South African Airways (SAA) Quarterly Performance: briefing postponed

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Finance Standing Committee

27 June 2017
Chairperson: Mr Y Carrim (ANC)
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Meeting Summary

The South African Airways (SAA) was expected to present its fourth quarter report before the Committee. However, the majority of Members expressed concern about the absence of SAA board members. Also, the Committee was dismayed by the quality of the SAA quarterly report which it could not process.

The majority of ANC Members wanted SAA board chairperson to be sent packing as she was the only board member present. However, Ms B Mabe insisted that the board chairperson be allowed to speak. The Chairperson indicated that Ms Mabe had attended only two meetings since her appointment to the Committee and both times had differed with her party colleagues. This led to a clash between Ms Mabe and the Chairperson during which Ms Mabe accused him of ill-treating her.

Members expressed concern about the absence of the Deputy Minister when SAA was having serious challenges. The EFF suggested board members had boycotted the meeting because of reported differences with the SAA board chairperson. Members were dismayed that there was no finality on SAA loans three days before repayment deadline. Was Treasury in a position to provide SAA with a loan guarantee if the R9 billion worth of loans rollover negotiations failed? Was it true that SAA was having difficulties with paying employee salaries?

SAA said it was engaging with the financiers to rollover its loans. Engagements were ongoing and at a sensitive stage. SAA assured the Committee that salaries would be paid on time. SAA emphasised that it would take the Committee into confidence when it brings a clear recovery path document on its next appearance.

National Treasury said it was in continual engagements with various lenders and working on a package to get SAA out of trouble. The Public Investment Corporation was one of the many options Treasury and SAA were exploring to deal with the challenges. On SAA loans, the indications were that the loans would be rolled over. It was well-understood that if obligations were not met, ripple effects would be felt on the whole guarantee framework of government.

The Chairperson suggested that SAA appear before the Committee for its fourth quarter report presentation on 3 August 2017- SAA was expected to bring a concrete recovery template then. Also, the Committee received a letter from the Black First Land First organization led by Mr Andile Mngxitama. The Committee viewed the letter as a crude attempt to interfere with the work of the Committee, and referred it to the Senior Parliamentary Legal Advisor.

Meeting report

The Chairperson, in his opening remarks, welcomed the delegation from the South African Airways (SAA).

Mr F Shivambu (EFF) asked about the whereabouts of the rest of the SAA board. He felt Ms Dudu Myeni, SAA board chairperson, could not account before the Committee alone.

Ms Dudu Myeni, SAA Board Chairperson, replied that the request to appear before the Committee was extended to every board member. One board member had travelled to the US and another was reported ill. She apologised on their behalf.

Ms T Tobias (ANC) found it very odd that board members had always honoured the Committee’s request to appear before it but in this instance all of them were absent. Issues on the table were very serious and the entire board should be collectively responsible. The Committee was making efforts to assist the board in rebuilding SAA. She suggested that the Committee not entertain any discussions if the entire board or a fair representation of it was not in attendance. It had become a ‘pattern’ in Parliament where people requested to appear before it do not avail themselves. The Committee could have been made aware in advance that board members were not available.

Mr A Lees (DA) expressed concern about the absence of the Deputy Minister when SAA was having serious challenges. It seemed that there was a general boycott of the meeting as none of the key players were in attendance. It does seem that the chair of the board has lost control of her board members if she failed to have them appear before the Committee.

Ms P Kekana (ANC) said discussions could not continue without a reasonable representation of the SAA board. Had Members been made aware on time, the meeting could have been cancelled. A letter of displeasure had to be sent to the Minister.

Ms D Mahlangu (ANC) indicated that the board’s absence brought a lot of suspicion. With various reports by the media, the absence of board members confirmed that there were serious challenges within SAA. A strong message had to be sent that Parliament has to be taken seriously. Members were committed to being part of the solution and the lack of cooperation by board members was a challenge. 

Mr Shivambu said the crisis in SAA was centred on Ms Myeni. He recounted that Ms Myeni was in the habit of bullying other SAA board members. She had not been attending successive board meetings and fellow board members felt it was unfitting for them to appear before the Committee together with her. The Committee was dealing with a truant board chairperson who did not respect the mandate of the Committee. Ms Myeni thought she was too powerful because of her close ties with the President- she had to leave SAA. He agreed with Ms Tobias that the meeting be postponed up to a time when a reasonable representation of the board was present.

