Laws? What laws? SIU report lays bare SAA’s culture of looting
The Special Investigating Unit (SIU) interim report (see here) to the Standing Committee on Public Accounts (Scopa) on 21 November reads like a horror story of gross and excessive plundering of the once leading state-owned entity South African Airways (SAA).
The SIU investigation into SAA was proclaimed in January 2020, giving the SIU a broad mandate to investigate back to 2002, and its progress report illuminates the horrifying details of state capture and grand corruption at SAA, and gives insight into the airline’s collapse due to looting.
Depressingly, the SIU says it has received “new allegations in relation to the Takatso deal” which are now being assessed, hinting that corruption continues.
Scopa was also updated by the Auditor-General, who said that the audit for 2022/23 is underway. Audits for the four previous years have now been completed: all four years received audit disclaimers due to “material misstatements” in the financials. Poor record keeping was cited. Governance continues to be inadequate. The culture of failure to comply with procurement and contract law continues. Irregular expenditure increased from R22 billion to R44.5 billion over the four years audited. “Failure to implement consequence management encourages a culture where the disregard for legislation, policies and procedures thrives,” said the AG report (see here).
The SIU investigations implicate former and current SAA officials, former SAA directors, and lawyers and businesses. This is a network of individuals who ignored procurement and company law, used corrupt contracts and allegedly corrupt lawyers, conspired with corrupt businesses and made off with billions of rand. The SIU has identified R3.4 billion to be recovered.
The details are extraordinary. A logistics tender awarded to a company that submitted a non-responsive bid. A tyre contract worth as much as R375 million that didn’t comply with procurement law. Ground power units sold for R5.6 million less than their actual value and then hired back. Corrupt payments between entities, third parties, SAA and SAA Technical employees and board members, in connection with a component support services contract worth between R1.2 billion and R1.8 billion. Unlawful board decisions. The payment of R17 million for a part that should have cost less than half that. Irregular expenditure of R953 million on a security services contract that was repeatedly extended.
Most of this plundering took place under Dudu Myeni’s watch. She was appointed as a director in September 2009, as acting chair in December 2012, and as chair from January 2015 until her extended term ended in November 2017.
Myeni, along with her lackeys Phumeza Nhantsi and Yakhe Kwinana, set out to remove those managers like Cynthia Stimpel, Wolf Meyer, Thuli Mpshe, Sylvain Bosc, and others who got in the way of their plunder spree. In a very short space of time, so much money was looted that the airline was trashed, even before the blow dealt by the Covid-19 pandemic.
This is why SAA has sucked up R38.1 billion in taxpayer-funded bailouts since April 2018 (see the AG’s report). This is why the airline collapsed, resulting in the retrenchment of thousands of staff and leaving legitimate contractors unpaid. This is the result of inadequate ministers who appointed inadequate, disastrous directors to the SAA board, who in turn appear to have protected and nurtured certain staff members who siphoned billions of rand out of the airline. This is the result of successive parliaments which failed to watch over SAA on behalf of the public, for years.
Cabinet, ministerial and parliamentary inertia meant OUTA endured a four-year legal battle to have Myeni irrevocably declared a delinquent director for life, when she should never have been appointed to SAA in the first place. The Airbus swap transaction which formed the basis of OUTA’s action against Myeni has a starring role in the SIU report: Airbus repaid SAA the R824 million in pre-delivery payments when the contract was cancelled, but there is no proof that this money ever reached SAA.
Myeni is an example of what crony and cadre deployments do to state-owned entities.
The real tragedy is that as we sit here today, after all the evidence exposed in OUTA’s civil case against Myeni – which was provided directly to the NPA’s Investigating Directorate – and the findings in the Zondo report, Myeni and others heavily implicated in state capture still roam the streets freely, living the high life and spending our stolen public funds without a care.
OUTA commends the SIU for its investigative work and moves to block corrupt contracts and the actions instituted to recover looted funds, and the AG for trying to make sense of SAA’s inadequate financials. The SIU promises to conduct a governance review, which will include identifying individuals responsible for the governance failures. The AG report includes recommendations for Scopa for the way forward.
We look forward to prosecutions, the blocking of miscreants from any public positions and government contracts, and legal action to declare as delinquents both those former SAA board members and the directors of private businesses who conspired with them.
We call on parliament and National Treasury to ensure the immediate and adequate resourcing of the SIU, NPA and law enforcement agencies, to ensure that these cases are fully investigated and prosecuted. Failure to ensure this would be supporting the criminal endeavours detailed by the SIU report.
We call on the President to “clean up” the executive, to get rid of ministers who are systematically destroying the departments they are supposed to oversee.
We at OUTA sincerely hope that with this thorough SIU investigation, accountability will now take place and that Myeni and others will face long jail sentences in the not-too-distant future. But with our slow and poor track record on matters of this nature, we’re not holding our breath.