![](\"http:\/\/cdn.mg.co.za\/content\/images\/2015\/11\/26\/ipadmeyer0000233470.jpg\")
\nFormer chief financial officer Wolf Meyer warned of the dangers of defaulting on the airbus deal. (Nelius Rademan\/Rapport\/Gallo Images)<\/em><\/p>\n
The memo, drafted by then chief financial officer Wolf Meyer, warns if Airbus decides to issue a default notice the move will likely trigger cross-default clauses on other loans and leases \u2013 meaning that banks and lessors have the right to call for full repayment of all outstanding debt.<\/p>\n
As a consequence, the government would face claims against existing government guarantees amounting to some R11-billion.<\/p>\n
Meyer resigned last week, saying he could no longer associate himself \u201cwith the conduct of the board\u201d.<\/p>\n
Nene\u2019s spokesperson, Phumza Macanda, told amaBhungane: \u201cWe are not able to comment on your specific questions right now, but be assured that the minister is seized with the SAA matter. The issue is at a delicate stage right now.\u201d<\/p>\n
Myeni\u2019s influence seems to have prompted caution in the treasury. Several sources described frustration among treasury officials, who say Nene\u2019s \u201chands are tied\u201d, preventing him from taking action.<\/p>\n
Airbus, under negotiations taking place since 2014, would have swapped an onerous existing contract for 10 shorter-range A320s with an agreement to lease five modern long-range A330-300 wide-body aircraft. Airbus would have funded the lease initially, but was open to devolving it later to another lessor approved by SAA.<\/p>\n
SAA desperately needs to modernise its long-haul fleet, which consists mainly of fuel-guzzling A340-600s that are costing the airline money.<\/p>\n
The A320 contract, first negotiated in 2002, has lumped SAA with an obligation to buy 10 outdated aircraft it doesn\u2019t need. The contract also makes provision for predelivery payments, some of which SAA has paid, whereas others \u2013 including the $17-million \u2013 are overdue. The swap deal approved by the treasury would have seen Airbus repay unspent predelivery payments to SAA and waive new ones,\u00a0making for a desperately needed cash injection.<\/p>\n
By committing to five new A330s, Airbus was all but assured of benefiting from any future expansion of the SAA long-haul fleet, rather than Boeing, because of the extra cost of maintaining a multi-vendor fleet.<\/p>\n
In April the SAA board approved the swap transaction in principle. On July 31 Nene gave approval in terms of section 54(2) of the Public Finance Management Act, and SAA acting chief executive Nico Bezuidenhout and Meyer sought SAA board ratification for the final agreement.<\/p>\n
The attempt to ratify the deal with Airbus was blocked because the board failed to achieve a quorum.<\/p>\n
The board is barely functional. In 2014 Brown sacked the board appointed by her predecessor, Malusi Gigaba, who had also clashed with Myeni.<\/p>\n Brown retained just two nonexecutives from the previous board: chairperson Myeni and her close associate, Yakhe Kwinana, who is also attached to Zuma\u2019s foundation.<\/p>\n Brown added just two others \u2013 retired accountant Tony Dixon and John Tambi, an obscure bureaucrat attached to the Nepad Planning and Co-ordinating Agency \u2013 to create an \u201cinterim board\u201d.<\/p>\n A year later this skeleton directorate is still in place, allowing Myeni to dominate board decisions with the aid of a few allies.<\/p>\n In September she grabbed the SAA joystick. She wrote to Airbus, seeking to insert a new player.<\/p>\n In a letter first disclosed in the Sunday Times, she stated: \u201cOn behalf of the board of South African Airways \u2026 I am pleased to inform you that SAA has decided to do this transaction differently, by engaging an African aircraft leasing company to engage directly with you.\u201d<\/p>\n According to the report, Airbus chief executive Fabrice Br\u00e9gier responded by saying that SAA could not tell his company who to deal with and warned: \u201cWithout immediate closure, Airbus will be forced to take appropriate actions in order to preserve its rights.\u201d<\/p>\n An insider told amaBhungane this week: \u201cWhen Airbus received this letter, they were flabbergasted. This was September. The deal had been done. Their head of sales, Hadi Akoum, called Meyer to say: \u2018What the fuck is going on here?