Block Dudu Myeni from directorships for life, OUTA and SAAPA ask court

Myeni was dishonest, obstructive and ignored good-governance principles while she chaired the SAA board.

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31/01/2020 12:35:20

                    Block Dudu Myeni from directorships for life, OUTA and SAAPA ask court


                    “The mismanagement of state-owned enterprises (SOEs) has brought our country close to ruin, and OUTA and SAAPA’s application to have Dudu Myeni declared a delinquent director, seeks to reverse this trend.”

                    With these words, advocate Carol Steinberg (for OUTA and SAAPA) started her opening statement in the Dudu Myeni trial. The trial itself finally got under way on 29 January after Myeni lost two appeal attempts (with costs). For more on those failed appeals see here.

                    In her statement, Steinberg highlighted various reasons why OUTA and SAAPA want the court to declare Myeni a delinquent director.

                    Steinberg called it “a matter of unquestionable public importance involving one of the country’s most beleaguered SOEs” and said evidence to be led would demonstrate that Myeni's time at SAA was “marked by decay and financial ruin”. She was the only constant in a “constantly rotating” SAA board from her initial appointment as a director in 2009 until her departure in October 2017. This time was marked by what Steinberg called “a pattern of unlawful and improper activities (by Myeni) that harmed SAA, and by extension the South African public”. During this time, the airline was also technically insolvent, and SAA had government-guaranteed loans of R19.1 billion.

                    The application deals with four sets of transactions and incidents: the Emirates deal; the Airbus deal; the BnP Capital deal (which OUTA stopped via court intervention); and the Ernst and Young report.

                    According to OUTA’s statement to the court, Myeni’s actions followed a clear pattern, with four constant “themes of misconduct”.

                    ·         Dishonesty: she repeatedly misrepresented SAA board resolutions and decisions in her dealings with Cabinet ministers and SAA’s partners.

                    ·         Obstruction and interference: she repeatedly interfered in SAA’s operations to delay and obstruct key deals, contrary to SAA’s best interests, in a manner that was wilful   or grossly negligent.

                    ·         Improperly inserting middlemen: Myeni repeatedly supported the insertion of middlemen into key deals, in breach of SAA’s procurement obligations and her fiduciary   duties to act in SAA’s best interests, using BBEEE as a cover for her nefarious activities.

                    ·         Poor governance: Myeni flouted fundamental governance procedures and principles in managing the affairs of the board.

                    Why are OUTA and SAAPA singling out Myeni for this delinquency action?

                    Steinberg said there are at least three good reasons to focus on Myeni.

                    Firstly, Myeni was a constant on a board that underwent significant and frequent upheavals, and her role in directorships and roles at SAA are common cause. Secondly, Myeni was intimately and actively involved in a pattern of unlawful and improper activities during her time at the helm of SAA. Thirdly, accountability must start at the top: a chairperson has special duties and responsibilities over and above those of ordinary board members, and “whataboutsim” does not excuse her conduct.

                    OUTA and SAAPA believe that other members of the SAA board who supported her unlawful activities should also face delinquency applications, and that authorities must act against any other SAA directors or officials found to be involved in mismanagement and corruption at SAA. We cannot do the work of law enforcement, and therefore focused our efforts and limited resources on the primary culprit.

                    In our view, the arguments and evidence gathered by our legal team will show that the SAA board, led by Myeni, breached SAA’s procurement policy and the Public Finance Management Act in various respects by failing to exercise proper oversight. Her failure to interrogate board submissions and to detect patent unlawfulness was wilful or, at the very least, grossly negligent in the circumstances.

                    We believe she cannot escape responsibility by appealing to a collective, as she was a member of the board and is responsible for her role in these unlawful acts. Even if this were not the case, she was the sole director to approve the patently unlawful cancellation fee (of the BnP Capital deal).

                    Therefore, OUTA and SAAPA’s legal team concludes that Myeni’s conduct warrants a court declaration of delinquency.

                    A delinquency declaration would bar Myeni from holding any directorships for at least seven years. However, the court has discretion to lengthen this, and Steinberg asked the court to make this a lifelong delinquency order.

                    A full copy of Advocate Carol Steinberg’s opening statement is here.
                    Details of the OUTA-SAAPA case against Dudu Myeni are here

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