Cape Town - The Federation of Unions of South Africa (Fedusa) has thrown its weight behind a push to have South African Airways (SAA) chairperson Dudu Myeni declared a delinquent director.
A court order declaring a company director delinquent holds them personally liable in either heavy fines or a minimum of 10 years in jail for material damages caused to the organisation they lead.
Fedusa is one of four trade union federations in the country with 18 affiliates from various sectors. An affiliate, the South African Airways Pilots Association (SAAPA), together with the Organisation Undoing Tax Abuse (OUTA), instituted legal action against Myeni.
"This is the first time that such kind of legal action has been brought against the chairperson of a state-owned company in South Africa," Fedusa said in a statement.
“We believe that SAA is in distress as a direct result of dysfunctional leadership,” said SAAPA chairperson Jimmy Conroy.
"Section 162 (5) of the Companies Act empowers this legal action and stipulates that a court must make an order declaring a person to be a delinquent director if the person while a director grossly abused the position of director and acted in a manner that amounted to gross negligence, wilful misconduct or breach of trust in relation to the performance of the director's functions within, and duties to, the company," he explained.
Conroy said in addition to SAA’s financial woes, SAAPA has seen reports which showed “the appointment of BnP Capital as transaction advisors which was subsequently extended to provide funding services at a cost of R256m, despite the fact that BnP did not bid for the provision of the funding services and had its licence withdrawn by the Financial Services Board”.
According to Conroy, the reports also revealed “the chairperson subsequently supported an attempt to pay R49.9m in penalties to BnP Capital, but this was rejected by the board; the sudden and unauthorised cancellation of the Emirates deal, by the chairperson, despite a board resolution approving [the deal]; and an attempt to amend the Airbus leasing contract, by the SAA chairperson, causing the Airbus CEO to threaten cancellation of the deal and the imposition of penalties".
In addition to this, Conroy said, an Ernst and Young forensic report had revealed multiple and serious irregularities with the procurement of goods and services. "No discernible action has been taken on the outcome of this report from December 2015.”
At its 6th Congress recently, Fedusa called on all affiliates to take urgent steps against errant company directors who fail to comply with their obligations as set out in section 162 of the Companies Act, 2008 and to compile a register of delinquent directors that would be made available to members of the general public.
The court application was filed at the North Gauteng High Court on March 7 2017.