'Invisible hand' at play in SAA suspensions
Two senior executives suspended but now jittery banks need to be appeased
Battle–scarred South African Airways (SAA) has launched a damage-control exercise after it suspended two executives, including chief financial officer (CFO) Phumeza Nhantsi, who is said to have had a very close relationship with the banks.
Officials from the state-owned airline will soon meet with creditors and its shareholders to explain its decision to suspend Nhantsi and CEO of SAA subsidiary SAA Technical Musa Zwane .
The suspensions on Monday were pending disciplinary action by SAA chief executive Vuyani Jarana, according to a media release issued on Tuesday.
SAA spokesperson Tlali Tlali said the airline’s board had resolved at its last gathering to institute disciplinary proceedings against the two.
Tlali confirmed SAA would meet with both lenders and treasury on Thursday and Friday respectively, adding that both meetings had been prearranged.
"SAA will meet the lenders on Thursday on liquidity management business which is an ongoing process. The meeting with the shareholder department on Friday is about preparation for appearance before SCOF next week."
He said despite the previous investigations' findings, "SAA is satisfied that there is a basis for instituting disciplinary proceedings against the two executives".
Times Select has established the suspensions are related to an aborted attempt to award a 1.5% success fee, some R256-million, to unknown boutique financier BNP Capital that had won a tender to raise R15-billion debt funding for SAA.
Nhantsi, then SAA’s interim CFO, and former acting CEO Zwane, has signed a recommendation to the board – despite the fact that SAA could have done the deal for R85-million.
At the time Sunday Times reported how former board chair Dudu Myeni pressured executives at the airline to ensure that BNP be paid the cancellation fee and that this be R 49.9-million. This was after SAA cancelled the deal after learning that BNP did not have a valid Financial Services Board.SAA said Nona Sonjani from SAA’s Group Finance and Wellington Nyuswa would act as CFO and CEO respectively. “Due process will be followed and the executives affected are still in the employ of the airline and will be presumed innocent.”
A former SAA insider Wednesday described the suspension as a “witch hunt” saying no less than three independent probes had cleared Nhantsi of any wrongdoing. This was at a time the previous SAA board appointed by former Finance minister Pravin Gordhan wanted to hire her on a permanent basis.
“I suspect there is an invisible hand at play here because this issue was looked at by the Public Protector - who found that SAA did not suffer any prejudice, the auditor general, and a law firm appointed by SAA’s board which said she should be given a warning. This was necessary because it would not have been approved by treasury,” said the source who did not want to be named because of proximity to SAA.
Tlali responded to the accusations saying: “Decisions of this nature tend to attract varied comments and theories, many of which have no basis in fact ... "We will not be drawn into discussing the merit aspects of the case in the media. To do so would be unprofessional and unethical when it is not justified to do so.”
An SAA insider confirmed SAA had to field calls from its creditors on Wednesday, wanting to find out what was wrong. “Remember SAA has a very close relationship with the banks because of its liquidity position, and that is through Phumeza. So, if anything happens, they need to know.”
Nhantsi’s attorney Mzwandile Matlala said his client was yet to receive a charge sheet and thus it would be “presumptuous” to comment on the matter. “What we can gather is that the suspension and the pending disciplinary process stems from a procurement process which dates back to 2016 for the procurement of funds for SAA’s debt restructuring, which procurement process collapsed,” he said.
SAA has been crippled by poor financial performance as a result of mismanagement and instability at the airline.
A report by Auditor General Kimi Makwethu released last week showed the airline made a loss of close to R6-billion at the end of 2017.
Last year former Finance minister Malusi Gigaba gave SAA a total of R5.2-billion in emergency cash from the National Revenue Fund when the airline was at risk of defaulting on loans. This was followed by an announcement the state would sell its stake in Telkom to raise R10-billion for a bail-out for the airline.
Jarana has been at the helm of the beleaguered airline since last November with a mission to lead the airline’s turnaround.
National Treasury on Wednesday said they were alerted to the suspensions by the board on March 8.