Mr D Maynier (DA) noted that Members had received correspondence from the Black First Land First organisation, which appeared to be in defence of Ms Myeni. He asked if Ms Myeni was aware of same and if she had played any role in having the correspondence circulated. He believed the meeting had to continue. SAA issues were critical and should not be deferred to a later date.

Ms B Mabe (ANC) felt the meeting should continue given that the board chairperson was present. SAA had to be given the opportunity to present its quarterly report. Also, given that Ms Myeni had accounted for the absence of fellow board members, it was only fair to hear her out as the ‘captain’.

Mr Lees said SAA was in dire straits and the situation had never been worse. The motivation by some Members to postpone the meeting was well understood but postponing the discussions would not be the way forward.

Ms Tobias reiterated that board members’ absence was on the backdrop of serious allegations against SAA that was recently covered by the print media. The Committee ‘should not fall into the trap’ and had to reach to the bottom of issues. She noted that Ms Mabe was not part of the Committee when it started dealing with SAA challenges three year ago. The meeting should not continue and Ms Mabe would be briefed about the intricacies during an ANC study group meeting. Also, the Committee would want to engage the entire board, including the Deputy Minister. The request to appear before the Committee was not short notice as it was sent six weeks back.

Ms Mahlangu added that on the basis of allegations in the media, it would to be prudent to have a reasonable representation of the board before the Committee. She maintained that Ms Myeni be released and allowed to put her house in order before appearing before the Committee. The political heads would be expected to be present as well.

Ms Kekana said the Committee had to agree on certain principles. The intentions of Members were not malicious but based on good faith. Also, the Committee was not empowered to fire Ms Myeni; it was the Department’s call.

Mr N Nkwankwa (UDM) said the Committee could be accused of taking sides in SAA’s factional battle if the meeting was allowed to continue in the absence of other board members. Members read various media reports with a number of accusations, with some board members being quoted.  The board chair and her delegation had to be sent back; to only appear when ready to engage with the Committee.

The Chairperson, before allowing Ms Mabe to speak, indicated that Ms Mabe had attended only two meetings since her appointment to the Committee and both times had differed with her party colleagues.

Ms Mabe felt the Chairperson did not want her to contribute and participate in the Committee. The Chairperson was ‘ill-treating her and the reason why she had not been attending meetings was that the Chairperson was killing her confidence’. The ANC Members would not want to excite the opposition by wanting to side with them. If that was how the Committee conducted its business, unfortunately she was in the wrong Committee. The Chairperson had to stop ill-treating her.

Mr Shivambu said the ANC must respect Parliament. The manner in which issues were coming up was extremely problematic. There was nothing wrong with some Members trying to update a colleague who had not been attending meetings about the intricacies of the SAA matter. He felt Ms Mabe’s actions were not appropriate and sensible. He reiterated that the meeting be postponed as the Committee was not going to get a true reflection of the realities in SAA from Ms Myeni.

Mr Nkwankwa said Ms Mabe’s accusations that her colleagues were siding with the opposition had the danger of dividing the Committee instead of addressing pertinent issues at hand.

The Chairperson pointed out that there was no ANC study group position on the SAA matter. However, he acknowledged that the majority of ANC Members were in support of calling off the meeting. He explained that it had never been the position of the Committee that the entire board membership of any entity be present for a Committee meeting. It was agreed in a different setting that an entity board chair and/or deputy chair as well as at least one board member were expected to appear before Committees upon request. To be fair, the SAA chair needed to know. He suggested that the rule, moving forward, be that the board chair and/or deputy chair, and at least two members appear. He alerted Members that there had been numerous attempts to stop the meeting from taking place. He spoke of receiving numerous calls and messages on different occasions requesting him to postpone the meeting. Therefore, Members who were against the meeting continuing had to be aware that they were unintendedly serving the purpose of those who did not want the meeting to be held in the first place. He suggested that the Minister or Deputy Minister appear as well up to a point that SAA stabilizes- there was need for political leadership. He pointed out that the Committee should not be threatened by anybody; there were people threatening to take the Committee to court and alleging that the Committee was not acting against corruption. The job of the Committee was to identify cases of corruption and to report to relevant authorities; the Committee had no capacity to carry out forensic investigations. He asked for proposals on when the SAA could appear before the Committee. Also, the SAA quarterly report presentation was only sent to the Committee Secretary an hour before the meeting. The presentation was ‘pathetic’ and ‘shameful’ given the gravity of the situation at SAA. Was the Board chair providing any leadership at all?

