Bidvest flushes bid from SAA

“We sadly have reached a point where we have run out of options, but to suspend SA Post Office's account,” said SAA spokesperson Tlali Tlali.  (Photo: Fedor Selivanov / Shutterstock.com)
“We sadly have reached a point where we have run out of options, but to suspend SA Post Office's account,” said SAA spokesperson Tlali Tlali. (Photo: Fedor Selivanov / Shutterstock.com)
Fedor Selivanov / Shutterstock.com

Although the letter, leaked to City Press, invites Yakhe Kwinana – the SAA nonexecutive director who made the request – to detail the requested changes in writing, it also lists several hurdles that would make an agreement to the proposal all but impossible.

Lindsay Ralphs, the chief executive of Bidvest SA, on Friday confirmed that the letter, dated June 30, was genuine, although he said he was dismayed that confidential correspondence had been leaked.

He said the approach by Kwinana to operational management of BidAir Services at OR Tambo International Airport had been reported to Bidvest executives, but it did not amount to a formal approach to the company.

The nature of the approach by Kwinana to BidAir Services emerged as Ralphs and his co-signatory, Mpumi Madisa, asked Kwinana to explain her request.

Kwinana and fellow nonexecutive director Dudu Myeni were the only two board members retained when Public Enterprises Minister Lynne Brown appointed an interim board in October with a mandate to stabilise the struggling national carrier.

In the letter, Bidvest spells out that BidAir Services is 63.42% black-owned, with a 24.85% stake owned by black women.

It pointedly asks Kwinana: “Is the transfer of 30% of the contract to an SAA-nominated, black-owned small business a prerequisite for the upcoming tender?”

A crucial reference to company structure says that, as BidAir Services also provides toilet-cleaning services to carriers other than SAA, a new company would have to be formed to tender for the contract.

“Kindly advise who SAA intends nominating for the 30% shareholding,” it says.

In addition to raising issues acquiring an operating licence for the new company, Bidvest also asked whether the SAA-nominated small business would be able to fund the estimated R20 million worth of equipment required for a new contract.

A final telling point comes in a paragraph referring to tenure, saying the depreciation period for the equipment was normally 10 years, and asked “how this challenge could possibly be addressed”, as the normal contract term was three years.

Ralphs was reluctant to discuss the issue because he said Bidvest had not had any formal engagement with Kwinana.

However, he said there appeared to be a number of similar approaches being made by parastatals similar to those reported from Eskom to its maintenance contractors about long-term contracts worth billions.

The approach Kwinana made was the first time Ralphs had heard of this at SAA.

“There is a new fad to create black industrialists,” Ralphs said. “We are always ready to discuss our business with our partners.

“But we cannot split our businesses into thousands of pieces; that would never work because we would lose all the benefits of scale.”

City Press was unable to contact Kwinana. After a call for comment to SAA spokesperson Tlali Tlali was disconnected, he did not answer further calls.

Talk to us: How should business respond to approaches to them to transfer significant stakes of their subsidiary operations to black businesses?


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