector.


Dudu in the sights of suspended water board boss

After an initial victory, the suspended chief executive of the Mthlathuze Water Board is gearing up for another round in the battle for his job. This time he is zooming in on the board’s chair, Dudu Myeni.

Sibusiso Makhanya wants several nasty “averments” contained in his drawn-out legal battle with the water board to be properly considered by a court. This was after Judge Yvonne Mbatha last November ordered those allegations be struck out of evidence, having considered an argument that they were scandalous and only good for selling newspapers.

One of the struck-out averments made by Makhanya was that Myeni had “ulterior motives” for suspending him. In his application for leave to appeal, filed on January 18, Makhanya argues that the court “erred” in its decision not to consider multiple claims about Myeni’s conduct, which he had made in his application to set aside his suspension.

Makhanya challenged his suspension for misconduct on various grounds, including that Myeni’s appointment as chair of the water board was unlawful because she had already served the maximum of three four-year terms; that the board’s term was irregularly extended by Water Affairs Minister Nomvula Mokonyane; and that the board had failed to follow due process in suspending him pending a disciplinary hearing.

Although he was successful when the court granted an order that was substantially in his favour, Makhanya seems intent on having the merits of his allegations against Myeni ventilated in open court.

At the heart of this new legal battle lies the claim that Myeni called him in July 2015 to advise him of certain “nefarious” allegations that had been made against him.

In telling him that an investigation would have to be conducted, Myeni allegedly added:“Ukuthi wena Makhanya awungidlisi kanti abanye o CEO bayadlisa or Chairperson babo [It is because you Makhanya are not feeding me when other CEOs are feeding their chairpersons].”

This, he claims, meant she expected him to abuse his powers to manipulate tenders for her benefit.

Makhanya wants the court to consider several other claims he made in his original court application:

• Myeni’s “tyrannical control” over the functions of the water board;

• That she sought to influence the irregular awarding of tenders and the appointment of staff;

• That she called him a number of times to instruct him to create a post for a third party to handle “corporate functions”, which he didn’t believe was justified; and

• That she had instructed him to sign off an agreement to rush through a payment of R1.5-million to the water board from the department of co-operative governance and traditional affairs, just days before the end of the financial year. This was even though no work had been performed and that she later advised him about where to transfer that money.

Makhanya’s lawyer, Dinesha Deeplal confirmed the appeal application but said she could not comment on the case.

Law firm ENSafrica, which is representing the water board, said it had instructions to oppose Makhanya’s appeal bid. Irvin Lawrence said it was noteworthy that Makhanya’s appeal bid was on the day of his disciplinary hearing before an independent chairperson was to start.

ENSafrica has handled both the disciplinary process against him and the investigation that led to his suspension. Makhanya claims this infringed his right to fair labour practices.

Mbatha’s November judgment found that Mokonyane’s extension of the board’s term of office was unlawful and as such its decision to pursue disciplinary proceedings against Makhanya was also found invalid and set aside.

The court suspended the order of invalidity for a period of 180 days to enable the minister to appoint a new board.