\u2019\u201d<\/p>\n The insider said Myeni\u2019s claims that she wants localisation and transformation are a \u201csmokescreen\u201d.<\/p>\n Akoum declined to comment this week, noting: \u201cAll discussions with our customers are bound by a confidentiality agreement.\u201d<\/p>\n On September 27 Meyer wrote to the board to say he was not aware of any such board decision, and warning that Myeni\u2019s interference threatened the deal and had implications for SAA\u2019s cash flow and solvency.<\/p>\n The insider said that on September 28 Myeni told the executive committee and the board that she had good news: she had found money for the fleet. But she would not give details, saying she knew board members would leak them to the media. In early October she laid out her plan.<\/p>\n In a letter to the board, seen by amaBhungane, she said: \u201cThere has been a development in which a South African third party has indicated that it wishes to make a funding proposal \u2026 This consortium comprises both private and state-controlled financial institutions \u2026 The board needs to determine whether this might be in the best interests of SAA, and how best we can reduce costs with the current proposal.\u201d<\/p>\n She noted Airbus had requested an urgent meeting \u201cthis Saturday\u201d with the board \u2013 an engagement clearly prompted by Myeni\u2019s September letter. With the crunch meeting just days away, Myeni asked the board to authorise her to engage \u201ca transaction adviser\u201d to help decide which was the better option: the deal approved by the treasury or her new option.<\/p>\n \u201cI have reflected on this and it would make sense that the transactional adviser be included in the meetings referred to above \u2026 I have accordingly approached Quartile Capital, whose experience is unparalleled and [is] recommended highly for such transactions.<\/p>\n \u201cI have considered them as they are perceived to be independent and credible. They have indicated that they are willing and able to advise the board, notwithstanding the short notice.\u201d<\/p>\n Such powerful advisory roles are normally put out to tender, but Myeni cited the self-induced urgency for why the board should waive normal procurement procedures.<\/p>\n In the same letter she also asserted that Quartile should be appointed to advise the board on a R15-billion project to consolidate all SAA\u2019s existing debt into one giant borrowing transaction, a deal with enormous implications \u2013 and fees.<\/p>\n \u201cShe had been hiding in a corner of the hotel, waiting for the others to leave\u201d<\/em><\/strong><\/p>\n Myeni said SAA\u2019s formal request for proposals (RFP) for this R15-billion transaction was flawed: \u201cThe current RFP does not talk about 8-BEE and the 30% set aside, a clear demonstration of a deliberate strategy to continue to exclude historically disadvantaged groupings and military veterans in contradiction of board resolutions.\u201d<\/p>\n What happened next is taken up in Meyer\u2019s memo to the board, dated October 26. He wrote: \u201cA scheduled board meeting was called with Airbus on Saturday October 10, to discuss and finalise the swap transaction. This meeting was attended by Ms Kwinana, Dr Tambi, Mr Dixon and myself with Mr Hadi Akoum from Airbus.<\/p>\n \u201cThe company secretary apologised that the chairperson could not attend. After a lengthy debate between the four board members present, it was resolved that the swap transaction could proceed on the basis that Airbus would recognise and engage directly with this African leasing vehicle but that it would still be subject to a proper due diligence in terms of their governance requirements \u2026<\/p>\n \u201cIt subsequently came to my knowledge that, after Mr Dixon and myself had left the meeting, the chairperson had in the meantime arrived together with the transaction adviser.<\/p>\n \u201cAnother meeting was held by the chairperson, the transaction adviser, Ms Kwinana and Dr Tambi with\u00a0Mr Akoum.<\/p>\n \u201cFrom subsequent Airbus correspondence, dated October 14, it transpired that the nature of the transaction had changed from leasing the A330 aircraft to actually purchasing them outright by SAA.