It’s taken two-and-a-half years but we’re finally seeing Dudu Myeni in court
The case to declare Dudu Myeni a delinquent director starts in the Pretoria High Court on Monday 7 October. Myeni previously indicated that she is contesting the action.
This is believed to be the first application for delinquency against a director of a state-owned enterprise. Such a declaration would block her from holding any positions as a director.
OUTA believes that such an action is crucial to restore accountability in SOEs.
The application was launched on 7 March 2017 by OUTA and the SAA Pilots’ Association (SAAPA) against former SAA chair Myeni. SAA and Air Chefs (Myeni was a director of both these SOEs at the time) and the Minister of Finance (who was responsible for SAA at the time) were also cited as respondents. This week’s trial date was set in February 2018.
OUTA and SAAPA are represented by advocates Carol Steinberg, Chris McConnachie and Nada Kakaza, instructed by Rashaad Pandor Attorneys.
The application seeks an order to declare Myeni a delinquent director in terms of section 162(5) of the Companies Act, due to her conduct while chair of the SAA board from December 2012 until October 2017 when she left the board.
During Myeni’s tenure as chairperson‚ SAA ran up losses of R16.844bn over five years (2012/13 to 2016/17)‚ despite that fact that SAA was profitable from 2009/10 to 2011/12.
Myeni is currently listed as a director of 13 entities, including Centlec SOC which is the Mangaung municipality electricity utility, and the Jacob Zuma Foundation NPC. A declaration of delinquency would remove her from these positions.
Two weeks ago, attorney Dan Mantsha dropped Myeni as a client in this case after acting for her for about a month; this followed a previous change in her legal team.
The delinquency application
In September 2009, Duduzile Cynthia Myeni was appointed as a non-executive director of the SAA board.
On 7 December 2012, she was appointed as acting chair of the board and, in January 2015, as the chair, a position she retained until her extended term ended in November 2017. She was also a non-executive director of SAA’s wholly owned subsidiary Air Chefs from September 2009 to March 2013, then again from May 205 to September 2016.
In 2016, OUTA exposed and stopped a deal to the value of R256 million between SAA and BnP Capital, which was irregularly appointed to source R15 billion in debt funding for the airline. Through OUTA’s intervention, a cancellation fee of R49.9 million awarded to BnP for the same transaction was also stopped.
In March 2017, the OUTA and SAAPA court application to have Myeni declared a delinquent director was filed. The application alleges that Myeni has breached the Companies Act‚ the Public Finance Management Act and the Supply Chain Management Policy of SAA. It says that Myeni has been seriously remiss in her fiduciary duties and responsibilities as the chairperson and, as such‚ has caused the airline significant harm.
These are the key allegations which form the basis of the legal case against Myeni:
1 That the board’s appointment of BnP Capital in April 2016 as a transaction advisor to SAA was unlawful.
2. That the board’s extension in May 2016 of the BnP Capital contract to include sourcing funding of R15 billion for SAA was unlawful and that BnP had by then lost its Financial Services Provider licence.
3. That the board’s decision in July 2016 to create and pay to BnP a cancellation fee of R49.9m for the failed contract was irregular and unlawful.
4. That in June 2015, Myeni unlawfully intervened in a board-approved deal between SAA and Emirates airline to block it, claiming that then President Jacob Zuma had reservations about the deal and resulting in significant financial losses and reputational harm for SAA.
5. That in 2013, Myeni unlawfully interfered in the financing for SAA’s contract to buy 20 new Airbus A320-200 aircraft for SAA, apparently to gain a financial advantage for another party. Then in September 2015, Myeni unlawfully intervened to block an SAA agreement with Airbus to cancel the purchase of the remaining 10 aircraft in favour of leasing five aircraft. Myeni’s action was intended to improperly involve and benefit a new aircraft leasing company and would cause unnecessary costs to SAA.
6. That when Ernst & Young reported to the board in December 2015 on significant problems with SAA procurement and contract management, Myeni and the board ignored the report and took no action to safeguard SAA’s interests and assets.
OUTA and SAAPA ask the court to order, if the application is granted, that any of Myeni’s legal costs in this case which were paid by any other defendant or by any public entity on her behalf, must be repaid by Myeni personally.
OUTA's summons of March 2017 outlining the case against Dudu Myeni is here.
Myeni's plea of June 2017 contesting the claim is here.