Wednesday 22 November 2017

Extension of Myeni’s SAA contract is ‘irregular’, finance committee says

Extension of Myeni’s SAA contract is ‘irregular’, finance committee says
(Business Day 09/13/17)
South African Airways (SAA) chairperson Dudu Myeni

Parliament’s finance committee has concluded that it appeared the extension of South African Airways (SAA) chairperson Dudu Myeni’s contract until the airline’s AGM in November was irregular, and has called on the executive to fix the matter.

The proper process was not followed in extending Myeni’s contract because the Cabinet did not approve it, as required. Her contract was extended in 2016 for a further year, which ended on August 31. It was then extended until the AGM took place — Finance Minister Malusi Gigaba sent a letter to Myeni informing her of this latest extension.

Questions over the legality of the extension were raised after it emerged that the Companies and Intellectual Property Commission (CIPC) had not been informed about it within the required 10 days. It also appeared to have been done in contravention of the SAA memorandum of incorporation.

The meeting was held to engage with SAA executives on its performance. Myeni who has been at the helm at SAA for about eight years, could not attend the meeting as she was not well. During her reign the airline has plunged deeper into the red and financial collapse.

Deputy Finance Minister Sifiso Buthelezi said the extension by the minister without the approval of the Cabinet was allowed in terms of the SAA’s memorandum of incorporation. He was not sure whether the CIPC had been informed or not.

Buthelezi said that the minister thought it prudent to extend the contract as the Treasury was undertaking a holistic evaluation of the board and was busy looking at the airline’s financial statements and performance, as well as its skills matrix.

He categorically denied that President Jacob Zuma had given an instruction to Gigaba to extend the contract, as DA MPs suggested.

But parliamentary legal adviser Frank Jenkins said that his reading of the clause of the memorandum of incorporation on which Buthelezi relied in stating that the extension was valid, did not give the authority for the extension of one nonexecutive director alone but rather, only all of them as a collective.

Jenkins said it was possible that a resolution of the Cabinet as the shareholder could override the provisions of the memorandum of incorporation.

ANC MP Derek Hanekom pointed out that it was normal practice for contract extensions to be approved by the Cabinet. MPs raised questions as to whether Cabinet approval was not required for the contract extension.

DA deputy finance spokesperson Alf Lees noted that Gigaba could have appointed the deputy chairperson of SAA as an interim measure instead of extending Myeni’s contract, who has been held responsible for the poor performance of the airline. He suggested that Gigaba might have been pressured by Myeni’s close friend, President Jacob Zuma, to extend the contract.

He said that whether or not Myeni’s contract extension was legal, she must be removed with immediate effect.

DA finance spokesperson David Maynier also suggested that the extension of the contract was a political decision, but Buthelezi said it was a "business imperative" and not a legal imperative.

But EFF chief whip Floyd Shivambu said that the extension of Myeni’s contract was illegal and could not be regularised.

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