SAA could claim against Ngqula

2009-03-24 12:02

Cape Town - South African Airways could make a claim against its sacked CEO Khaya Ngqula should an investigation find he acted improperly during his tenure at the airline, the National Assembly's portfolio committee on public enterprises heard on Tuesday.

"It needs to be made clear that if the investigation should uncover evidence of wrongdoing, Mr Ngqula's separation from SAA will not protect him from the consequences that the board instigated," SAA board chairperson Jakes Gerwel said.

"If findings of impropriety are made, the board will be able to follow its rights."

Ngqula was fired earlier in March after accusations of tender irregularities in a R1.5bn catering tender awarded to a consortium involving his wife's business partner, Vusi Sithole.

It had been reported that Ngqula could get a package of nearly R8m based on his current salary and taking into account that his six-year contract was due to run until the end of August next year.

This was likely to exclude the more than R1m in retention bonuses he would have to pay back due to his leaving before the end of his contract.

Financial settlement

Last week government spokesperson Themba Maseko said the Cabinet took "very strong" exception to the reported financial settlement reached between the SAA board and Ngqula.

But Gerwel explained on Tuesday that the board took the decision to negotiate a termination with Ngqula due to the need to stabilise the company and "allow the operation to go on without the uncertainties of a CEO on special leave of absence from the company".

If the board had not fired Ngqula he could have earned a salary and full benefits for a substantial period.

"If the board had not decided to separate with Mr Ngqula, he would still be earning his salary and retention premium while on special leave," Gerwel said.

"The conundrum that faced us - board and shareholder - was that if the independent inquiry into the allegations made against him uncovered nothing of substance, it would have meant his return to work."

Even if the forensic investigation had found against him, Ngqula would have the right to appeal and SAA would have continued to pay him his full package during the course of a potentially lengthy appeal.

Gerwel said Ngqula had fully paid back a retention bonus he had received during his tenure as CEO.

Retention bonuses were paid to upper management and scarce staff such as technicians at SAA as a retention mechanism. Should the staff member leave the airline, they had to return the bonus.

"One detail we may disclose in spite of the normal and conventional confidentiality clauses in settlements like these is that Mr Ngqula has repaid retention premiums in line with SAA policy."

Details of the settlement with Ngqula would be made public in SAA's annual report in September.

SAA consulted with president, minister

Gerwel rejected suggestions by the Cabinet last week that the SAA board had acted unilaterally and without consultation in settling with Ngqula.

"That we acted unilaterally is not factually correct. In fact, on the contrary," Gerwel said.

Gerwel said he had sought and obtained a meeting with President Kgalema Motlanthe accompanied by the shareholder minister - Public Enterprises Minister Brigitte Mabandla.

"The president was fully briefed and provided with a file containing correspondence and minutes of meetings involving the board and the shareholder minister regarding the settlement with the former CEO," he said.

Committee chair Fatima Chohan-Khota was being provided with the same documents on the understanding they were confidential.

"The point of the disclosure of these documents to the President and the chairperson of this committee is to dispel the notion that the board unilaterally and without consultation decided to arrive at a settlement with the former CEO," Gerwel said.

The decision was ultimately and formally taken by the board as the employer.

"The documents in your possession will show, though, that the board decision was after the express indication of the wishes of the shareholder as conveyed in an extra-ordinary general meeting called by the shareholder, and at every step with the formal consent of the shareholder.

"The Cabinet statement, and then with its corollaries about 'issues of governance, management and reasons for the reported under-performance of the airline' came as something of a surprise to us and the board," Gerwel said.

Catering contract not signed

SAA acting CEO Chris Smyth told the committee that the catering contract entered into by Ngqula had not been signed.

"No contract has been signed at this point," he said.

"The intention for putting out a contract was to get an idea of pricing out there," he said.

"We wanted to combine the selling of Air Chefs with the award of the contract."

- SAPA

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