Zondo report: Why Myeni must be prosecuted for SAA debacle

The judicial commission of inquiry into state capture has recommended that Dudu Myeni, the disgraced former chairperson of SAA, be charged with fraud.

The commission — chaired by deputy Chief Justice Raymond Zondo, who handed over its first report to President Cyril Ramaphosa on Tuesday — notes that the national carrier “declined during the tenure of Ms Myeni to an entity racked by corruption and fraud”.

Myeni, the report found, knowingly made misrepresentations to the public enterprises ministry that caused financial losses to the beleaguered airline. “It is likely that her conduct constitutes the crime of fraud,” the report reads, noting the commission’s recommendation that the National Prosecuting Authority investigate whether Myeni should be prosecuted for fraud.

The 874-page report, the first of three, sets out the misrepresentations in question: in 2013, Myeni sent at least two letters to the then minister of public enterprises, Malusi Gigaba, relating to a transaction with Pembroke Capital, an Ireland-based aircraft leasing company. 

The letters purported to communicate board resolutions. But, according to evidence, the decisions were made by Myeni alone. 

According to evidence by Bongisizwe Mpondo, a former non-executive director of SAA, the board resolved on 27 May 2013 to award a contract to finance 10 aircraft to Pembroke Capital. After the resolution, an application was submitted to Gigaba for the approval of the financing that would be obtained from Pembroke for the leasing of the 10 aircraft.

A month later, Myeni wrote to the minister and said “the board has subsequently resolved to transact on two aircraft with Pembroke”. About three weeks later, Myeni wrote a third letter to Gigaba in which she claimed that a third decision had been taken by the board of SAA — to revert to the original request for approval for the financing of 10 aircraft.

But, according to Mpondo, the board was not aware that Myeni had sent the second letter to the minister.

Mpondo stated: “It appears, on the face of it, that Ms Myeni unilaterally attempted to change the board resolution of 27 May 2013 without the knowledge or approval of the board. This was highly irregular in my opinion.”

According to Mpondo’s affidavit, on 22 January 2014 the board held a meeting at which members raised concerns about the aircraft having not yet been delivered. This was costing SAA R2-million a month in storage fees to Airbus for not taking delivery timeously.

The board later concluded that Myeni appeared to be trying to secure her own funding for the acquisition of the 10 aircraft, without involving the executive, resulting in the attempted change in the board’s funding resolution. 

Myeni’s conduct in the Pembroke transaction, the report notes, resulted in delays in the delivery of the aircraft that cost SAA about R800-million in pre-delivery payments. “This led to a further cash shortfall and SAA having to increase its borrowing limits, which negatively impacted SAA for a long time.”

When Myeni appeared before the commission, she refused to answer questions relating to the alleged misrepresentations, citing her privilege against self-incrimination. Myeni, the commission found, abused this privilege.

Zondo explained to Myeni that her failure to deal with these issues would mean the evidence against her was uncontested and findings against her could be made on the basis of this uncontested evidence.

“The Pembroke transaction is one such instance where the evidence against Ms

Myeni is undisputed and overwhelming,” the report reads.

“Ms Myeni, the then chairperson of the board of SAA, on two successive occasions, lied to the minister of public enterprises when she claimed that the board had taken two decisions that it had not taken. Those misrepresentations caused financial losses to SAA.”

The report further notes that despite SAA’s decline under Myeni, she was retained as its chairperson “well beyond the point at which she should have been removed”. 

Two successive finance ministers, Pravin Gordhan and Nhlanhla Nene, told the commission that this was because of the personal preference of former president Jacob Zuma.

“This is the antithesis of accountability. President Zuma fled the commission because he knew there were questions that would be put to him which he would not have been able to answer … The appointment of individuals to boards of SOEs [state-owned entities] must be justifiable based on their skills, expertise, experience and knowledge. Functionaries within SOEs must be held to the highest standards of accountability because they use public funds to manage the businesses they oversee,” the report states

Those responsible for governance at SAA, South African Airways Technical and SA Express “displayed a wanton disregard for these standards”, the report adds.

“Rather than acting in the entities’ best interests, they were motivated by their own personal interest. This should never be allowed to occur again.

Read it below:

Judicial Commission of Inqu… by Mail and Guardian

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Sarah Smit
Sarah Smit
Sarah Smit is a general news reporter at the Mail & Guardian. She covers topics relating to labour, corruption and the law.

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