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Response by Dudu Myeni to Mail & Guardian article of 17 April 2020

Dear Editor,

Your article titled “Without a clear plan, SAA stood no chance’ published on 17 April 2020, was very poorly researched and hollow in its’ articulation of the issues that have led South African Airways to its current predicament. In addition, your article contained a number of untruths about me thus I write to challenge the false statements you have made. More specifically, I challenge the statement about me derailing transactions at SAA for my personal gain. There is no truth in that statement and I challenge you to produce the evidence you rely upon to publicly make such a contumelious and defamatory statement about me.

One of the many tragedies of post-colonial Africa is the subservient posture our leadership often adopts in fawning at expertise from so called “international experts” when the record has repeatedly shown this to be obliquity and folly. I draw parallels on how the demise of SAA resembles what many Nigerians now lament in the 1986 implementation of the Structural Adjustment Policy as directed by
“international experts” that; in a raft of economic policy measures, pushed Nigeria to pursue a policy of devaluing its currency without realizing any benefits from this. The Nigerian economy despite being a major crude oil producer has never been able to regain its footing and recover from the negative consequences of having pursued that Structural Adjustment Policy. The story of SAA is in my view a similar one, thus one cannot do a proper analysis of SAA without factoring the legacy decisions dating back to the late 90’s and early 2000’s that have been the albatross that has now suffocated SAA. While it may suit the popular anti Zuma narrative and agendas to drag my name in writing the SAA obituary, I deem it necessary to remind you of the crucial facts that you and your ilk conveniently choose to forget.

The first of these being the 1998 appointment by Saki Macozoma of American consultant Coleman
Andrews as CEO of SAA of whom it was said at the time; was the “international expert” who would turn the fortunes of the airline. In 1999 SAA had debt of about R4 billion and assets of an equal amount. In 2000 SAA reported a profit of R350 million which led many, including Macozoma, to falsely claim that the airline had been turned around when in actual fact these profits were mere cash flow injections from the sale of SAA assets by Coleman Andrews. Among the assets sold was no less than 15 fully paid aircraft from the SAA fleet that SAA immediately started leasing from their purchasers. That R350 million profit wasn’t worth anything in any event because in his less than two year stint SAA CEO, Andrews appointed his own company, Bain and Company, as consultants that earned R209 million in consultants fees. In the same period, another R118 million was paid to nine other expatriates he had appointed to executive positions at SAA. Andrews’ golden handshake was no less than R232 million made in part of 18 million SAA shares initially given to him at 1cents each and bought back from him by SAA at R2,50 each. Macozoma, defended Andrews and his golden hand shake saying “We now have a viable airline instead of the shambles we had in 1998.” As we all know, the so called “shambles” remained and the interventions in the subsequent years that were intended to rectify the problems created by Andrews were only treating symptoms of the problem and in effect exponentially compounded the problems.

Maria Ramos took over the reigns at Transnet and she too embarked on a loss-making trajectory that is also conveniently forgotten. In November 2003 Ramos told parliament’s committee on Public Enterprises that SAA had budgeted to post a R1,8-billion currency loss in the 2003/04 financial year on top of the R6-billion loss reported in 2002/03 financial year as a result, in part, of a decision to hedge the rand at R10,80 to the dollar over 10 years. This currency hedging decision had been driven by Ramos while she was the Director General to her husband at National Treasury. She shortly thereafter moved to Transnet to oversee its implementation at SAA. Again another government intervention was needed to the tune of another R4 billion. The following year SAA reported a loss of R8,7 billion and it was then that process of reconfiguring the orders for new aircraft with Airbus began. Ramos pushed for the orders to be converted from outright purchases to leases. These leases were agian financed in foreign currency and at internationally linked interest rates. That is the dark hole where all the government bailouts keep sinking. These long term aircraft lease contracts became increasingly onerous on the airline as the local currency depreciated from around R6 to around R14 to the US dollar. With every set of SAA leadership including my own, that was the chronic ailment the airline could not overcome. The operating costs of leasing the entire fleet of aircraft in foreign currency with a continuously depreciating currency is what has eventually killed SAA. This truth is known but not spoken of because it does not suit the narrative the media handlers want placed in the people’s minds.

I have subsequently been taken to court to be declared a delinquent director on account of my challenging the decisions of white SAA executives who were pursuing more foreign finance leases. I became the target of vitriolic attacks on my integrity for insisting that SAA finance all acquisitions or leases locally. Similarly I have been vilified for my stance on protecting SAA’s market share from aggressive competitors that were eroding SAA’s market share through the guise of code share agreements. I have also been vilified for challenging the lack of transformation at SAA when I challenged the executives to change the situation of black owned companies only making up 1.7% of
SAA’s procurement expenditure. I also challenged how certain companies had so called “evergreen” contracts when all SOE’s are governed by the Public Finance Management Act.

