The Soapbox | Where South Africans Speak Out

BY AKANYANG MEREMENTSI

One cannot help but wonder what is actually going on at South African Airways. The former SAA CEO Khaya Ngqula was paid R935m last year to terminate his contract by the very same company that is now suing him. Why?

The payment, according to media reports, include his R3, 831-million salary and ‘termination of contract benefits’ equal to R9, 35-million.

Recently, a forensic investigation into the airline’s financial mismanagement revealed among others, the R27 million that Ngqula paid to [his] executives as ‘retention bonuses’, an amount he was “not authorised to do” as it “was outside the board-approved mandate for payments”.

Now the airline’s new chairperson, Cheryl Carolus, is reported to have said that SAA will sue Ngqula for R30.8 million, and recover the R141m “in mis-spent sponsorship money”. She said the R27 million was in excess of the maximum financial limit and such excesses were not authorised by the board and this has resulted in Ngqula being found to have “acted illegally by approving it.”

On the list are also the two sports sponsorships that Ngqula allegedly approved between 2006 and 2009, Fin Week, South Africa’s weekly financial magazine, has reported. “One was R21m for Angel Cabrera, an international golf player, and the other one R120m for the ATP tennis tour.” She said the This R27 million was in excess of the maximum financial limit and such excesses were also not authorised by the board

Ngqula was apparently only, allowed to approve sponsorships of between R1m and R2m a year at most, Carolus told Fin Week, but instead, he went ahead and approved those of higher value than was expected of him.

The investigation, which began more than a year ago, was instituted after tender irregularities and fraud allegations were leveled against Ngqula. In the month that followed, March 2009, Ngqula left SAA “under a cloud” “after accepting a golden handshake of about R8m”, according to Fin Week.

What has since worsened the legal action against Ngqula is his failure to co-operate with the airline in its findings as he “demanded all sorts of conditions which made it impossible … to proceed with the interview [in which he will have had the chance to state his side of the story], according to a Business Day newspaper report, and therefore the “process was concluded without his input” despite him having “had the time to react to the findings, but had not co-operated.”

Despite there being ‘various weaknesses in SAA’s internal controls and procurement processes’, according to the then CEO André Viljoen – there was no reason for Ngqula to have taken advantage of the system as he seems to now have as indicated in the report. “The KPMG report showed there were huge gaps in terms of corporate governance, procurement and internal policies, which were now being addressed by CEO Siza Mzimela, said Carolus.

Business Day has reported that given the finding of the investigations against Ngqula, the latter was found to have been a “cavalier leader” and treated SAA as his “his own personal empire”. Ngqula is further alleged to have “spent R500000 hosting friends and associates at the expense of the airline. These included trips to the Soccer World Cup in Germany in 2006, the Rugby World Cup in France in 2007 and a tennis tournament in Monte Carlo in 2008” the newspaper reported today.

What is even worrying about the findings of the report is the failure of the previous board and the then CEOs’ failure in trying to solve these “transgressions seriously” just before the Public Enterprises Minister Brigitte Mabandla intervened in February last year, the Business Day has wondered. Of course this is very true.

Both opposition party, Democratic Alliance (DA), and COSATU welcomed the board’s decision to pursue legal actions against Ngqula. COSATU said the decision was “a great victory for the SA Transport and Allied Workers’ Union (SATAWU) whose members first blew the whistle on the [Ngqula]”.

It congratulated its affiliate and stated that this was a “warning to any other executives that the trade unions will now be even more determined to follow SATAWU’s example and to blow the whistle of such examples of crass materialism and theft from a state-owned asset”.

DA shadow minister of Public Enterprises Manie van Dyk reportedly said in a statement (see here) that SAA’s decision to sue Ngqula represented a “departure from the general lack of responsibility that has come to define the other heads of state-owned entities (SOEs) responsible for financial mismanagement”.

Akanyang Merementsi blogs at Akanyang Africa.