South Africa

NO FLY ZONE: Former SAA CFO stands ground on ‘Myeni’s mess’

Former SAA chairperson Dudu Myeni’s lawyer tried to corner the airline’s former CFO Wolfgang Meyer at her delinquency hearing on Monday, suggesting he was biased, that she had shown caution on crucial deals, and others shared responsibility for the airline’s troubles. It was a day of mud-throwing, to the judge’s frustration.

Advocate Nqabayethu Buthelezi began his cross-examination of former SAA chief financial officer (CFO) Wolfgang Meyer, in the North Gauteng High Court, by asking if he was biased against the airline’s former chairperson, Dudu Myeni.

Buthelezi said Meyer used “peculiar” terms in his testimony to describe Myeni that “indicate extreme bias”, including: criminal conduct, very cheeky, shocking, highly irregular, nonsense, and “I don’t know what she was smoking”.

The attempt by the Organisation Undoing Tax Abuse (Outa) and the SAA Pilots’ Association to have Myeni, who chaired SAA from 2013 to 2017, declared a delinquent director, continued on Monday.

On Friday, Meyer said she lied, ruled through fear and obstructed deals that could have improved the beleaguered airline’s finances.

In his State of the Nation Address on Thursday 13 February 2020, President Cyril Ramaphosa used the airline as an example of the challenges facing state-owned enterprises.

“The extent of capture, corruption and mismanagement in SOEs is best demonstrated at South Africans Airways, which was placed in business rescue late last year [2020],” he said.

Buthelezi, representing Myeni, spent most of the day questioning whether Meyer had evidence to support his claims. He suggested Myeni either took a cautious rather than obstructive approach or that she was not solely responsible for impeding deals with Emirates and Airbus that might have increased revenue and saved SAA billions.

Meyer and former acting CEO Nico Bezuidenhout have testified that Myeni called Bezuidenhout on the eve of signing a memorandum of understanding (MOU) with Emirates in Paris, in June 2015, that would have guaranteed SAA at least $100-million a year in revenue and expanded its connectivity.

Myeni, they said, told them not to sign the agreement based on then-president Jacob Zuma’s instruction. Meyer said Myeni did nothing to support the deal and tried to delay it.

Buthelezi raised Myeni’s objection to letting foreign carriers have access to domestic routes, creating more competition for SAA, suggesting she did do something.

Meyer said Myeni was trying to delay the Emirates deal. She knew the Department of Transport, not SAA, determined who had access to which routes and at what frequency.

“She objected to the signing of the MOU in Paris on the grounds that the board hadn’t deliberated on the issue and the signing of this MOU without the board deliberating on this issue would have been premature and that’s the only basis upon which she objected,” said Buthelezi.

Meyer said even though the SAA executives didn’t need board approval to sign the Emirates MOU, they pushed for it anyway and Myeni had ample opportunity to support it before the team went to Paris.

Buthelezi shot back:

“As far as we know, despite the many attempts to ram this thing through the board, the chair’s view was: let the board discuss this properly at a proper meeting and express itself as a collective and the board did so on 10 July.”

The advocate also defended Myeni’s last-minute change to a deal with Airbus that could have saved SAA billions in expenditure. In 2015, SAA had negotiated to return 10 A320s it had bought from Airbus and lease five more-efficient A330s.

Due to escalation clauses in the 2002 purchasing agreement, when the first aircraft were delivered in 2011, SAA had to immediately write off $10-million on each of the 10 planes and the airline couldn’t afford their continued costs and needed to renegotiate.

Meyer on Friday said he told Treasury it would be “disastrous” if SAA, already depending on government bailouts, didn’t reach a new deal as it would incur about R1.4-billion in impairments over the next two years.

While Airbus was waiting for the SAA board’s approval, Myeni wrote to the European multinational to say SAA wanted to introduce an — as yet unnamed and unknown — African leasing company into the deal.

Meyer said while other options could be discussed, SAA was running out of time and it was imperative to conclude the deal “to remove the sword over our head”. Buthelezi said Airbus and then finance minister Pravin Gordhan both entertained the idea.

However, while Treasury approved the original swap deal, provided SAA delivered some extra information, it rejected adding a local company as a middleman for the lease, saying it would leave the airline in a worse financial position.

Buthelezi questioned why Meyer suggested Myeni was responsible for changing the Airbus deal and asked if other board members might have also been on board. When he tried to restate the former CFO’s response, Meyer responded:

“Don’t change my words. What I said is what I said. I’m not saying anything else, please.”

The cross-examination was frequently interrupted by Judge Ronel Tolmay and other counsel.

At times, it felt as if Buthelezi was throwing mud at the wall, hoping something would stick. Meyer claimed Myeni said Treasury, the Department of Public Enterprises and unions wanted him out and he was one of four white men who pushed for the Emirates deal.

Buthelezi suggested Meyer claimed the board was racially divided, which he balked at.

Buthelezi asked if there was any truth in the allegation that Meyer’s contract was renewed without following the proper processes.

He abandoned his point, which wasn’t presented with references or evidence, after Tolmay intervened because, he said, “nothing turns on it”. Tolmay questioned whether Buthelezi was wasting the court’s time.

Meyer, who is now the CFO at Saudi Arabian Airlines, said his relationship with Myeni soured after Zuma in 2015 announced government entities should spend 30% of procurement on small, local businesses. Meyer said he consulted Treasury, which denied it was official policy.

He eventually resigned from SAA in November 2015.

“There was a total breach of trust between me and Ms Myeni. I could no longer see myself being associated with this board and Ms Myeni and her conduct,” Meyer testified.

The hearing continues. DM