SAA board in bid to ground Dudu Myeni

The tables are turning on Dudu Myeni, the chairperson of SAA, who has been conspicuously absent from board meetings at a time when the airline’s financial distress warrants urgent attention.

Myeni has missed six special board meetings, notifying her colleagues of her absence by SMS or, in one case, by email, according to documents seen this week.

The Mail & Guardian has established that Myeni’s board colleagues have instructed lawyers to examine her conduct and an alleged lack of participation in company business to see whether she has breached the Companies Act and adhered to the principles of the King IV code of good governance.

According to documents seen by the M&G, Myeni has allegedly also failed to respond to important written correspondence from board members – including by the airline’s deputy chairperson, Tryphosa Ramano, who was one of several additions to the board in a bid last year to bring stability to SAA.

Any evidence of dereliction of duty or breaches of her fiduciary duties, if proven, could lead to a formal bid for her removal either by the board or Finance Minister Malusi Gigaba.

Details provided to lawyers include that Myeni allegedly failed to:

  • Respond to an April 7 letter from Ramano about the recruitment of a permanent chief executive. Before his axing in March, former finance minister Pravin Gordhan told Parliament the airline would have a new chief executive by the end of March, implying the process was nearly complete.
  • Respond to an April 13 letter in which Ramano updated her on steps taken to mitigate the risk of defaulting on a loan facilities agreement; and
  • Respond to a third letter on April  26 in which she was warned about the deteriorating financial position of the company.

By then, it appears that Ramano had lost patience and reminded Myeni of her duties as chairperson. Ramano asked that Myeni play an active role in running the business and secure an urgent meeting with Gigaba’s office to resolve “issues around the company’s financial distress”.

“We have been instructed that there is no record of any formal response” to the letter, the document states.

SAA has been battling financial distress for several years and has required billions of rands in guarantees from government over that time.

SAA, in response to questions, sent a statement: “Due to practical considerations, we could not solicit the views of all board members to enable us to provide a collective board response on this enquiry. Notwithstanding, all board members know and understand their obligations towards the business and the shareholder and are expected to always act in accordance with appreciation of their responsibilities. The main focus of the board is to stabilise SAA with a long-term goal to achieve financial sustainability.”

SAA said the board has also submitted a candidate for the position of chief executive to Gigaba.

It has been established that the board has obtained at least two sets of legal opinion, including a detailed memorandum, dated May 26, prepared by law firm Cliffe Dekker Hofmeyr.

Contacted for comment, attorney Gasant Orrie said Cliffe Dekker would not comment on a “legally privileged document” sent to its client.

Based on the document, it is clear that the SAA board had sought legal opinion on options to deal with Myeni’s absence from board meetings and her failure to respond to pertinent correspondence.

Although the legal advice sets out the duties of directors under various items of legislation, it also warned against invoking Section 71 of the Companies Act because of “political and other sensitivities”.

Section 71 of the Companies Act, the document states, would enable the board to initiate immediate proceedings to remove Myeni.

It does not require the board to give her an opportunity to explain her absence or her alleged lack of participation in work matters.

A better option, the lawyers advised, may be to first invite Myeni to explain herself by providing reasons for her absence before the board decided on a course of action, which could then include invoking Section 71.

Myeni is regarded as a close friend of President Jacob Zuma, whom she is known to refer to as “uBaba”. She chairs the president’s charitable trust.

Myeni faces a high court bid by the civil organisation Organisation Undoing Tax Abuse, known as Outa, which seeks to have her declared a delinquent director. If that is successful, Myeni could be barred from holding any directorships in the country for several years.

She was also slapped with a compliance notice by the enforcement arm of the Companies and Intellectual Property Commission (CIPC) for violations of the Companies Act. Next week, Myeni will be seeking to review that sanction at the Companies Tribunal.

The M&G revealed in January that the compliance notice related to her failing to produce a board resolution that would have cleared her of lying to Gigaba – then minister of public enterprises – about a deal involving new aircraft.

Myeni had written to Gigaba in 2013 to inform him that the board had resolved to lease two new aircraft when in fact the resolution had been for 10 aircraft.

This had brought into question Myeni’s motive and resulted in a complaint to the CIPC. She has repeatedly denied intentionally misrepresenting the board resolution.

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