High-level turbulence rocks SAA
Embattled airline SAA could be flying into a spot of bother as divisions at the top of the state-owned entity are threatening to scupper its turnaround.
The Mail & Guardian has learned that relations between chief executive Vuyani Jarana and the board have deteriorated, and he has asked government’s shareholder representative, Public Enterprises Minister Pravin Gordhan, to intervene.
SAA’s financial situation is dire. On Tuesday Jarana told MPs that SAA’s turnaround had been pushed back to 2021 and that the airline will require R17-billion in bailouts by next March for working capital and to repay R9-billion in maturing loans, and that R3.5-billion was required as early as December.
The M&G has reliably learned that Jarana avoided an attempt to remove him three weeks ago when three of SAA’s nine non-executive directors backed a proposal to suspend him.
A government source with knowledge of Jarana’s views on the impasse said the former Vodacom executive believes he is being hounded by three board members, Martin Kingston, Thandeka Mgoduso and Peter Tshisevhe, for questioning legal contracts given to Tshisevhe’s law firm, TGR Attorneys, and for his refusal to approve the extension of former interim chief finance officer Robert Head’s contract.
Jarana refused to comment.
At the time of going to print SAA’s board and executives were locked in a meeting, and it is speculated that this could result in major developments.
Tshisevhe denied knowledge of any lobbying of Gordhan or tension between himself and Jarana. Neither Mgoduso nor Kingston responded to requests for comment.
Tshisevhe said: “There is one matter that TGR Attorneys has been advising SAA on since 2012, four years before I was appointed on the board and I informed the board about it …
“We took a conscious decision in 2016 not to accept briefs from SAA since I was appointed on the board.”
Three sources, who asked to remain anonymous because of their proximity to the developments, said concerns raised about Jarana’s leadership involve him meeting disgraced Bain official Vittorio Massone before he took up the reins at SAA, his decision to hire Head as interim chief finance officer when the board had resolved he be brought into Jarana’s office, and the fact that he expected the board to approve resolutions using round-robin emails rather than tabling issues at board meetings.
“At one meeting things got so heated that when Jarana was questioned [by Tshisevhe] about his conduct he told the chair [JB Magwaza] either he leaves or Tshisevhe [does],” said one source.
The M&G has previously reported that Mgoduso questioned SAA’s statement that Head was interim chief finance officer because the board had resolved he be employed as an executive in Jarana’s office.
Head’s salary of R5.5-million over six months was criticised as excessive by the opposition in Parliament’s standing committee on finance.
The government source said Jarana also felt frustrated by his relationship with Gordhan because apparently the minister regarded him with suspicion because he was hired by former finance minister Malusi Gigaba.
“His only crime was to question why TGR Attorneys was doing work at SAA, and also his refusal to extend Head’s contract,” he said.
Democratic Alliance MP Alf Lees, who oversees SAA through the standing committee on finance, said lawmakers had had a rocky start with SAA’s leadership earlier and were just beginning to find each other.
“Part of the problem that Vuyani [Jarana] probably has with the shareholder [government] is at the beginning they thought they might run it like a normal commercial operation, they would have the same sort of freedom, and they hadn’t and I have no doubt that with Vuyani and Magwaza that was a big disappointment to them.”
The state airline is also yet to finalise its annual statements for the financial year ended March 2018 and it has now been more than two months since Parliament’s deadline.
Gordhan’s spokesperson, Adrian Lackay, was unable to answer questions before the M&G’s deadline.
Earlier in November, Gordhan and Jarana addressed workers side by side at Airways Park after Finance Minister Tito Mboweni told a conference his view was that government should close the loss-making airline as it was unlikely to be saved.
This was a short while after Mboweni had announced a R5-billion bailout for SAA and regional state airline South African Express during his mid-term budget speech in October.
The airline has reported a R5.7-billion loss in 2017 and is projected to report a R5.2-billion loss for the financial year ending in 2018..