It was the same executives that continuously undermined my leadership of the board while they pursued alliances with competitors to the detriment of the airline. In parallel there exists allegations that I blocked an Emirates transaction at SAA which is also false. I am on record as being one of the board members who took the executives to task for pursuing an agreement that would have seen Emirates increase its number of flights to South Africa to the detriment of SAA. SAA had initially lodged a complaint with the Department of Transport about Emirates’ unlawful flight frequencies to South Africa but Emirates caused SAA executives, in particular then Acting CEO Nico Bezuidenhout to make the airline change its position on the issue. Bezuidenhout did this together with the well-known Gupta associate Hamza Farooqui. Emirates would copy Hamza Farooqui all correspondence to SAA referring to Farooqui as a lobbyist. Farooqui in the same time was taking minister Pravin Gordhan to court to try force the acquisition of Habib Bank through his company Vardospan on behalf of the Gupta businesses. It was this same Hamza Farooqi who was harassing me to agree to the dubious Emirates agreement and at the behest of Bezuidenhout, went as far as reporting me to the presidency for insisting that the board be given time to interrogate the substance of the agreement that was being pursued with Emirates.

As far back as 2006, the Competition Commission reported that SAA’s market share had fallen from 69% in 2001 to 50% in 2005. Repeatedly SAA was taken to the Competition Commission by its competitors on a variety of complaints yet the government, as a major shareholder, did not intervene in protecting the interests of the airline through legislation that could enable SAA to enjoy a competitive edge without violating competition laws. Instead the government relented to external pressure to open the skies to competitors while knowing that this would have a detrimental effect on SAA. In 2001 the
UK trade minister Richard Caborn called for more deregulation of South Africa’s airlines and the removal of SAA’s protections. He was joined in that predatory chorus by then UK foreign minister Peter Hain who also called for an open skies policy to enable British Airways more access into South Africa. Soon thereafter, The ComMark Trust came out with a report saying that liberalising SADC skies could boost tourists by 500 000 a year and create about 70 000 new jobs in travel and tourism. This report went on to suggest that it would be better to offer SAA for an outright sale for whatever British Airways or another airline would be prepared to offer. The then Public Enterprises Minister, Alec Erwin relented to this external pressure and started making pronouncements along the lines of government no longer wanting to support SAA financially.

Interestingly Peter Hain recently surfaced at the Commission on Inquiry into State Capture to, I suppose, tell the natives of colonial masters’ irate state of disapproval of “governance issues’ in the colony. I am the least bothered on that but really bothered by how this Commission seems less interested in pursuing issues of actual corruption and has instead turned into a platform for public slander and the settling of political scores. I cannot tell what is left of the commission’s integrity if the biggest company on the JSE can openly defy it and its’ star witnesses like Angelo Aggrizzi and Vytjie Mentor have now apologized for giving false evidence. If the commission really served a bona fide purpose, one would have expected to see a lot more private companies being summoned. When will the commission summon KPMG, Deloitte, McKinsey, Bain, SAP, First National Bank, Standard Bank, Nedbank, HSBC and Bank of Baroda? The information of their involvement in various acts of corruption is before the commission but it seems the commission has turned a blind eye. The same way the commission has turned a blind eye to the real corruption at SAA. In my time I commissioned no less than 14 forensic investigations through firms such as Edward Nathan Sonnenberg and Ernst & Young. These forensic reports were presented to parliament and National Treasury but none were never acted on. These reports have been suppressed in the public domain despite there being full knowledge of their existence. As the board of SAA, we initiated a number of disciplinary processes against various executives that had been implicated but were blocked in various ways when we tried to take steps against certain companies that were implicated in unlawful contracts at SAA. The report by Edward Nathan Sonnenberg of 9 October 2017 is more than 250 pages long and has amongst its findings, a finding of R685 036 241 in irregular payments to a closed group of 32 companies that included:

• Reshebile Aviation and Security Services – R160 356 319
• KWE (Pty) Ltd – R125 842 711
• HAVAS Worldwide – R53 767 139
• Dimension Data – R49 948 796
• Avis – R9 453 813
• Skysupply Gmbh – R24 659 958
• Arcus FM Solutions – R30 992 559
• SFU Engineering – R28 245 648
• Swissport Tanzania – R11 773 279
• Swissport USA – R10 782 954
• Gate Gourmet Washington – R29 699 033
• Guardforce – R18 419 785

This is but one report of fourteen forensic reports of corruption at SAA that are being kept from the public while my name gets used as a scape goat to distract the public from the real truth of corruption perpetuated by big companies at SAA.

In writing your article of 17 April, you did not contact me for comment or a right of reply as you are ethically expected to. I therefore call upon you to produce the evidence upon which you allege that I benefitted personally. If you are unable to, I ask that you withdraw the false statements about me and tender a public apology wherein you specifically state that the statements you have made about me are false.

Regards,

Dudu Myeni
12 May 2020

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