Inside the SAA battle: Throwing toys and bugging boardrooms

Resigning himself: SAA chief executive Vuyani Jarana had to answer to the airline’s board about its poor performance and outstanding financials. (Elizabeth Sejake/Gallo Images/Rapport)

Resigning himself: SAA chief executive Vuyani Jarana had to answer to the airline’s board about its poor performance and outstanding financials. (Elizabeth Sejake/Gallo Images/Rapport)

The resignation of Vuyani Jarana from SAA came after a week of high drama, during which the outgoing chief executive was confronted about the performance of the airline, first by the board’s audit committee and then the full board.

The Mail & Guardian understands his resignation was also influenced by Pravin Gordhan’s reappointment as public enterprises minister.

Concerns raised in the board meeting, whose agenda the M&G has seen, included the fact that SAA’s 2018 financials, which are now more than nine months overdue, were still outstanding. Those concerns extended to the fact that the current losses at the airline were worse than the R5-billion projected in the turnaround strategy.

One source said: “The board was unhappy because they allowed him to do everything he wanted, including hiring his own consultants [whom] he called black belts, but that still did not do anything to save the airline. He did not take kindly to their view that he’s had it the best but was still failing.”

The meeting was scheduled to discuss the chief executive’s report and the financial report, as well as strategic partnership options for Air Chefs and SAA Technical. The board was also meant to approve the group’s risk and compliance policies and a wage mandate, plus the replacement of SAA’s wide-body fleet.

Another source said: “He [Jarana] threw out his toys when they asked him about the losses and he said it was because he did not have support. Martin [Kingston] told him that even the previous CEO did not have support but his numbers were better.”

SAA spokesperson Tlali Tlali said the board would address recent developments in a press briefing today.

Earlier this week the situation degenerated into a full-blown soapie as it emerged that Jarana, who had threatened to sue SAA’s board, is now the subject of a forensic investigation. Labour unions have also accused the airline of being captured, after learning that it held a board meeting on Monday at financial-advisory firm Rothschild & Co.

The firm is linked to former finance minister Trevor Manuel, who is employed there as an adviser but is also associated with SAA board member Kingston, who was its chief executive until March this year and who recently told Bloomberg that he would welcome further involvement in South Africa’s state-owned enterprises (SOEs).

Statements such as this have seen the firm labelled an emblem of outside control of the state under the administration of President Cyril Ramaphosa.

Insiders said the board felt it was necessary to hold the meeting outside SAA offices as it feared that the boardrooms at Airways Park were bugged. A day later Jarana was invited to another meeting with the board in Sandton at the Maslow Hotel, where his exit was further discussed.

In his resignation letter, Jarana cited inadequate support from the government’s shareholder representative — the department of public enterprises — and claimed that it was meddling in the day-to-day running of the board. He also believed that the turnaround plan was under threat.

Several sources said the board was mulling the possibility of allowing Jarana to resign because it blames him for leaking his own resignation letter, despite him being asked to submit a shorter, sanitised version.

The board had asked Jarana to tone down his letter, out of concern for the negative effect it would have on the perceptions of lenders and other stakeholders.

“They asked him to make it a one-page letter that said either he was sick or wanted to spend time with his family,” a source close to the situation said.

Another source said: “He should have been more considerate in his wording. His letter has created anxiety and turmoil with lenders and service providers, because it gave indications that the turnaround plan is in trouble and SAA needs to be put into business rescue.”

On Wednesday, Jarana, who had offered to serve notice until the end of August, gave his board 24 hours to inform him whether it intended to accept his resignation or officially reject it in writing. “The board’s refusal to pronounce on my resignation in writing makes it difficult for me to prepare myself for a decent and proper handover,” he said in his letter.

He also threatened legal action against the board after he learned it had instructed the airline’s head of risk and compliance, Vusi Pikoli, to investigate him for possibly leaking his resignation letter. SAA’s board is expected to announce a decision regarding Jarana this Friday.

Jarana questioned the decision to investigate him, saying the board had seen fit not to inform him about it at Monday’s meeting. 

“It is in violation of my constitutional rights and the rule of law. My right to seek legal advice on the board’s unlawful and unconstitutional conduct remains reserved,” he wrote, adding that the board’s conduct fell into the category of constructive dismissal.

Jarana could not be reached all week.

His decision to throw in the towel — the second such move by a troubled SOE head recently, after Eskom’s Phakamani Hadebe — led to several groups, from politicians and labour to executive bodies and analysts, saying it sent negative perceptions about SAA.

This week the Economic Freedom Fighters said Jarana was sabotaged by Gordhan, while the Black Management Forum said SOEs had become “slaughterhouses” for black executives because of government meddling.

Labour unions at SAA, with the exception of the National Transport Union,threatened strikes that would down flights in solidarity with Jarana and called for Ramaphosa to intervene and reinstate him.

In a joint statement, the South African Cabin Crew Association and the National Union of Mineworkers of South Africa said the resignation was a national crisis.

“We want to be upfront that we have always understood that there has been an agenda to privatise the SOEs and SAA is not immune to this,” the statement said, while also seeking to link Gordhan to what it said is a Rothschild agenda to privatise SOEs. 

It also said: “What has consistently strengthened this belief is that in all SOEs, if Rothschild is not directly involved in the boards, it acts as consultants and/or advisers. The big question, therefore, is:how is its meddling in the affairs of SOEs any different from the previous meddling of the Guptas, which the country is still recovering from?”

The M&G understands that SAA’s board, led by remuneration committee chair Thandeka Mgoduso, was also told by SAA workers during a public meeting on Wednesday not to accept Jarana’s resignation.

Sabelo Skiti

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