Ms Tobias apologised on behalf of the Committee for the exchanges between Ms Mabe and the Chairperson; it was not a normal feature in the Committee. She emphasised that SAA should be released given that board members were not in attendance. There were pertinent questions Members needed to ask the chair and the board; some based on recent media reports on SAA. There was need for a fruitful engagement without the element of bias.

The Chairperson suggested the board chair be heard. However, discussions on the substance of the SAA quarterly report would be deferred to a later date. The board chair would only deal with process issues.

Mr Shivambu commented on a letter sent to the Committee by Black First Land First leader, Mr Andile Mngxitama. He indicated that Mr Mngxitama held a joint press conference with Ms Myeni a while ago, defending the latter. The issues raised during said press conference also found expression in the letter. He dismissed the letter as ‘complete nonsense’. ‘The Committee must not fall into the trap of capturers running the show and would want to drive a certain narrative that all is well’. Members would not be doing justice to Parliament if they were to engage Ms Myeni.

Mr Lees motivated why he felt the meeting had to continue or be reconvened within the week. SAA was on the verge of bankruptcy and collapse; R9 billion worth of loans had to be paid by 30 June or be rolled over. If the loans were not rolled over, the airline would close down- with huge implications on the economy. Also, he knew from good authority that SAA battled to pay May and June salaries. The matter could not be put on hold up to SAA’s next scheduled appearance before the Committee. This was not about Ms Myeni- the real issue was the future and imminent collapse of SAA.

The Chairperson suggested the Committee deal with pertinent issues pointed out by Mr Lees, and the rest be discussed on a later date; bearing in mind the fact that the board chair would not necessarily reflect the views of the board as a whole. He asked SAA to clarify issues around its loans and whether the Public Investment Corporation (PIC) had been approached. Was it true that SAA was having difficulties with paying salaries?

Ms Myeni replied that SAA had received confirmation of the Committee meeting from the Department on 21 June. She had received the SAA quarterly report presentation on the night before the Committee meeting, thus there was little time for a ‘dry run’. She indicated that she had been attending all scheduled SAA Board meetings.

The Chairperson interjected that Ms Myeni stick to the questions raised by Members. All accusations and allegations would be dealt with in the presence of other board members.

Mr Tleli Makhetha, General Manager: SAA Cargo, said SAA was engaging with the financiers to rollover its loans. Engagements were ongoing and at a sensitive stage. On salaries, SAA had been able to pay salaries as and when they became due. Paying salaries had always been a priority.

Ms Tobias clarified that Members were concerned about whether SAA would be able to pay employee salaries going forward, not about historical payments that had been made. Also, Members understood the sensitivities around loan negotiations and would not want to jeopardize same.

Ms Phumeza Nhantsi, Interim Chief Financial Officer, said SAA was in the process of diversifying its debt portfolio and the PIC was one of the various potential investors SAA was in discussions with. SAA was working on solutions to address its debt challenges.

Ms Tobias felt the CFO was not the right person to be responding to issues. The Executive Committee of SAA should take ownership of the challenges.  

Mr Lees was dismayed that there was no finality on loans three days before repayment deadline. He asked Treasury whether it was in a position to provide SAA with a loan guarantee if negotiations fail. It was understood that Standard Bank was insisting on repayment of a loan amounting to R2.3 billion. Was Treasury aware about negotiations with the PIC? 

Mr Dondo Mogajane, Director-General, National Treasury, said Treasury had ‘not been sitting doing nothing’; it was in continual engagements with various lenders and working on a package to get SAA out of trouble. The PIC was one of the many options Treasury and SAA were exploring. On SAA loans, the indication was that they would be rolled over. If obligations were not met, ripple effects would be felt on the whole guarantee framework of government- that was well-understood. Treasury was well aware of the issues and engaging with lenders and SAA on a weekly basis. 

Ms Myeni assured the Committee that salaries would be paid going forward- ‘it was all systems go when it came to that.’ She emphasised that SAA would take the Committee into confidence when it brings a clear recovery path document upon its next appearance before the Committee.

The Chairperson suggested that SAA appear before the Committee for its fourth quarter report presentation on 3 August 2017- SAA was expected to bring a concrete recovery template. The Committee viewed the Black First Land First letter as a crude attempt to interfere with its work and referred it to Adv. Frank Jenkins, the Senior Parliamentary Legal Advisor.

The meeting was adjourned. 

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