\u201d<\/p>\n One account of the October 10 meeting provided to amaBhungane claimed: \u201cKwinana was literally holding Akoum by the sleeve, and then Myeni arrived. She had been hiding in a corner of the hotel, waiting for the others to leave \u2026 She brought [chief executive Modise] Motloba from Quartile Capital. And he said: \u2018I can give you the R6?billion [purchase price], so let\u2019s do the deal.\u2019<\/p>\n \u201cAkoum told them it was not possible. They would first have to start a new process, which would take months, and Quartile would have\u00a0to bid.\u201d<\/p>\n Motloba declined to confirm or deny the meeting.<\/p>\n According to Meyer\u2019s memo, the October 14 letter from Airbus put SAA on strict terms.<\/p>\n Any new transaction proposal had to be finalised in 30 days. Meanwhile, SAA was immediately required to make a payment equivalent to the past predelivery payments due on the old A320 contract, about $17-million. At the execution date an additional $100-million was required.<\/p>\n SAA did not have the cash, Meyer told the board.<\/p>\n \u201cSAA is now at risk of cross-default clauses being invoked as a result of the airline inevitably defaulting on its existing payment obligations,\u201d he warned, adding: \u201cOn October 15 I was obliged, in terms of my fiduciary duty as the CFO [chief financial officer] and director, to inform [the] national treasury that SAA will, in all likelihood, not be able to make due and punctual payments in terms of its obligations.\u201d<\/p>\n On November 5 Meyer, acting chief executive Thuli Mpshe and SAA legal counsel Ursula Fikelepi signed a memorandum to the board.<\/p>\n AmaBhungane is in possession of the memo, but cannot report on it owing to an interim court injunction obtained by SAA against Business Day, Media24 and Moneyweb.<\/p>\n Business Day reported on the contents before the injunction, but will be challenging the ban next week.<\/p>\n But the affidavit SAA tabled in court is clear.<\/p>\n In it Fikelepi states: \u201cOn October 29 2015 I was requested by exco [executive committee] to provide a legal opinion to the board of SAA.<\/p>\n \u201cMy advice was sought on the legal risks and implications for the rights and obligations of the applicant arising out of correspondence from Airbus, dated October 2 and 26 2015 [and] related to a potential dispute between applicant and Airbus over a transaction related to the purchase and swap of Airbus aircraft.\u201d<\/p>\n She states that the advice she delivered \u201cmakes reference to \u2026 information [that] has the potential of causing real and serious reputational and financial damage to [SAA] and the government of the RSA.\u201d<\/p>\n Neither SAA nor Myeni responded to questions.<\/p>\n * Got a tip-off for us about this story? Click here<\/a>.<\/em><\/p>\n Insiders have revealed how Dudu Myeni, a close friend of Jacob Zuma’s, is steering the national carrier straight towards a calamitous debt mountain.<\/p>\n","protected":false},"author":3,"featured_media":22726,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-4332","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stories"],"acf":[],"_links":{"self":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/4332","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/comments?post=4332"}],"version-history":[{"count":2,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/4332\/revisions"}],"predecessor-version":[{"id":30765,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/4332\/revisions\/30765"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media\/22726"}],"wp:attachment":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media?parent=4332"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/categories?post=4332"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/tags?post=4332"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![](\"http:\/\/cdn.mg.co.za\/content\/images\/2015\/11\/26\/ipadzumamyeniednts7567done.jpg\")
\nDudu Myeni (right), SAA’s seemingly untouchable chairperson, also heads the Jacob G Zuma Foundation and is known to be good friends with the president. (Siyabulela Duda)<\/em><\/p>\n![](\"https:\/\/amabhungane.org\/wp-content\/uploads\/2018\/03\/94x94.jpg\")
<\/a>The M&G<\/em> Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za <\/a> for our stories, activities and funding sources.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"