Why is The Rampant Corruption at SAA being protected?

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By Pinky Khoabane

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Not so long ago, the South African Airways (SAA), was projected as a company riddled with corruption and maladministration. It was said to be financially unsustainable. Every appearance at Parliament’s Committee on public enterprises is met with headlines of corruption, grilling, and so forth.

It came as a real surprise and shock to read that “good work” was being done at the airline giving impetus to providing “substantial” equity to the carrier http://www.iol.co.za/business-report/companies/saa-will-get-cash-injection-this-year-says-treasury-dg-9030324. This is according to treasury’s outgoing Director General  Lungisa Fuzile who gave his last presentation to Parliament’s standing committee on finance before his departure from treasury next week.

Well, in the face of the scathing Ernst & Young forensic report on the weak procurement controls at SAA, which had caused the bulk of its losses, I set out to establish what it is that the director general was talking about in terms of the “good work”.

The rot in SAA’s procurement processes is beyond shocking. The E&Y forensic report found that corruption, described as “weaknesses in the procurement processes”, was rife. More than half of the 48 sampled contracts at SAA and its subsidiaries were “improperly negotiated, poorly contracted or poorly managed,” according to a statement by SAA at the time the draft report was released in 2015.

“A logical deduction must be that if these (many of which are the largest contracts awarded) suffer these weaknesses then the bulk of the smaller contracts will be at least if not worse. Potentially 60 percent of SAA’s total procurement could be in one way or another subject to weak business controls.

“This must lend itself to some idea as to why the airline makes such large losses,” the statement continued.

SAA said its board was studying the report and it would inform the drafting of action plans to correct the weaknesses.

The report was tabled in Parliament and the former and present ministers of finance are aware of these failed procurement processes.

What are the action plans that have turned-around the situation at SAA? If we are to believe commercial media and opposition parties, the airline remains fraught with corruption. If you listen to the Chairperson Dudu Myeni speak, you get a sense that the fraudulent conduct of those in charge of SAA’s procurement persists. Just two days ago media reports said SAA was expected to report financial losses of R5bn.

The newly appointed chief financial officer has been implicated in the national carrier’s cancelled debt restructuring deal with unlicensed BnP Capital. The CFO was allegedly involved in a fraudulent transaction which saw a tender for transaction services being extended to include the sourcing of R15bn funding at a fee of R256million.

The extension of contracts without due process is in fact widespread. A whistleblower who spoke to UnCensored on condition of anonymity said many of the longest and largest contracts had long lapsed and were now open ended and operated on memoranda of understanding (MOUs). The whistleblower cited Bidvest, Kinetsu World Express (KWE), Alpine Butchery as some of the companies whose contracts had expired but remained as suppliers. SAA spokesperson Tlali Tlali said the airline could not disclose details of these contracts including their value as they were confidential.

UnCensored has learnt however that some of these contracts expired as far back as 2001. Bidvest for example, is said to offer laundry services, frozen foods, ground handling, meat supply, and cleaning inside the aircrafts and toilets. Some of these contracts are said to have expired in 2001/2002. The Bidvest Foods contract, which provides frozen foods, expired in 2015, it is alleged.

The KWE contract has allegedly expired and although a new company was appointed, the KWE contract was extended. KWE did not respond to questions by UnCensored. A mobile number on one of its previous press releases was answered by a person who said they no longer consulted for the company.

Only 2% of SAA’s R24bn Procurement Spend goes to Black-Owned Companies

Now, if as the E&Y report says, 60% of the procurement spend is fraudulent and only 2% of the R24bn goes to Black suppliers, it stands to reason that the bulk of this corruption happens among white-owned companies.  Could it be why there’s reluctance from everyone – SAA Board, Treasury, Parliament – to do anything about this fraud? Worse, the outgoing treasury DG says “good work” has been done! Where, I ask!

10 Comments on "Why is The Rampant Corruption at SAA being protected?"

  1. DumisanI Albert Banda | May 12, 2017 at 11:46 am | Reply

    It is evident and a fact that in South Africa white monopoly capital corruption is never reported. In South Africa it is NOT corruption if the corrupt persons are white or have white interests. What a country we live in. I am sure that should 2% of R24bn tenders were to be increased by at least 8%, the corruption machine will start to clamour only because the beneficiaries will be black. As long as whites dirty their noses at the trough no problem. I am not self hating but as black Africans we have no sense of unity. Whites close ranks even if the cause is preposterous and illegal

  2. Jeff Koorbanally | May 12, 2017 at 5:49 pm | Reply

    He meant to say: Treasury has done a “Good Job” in the cover up of the theft/fraud & corruption/looting of the WMC companies.

    • Pinky Khoabane | May 12, 2017 at 8:01 pm | Reply

      Astonishing that nothing major has been done to implement the plans to remedy the procurement systems. That place is so corrupt honestly, we need to do something.

      • Jeff Koorbanally | May 13, 2017 at 5:46 pm | Reply

        Pk
        The procurement system was designed by WMC with those loophole specifically to allow the WMC corruption capture success, all former Finance Minister were put there to ensure it protected and never changed. And if eventually caught use system flaws as justificationas the mentioned Auditors have done.
        These white people take us as fools, & maybe we gave them that perceptition by allowing them to loop & control our treasury for 23 years,& finally take action only now. All praise to our President!

  3. Jeff Koorbanally | May 12, 2017 at 6:26 pm | Reply

    Procurement system at treasury is flawed & distorted with manual intervention which create loopholes for manipulation. This can be rectified easily & quick at minimal cost. We have the compitence and the expertise same applies to Sars system,the rogue unit are overiding it.

  4. Just a bit of an inside from a former employee the majority of those contracts goes to white companies yes agree however our black brothers and sister are sitting in positions where they approve those transactions we have a big issue as black south africans to believe that whatevwr is white is gospel .we had pointed out some of this issues with different people in high positions and only to find out the very same managers bring the looters as their advisers to to those meeting this has lead to some od the people being set up by our own people using our own sister to claim sexual harrasment and other things that gets you fired. We are our own enemies until we deal with our own mental slavery there is no way we will stand together and fight this corruption as muxh we always talk about the white monopoly capital my opinion is the problem is not in the white is in the capital coz even our own people are controlled by greed.We have wrote several letters to SAA on what coukd be the turn around plan for the airline we also pointed out where the money is lost and what other airlines are doing to increase profitability as former employees and people who are passionate about our country we even pointed out the reason why we are unable to compete with other airlines but the deep corruption in SAA has made people very protective of the truth. As much as agree that most contracts goes to white companies yes but our people have their hands on them the difference is they only get a few peanuts for the transactions because they are ignorant as black people sometimes we take what we get because we dont know what we worth.Change is possible but not with the current Management if you wana kill the snake cut the head not the tail .

  5. Bidvest is one company that controls or take 30% of the entire government procurement spend national from all departments Healthcare,security ,Cleaning ,Food ,stationery,Port control and logistics ,car rentals ,waste removal on Flights ,i for one have those trucks but no one wanna listens at SAA

    • Pinky Khoabane | May 15, 2017 at 3:32 pm | Reply

      Dear Sthembiso

      I dont recall seeing your name on the readers pages. Welcome my brother if its your first time here. Do you have the details?

      Kindest

      PK

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