Mixed signals out of the Treasury have created uncertainty over when SAA chair Dudu Myeni will vacate the position she was supposed to exit this week.
Myeni’s contract expired on Thursday and her last day was expected to be Friday, but she may only leave in January. The government was supposed to appoint a new chairperson at an AGM scheduled for later this month but it may be postponed after she sent a letter to Finance Minister Malusi Gigaba requesting a postponement in August. This is because SAA can’t finalise its financial statements and going-concern position without a bailout from the government.
But Gigaba’s spokesman, Mayihlome Tshwete, was adamant on Friday that the AGM would be “held within 2017” and that “there was no intention to have her [Myeni’s tenure] extended indefinitely”.
Last week Gigaba, citing the King Code on corporate governance, told the media that “six years of three years per term is acceptable” for a non-executive director to serve on a board. “It is time to hand over to a new chairperson,” he said.
Pressure from business
Myeni has served for eight years on the board – two years longer than the maximum six years the codes allow.
But she received an implicit endorsement from President Jacob Zuma this week when he told parliament she could not be blamed for all the airline’s problems.
Zuma said a decision had been taken to recapitalise the airline and that an announcement would be made soon.
Tshwete said: “We just want to be given some time to work on the financials. The issue of the chairperson is secondary.”
This week board members, who spoke on condition of anonymity, said there was pressure from lenders and business for Myeni to relinquish her position. “The lenders may be difficult on repayment terms. There is no doubt her stay delays progress at the national carrier,” they said.
Incoming CEO Vuyani Jarana, who is still serving notice at Vodacom, said on Friday he would prioritise discussions with SAA lenders.
Standard Chartered rejected a request to extend its credit facility in June. The Treasury gave SAA an emergency bailout of R2.2-billion to repay the loan. Citibank was also rumoured to have refused an extension of its R1.8-billion credit facility to SAA.
Jarana, who has spent 22 years in the telecoms industry, the last five as chief officer of Vodacom Business, said: “If you put together a very strong plan and you show capacity to execute on it, I do not see why lenders should run away.”
He did not comment on the chair’s position, saying the board was the responsibility of the shareholder to manage. But he said: “The interactions I’ve had with some of the board gave me the belief that there is a strong sense of wanting to make SAA a good business, bringing impact.
“There will be no miracles at SAA … We’re going to need good people, we’re going to need to make trade-offs and sacrifices.” Jarana confirmed that he had accepted his appointment letter on Monday.
Azar Jammine, chief economist at Econometrix, said poor governance was one of the factors that could prevent South Africa from retaining its investment-grade status on its local currency.
“I think the chances of us being downgraded are increasing all the time,” he said.
Myeni’s extension could send the incorrect message about the government’s commitment to good governance at SOEs, he said. “I suppose the ratings agencies share the same view that many of the business sectors do, and that is [that] between the two factions of the ANC there is a perception that the one is much more vulnerable to state capture and to poor corporate governance than the other,” he said.
The fact Myeni was “very closely and directly aligned with that faction” reinforced a view that Gigaba, who many feared was part of the captured camp, was indeed in that faction and therefore reluctant to get rid of Myeni, Jammine said. Myeni was not available for comment.
Lenders including Standard Bank, Nedbank and Citibank declined to comment on Friday. However, Rand Merchant Bank said it was “engaging with the Treasury as part of ongoing discussions regarding our exposure to SAA.” It added, however, “At this stage we are unable to comment on specific matters relating to individuals involved.”
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