Former SAA chair Dudu Myeni declared delinquent director


Former South African Airways (SAA) chair Dudu Myeni has been declared a delinquent director in terms of the Companies Act.

Myeni was appointed as non-executive director of the board of SAA in September 2009, became acting chair in December 2012 and chair in September 2016 until 2017. She was a member of the accounting authority of SAA, among other things.

The North Gauteng High Court on Wednesday declared her a delinquent director for life; however, she can apply in three years from the date of the order to have the declaration of delinquency to be suspended, but she would have to demonstrate that she has "sufficiently remedied and rehabilitated her misconduct".

The application was brought by the Organisation Undoing Tax Abuse (OUTA) and the SAA Pilots Association (SAAPA).

The judge found Myeni's evidence posed serious difficulties in her defence, saying her versions changed and she could not answer crucial parts of the evidence against her. She did not  deem it fit to attend certain parts of the court proceedings, offering "unconvincing" excuses, the judgment added.

Furthermore, her pleading poverty was found by the judge to be "distasteful as a professional woman who served and still serve as a director of several companies". On the contrary, Judge Ronel Tolmay described her as "one of the privileged few".

At a briefing to the standing committee on appropriations on Wednesday night on the financial challenges SAA is facing, a representative of the business rescue practitioners, Bongani Nkasana, said the Special Investigating Unit (SIU) would probably connect the ruling to its ongoing investigations at the airline.

Nkasana said the SIU is busy at the SAA premises, conducting investigations on offences and contracts of the past. The practitioners have been engaging with the SIU to assist in investigations by flagging any suspicious activities or contracts.

Lucrative deal

The court ruling found that Myeni caused the demise of a lucrative deal SAA was negotiating with Emirates, which could have saved SAA or at least strengthened its financial position. 

It was estimated that the Emirates deal could bring about R1.5 billion a year for SAA and it would have enabled SAA to cancel its loss-making route to Abu Dhabi.

Testimony was led on how Myeni insisted on attending operational meetings - a highly unusual practice for a non-executive chair. SAA executives testified that, at one point, she even said former President Jacob Zuma instructed her not sign on the deal.

As for an Airbus swap deal, even though it was approved by Treasury, Myeni started directly dealing with Airbus and wanted to appoint a "transaction advisor" and use a certain local leasing company and financiers. In court she could not explain why her actions were not grossly negligent.

"She knowingly took SAA and the country to the brink of disaster by delaying the conclusion of the Airbus swap deal... and she displayed complete disregard for public funds," the judge said.

The judge added that, to serve on the board of a state-owned airline should not be "a privilege of the politically connected".

"Government has, as custodian of the common good, the obligation to ensure the suitably qualified people with integrity is appointed to these positions," said the judge.

"SAA received billions in government guarantees - not only the court but also government should hold board members of SOEs accountable when they fail to execute their duties."

During the proceedings Myeni indicated that she earned over R4.3 million in director's remuneration during her time at SAA and an additional R3.45 million as director of the Mhlathuze Water Board.

Determined to see it through

OUTA and SAAPA said in a joint statement that they made the decision to pursue this case three years ago and were determined to see it through.

"We are extremely pleased to see justice meted out in a prominent matter related to state capture," said Stefanie Fick, OUTA's chief legal officer.

"When we set out on this matter three years ago, we knew it would take time and would be very costly. We believed then, as we do now, that it is important to hold people like Ms Myeni to account... Imagine what could have been done with the endless amounts of taxes lost in her tenure to alleviate poverty and advance democracy."

Captain Grant Back, chairperson of SAAPA, says it is important for internal organisations to take a stand against their directors when it is necessary to do so, as was the case with Myeni during her tenure as the chair.

"We also salute all those who were willing to testify in the case, many of whom stood their ground against the abuse of power by Myeni and her cohorts, and lost their jobs at SAA. They are the heroes who exercised moral courage and stood up for what was right, on behalf of their fellows South Africans," he said.

OUTA and SAAPA called on the National Prosecuting Authority to act swiftly against Myeni.

UPDATE: The Institute of Directors in South Africa (IoDSA) said in a statement on Thursday that it welcomes the "far-reaching judgment" as timely.

"It finally tests in court the IoDSA's long-standing contention that directors must inform themselves properly about the nature and extent of their duties, or put themselves in peril," says Adv. Fay Mukaddam, chartered director and technical advisor at the IoDSA.

"It is also clear from the evidence led that the courts will rely not only on legislation but also the King Reports on Corporate Governance — together, these provide a sound framework to guide directors in fulfilling their fiduciary and other duties satisfactorily."

The judgment also made the important point that directors cannot use collective decision-making as a way to evade individual responsibility.

Parmi Natesan, CEO of the IoDSA, emphasises that the Myeni case shows how important it is for organisations to appoint suitably qualified people to boards, and to ensure that they keep up to date with the latest thinking and are regularly appraised.

* Additional reporting by Lameez Omarjee

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