Sunday, March 24, 2013

■ SOUTH AFRICA: Murky business meetings and an unapproved USD1billion Airbus fleet renewal deal at centre of SAA's boardroom woes claims report.

SAA logoMurky private business meetings and a USD1.08billion (ZAR10billion) fleet procurement tender awarded to Airbus Industrie SAS are at the heart of South African Airways (SA)'s boardroom troubles claims an article by the amaBhungane investigative column of The Mail & Guardian newspaper.

According to the article, SAA's original board (i.e those who eventually left the company is record numbers following a breakdown in their relationship with SAA's sole shareholder, the South African government) had awarded a ZAR10billion tender to Airbus for SAA's fleet renewal, as part of the airline's then turnaround strategy (Number 8). However, it goes on to claim, the Ministry of Public Enterprises, headed by Minister Malusi Gigaba, were taken aback at the recommendation:
"The previous board accepted the recommendation from the fleet committee," said one well-placed source. "That's when events started melting down – after the shareholder [the minister] was advised of SAA's view on the bids. There was a sense that the minister's office was quite shocked the process had progressed so far."
SAA AirbusThe resulting lack of action regarding the recommendation on the ministry's behalf and the consequent breakdown in trust is said to have helped precipitate the departure of the board. 

Contrastingly, the ministry disputes this version of events stating that the previous board, headed by Cheryl Caoruls, were not so squeaky clean and had in fact "only met 30% of its key performance indicators, the most important of those being financial management."

The article further sheds light on the mysterious appointment and departure of Vuyusile Kona, the now former interim CEO of the carrier, given the difficult, and at times litigious, relationship he had with SAA.

It says that following the resignation of Siza Mzimela as CEO of SAA in early October 2012, Kona, who was then appointed to the role of both interim CEO and Board chairman of the airline, was involved in a murky meeting with well-connected South African businessmen in which an alleged offer of USD49'000 (ZAR500'000) was made to Kona possibly in reference to the Airbus deal. 

Statements from the businessmen involved claim that the meeting was solely to do with them switching their business travel from rival Comair Ltd, to SAA, an absurdity the report claims, given their vested interests in Comair Ltd.

An investigation into Kona was launched after his appointment, which ultimately culminated in his suspension. 
The airline has declined to detail the nature of the investigation but, according to a source who has had insight into the dispute, the initial reason given was concerning a consultancy contract he had entered into with German airline Lufthansa.

Kona challenged the board after he was tipped off that a legal opinion on the Lufthansa contract had been doctored to justify his suspension.
Source [M&G]