Dear SAA Board Members
IN the ongoing claims of rampant corruption at South African Airways (SAA), the spotlight must surely come to you as the Board of SAA. When I say claims, I don’t mean some flimsy information but hard facts obtained by forensic experts in the form of an Ernst & Young report which you will no doubt be aware was tabled in front of Parliament’s Portfolio Committee on Finance last year. I take it you have seen this report and hopefully you’re able to share some information as to what is being done, if anything, to arrest the runaway corruption.
Damning is the only description that fits the conduct of all concerned; from the executives who concluded the deals which have seen the national airline incur R705,582,427.38 in wasteful expenditure and continue to operate in an environment which protects and promotes this rampant corruption, right up to the Board which seems ineffective in carrying-out its fiduciary responsibilities.
SAA spends R24bn of which only 2% goes to black suppliers. The E&Y report said 60% of the contracts sampled have been conducted corruptly (my words). They maintain 60% of these contracts which are the longest running and the highest in value – have not been attained through proper procurement channels. In ordinary speak this is corruption. If only 2% of procurement goes to Black companies, it stands to reason that the bulk of the fraud that takes place and is indeed the cause of the rampant losses at SAA as identified by the E&Y report, is done by these white-owned companies.
Are you asleep at the wheel or are you simply protecting the corruption at SAA because of the perpetrators who are largely white-owned companies? Are you in cahoots with the corrupt executives that have allowed the institution to have incurred the magnitude of the losses made by the airline. I ask this because your role as board members is clear and includes inter alia:
- Monitoring the activities of the executive management;
- Ensuring that SAA has effective, efficient and transparent systems of operational, risk management and financial internal controls. You know that this is not happening at SAA. I only have to refer you to the the deal between SAA and CAE Inc for the lease of an A330. You know the allegations of flouting tender regulations, overpayments, invoices paid for which there are no specific details of what is being paid and questions of whether the services for which payment was made have been rendered. SAA is paying this US company billions in dollars and many of the contracts guiding this relationship could not be located by SAA management. My question is whether the executives involved are still working, suspended, investigated or what the situation is here.
- There are allegations that the MOU between SAA and AAR and the awarding of the contract was based on a potentially corrupt relationship between AAR and SAA officials. The E&Y’s preliminary investigation has found there is merit in the allegation and recommends further investigation. In his resignation letter, SAAT board member, Barry Parsons said, in reference to this deal…”There is clearly a hidden agenda somewhere in this relationship and it requires urgent independent investigation. Has this issue been followed up?
- CAE Inc is not the only company whose relationship is short of corrupt. There are many:
Cases of Failure to follow correct tender processes, overpayment, no explanations for payment & collusion at SAA. Here are just a few.
- There’s an overpayment in the case of Kintetsu World Express (KWE) whose contract was “concluded informally” on 28 August 2014 and evidence of possible collusion between SAA officials and KWE
- Overpayment in case of SAA’s contract with Societe Internationale de Telecommunications Aeronatiques in 2013
- Failure to follow correct tender processes and overpayment in respect of Air Chefs’ contracts with ADJ Maintenance, Vizzini Motors, First Garments.
- Havas Worldwide Contract from 1 May 2013 – 30 April 2016. Approved Budget. R67 500 000 overpaid by R47 566 707.95
- Havas Worldwide Contract from 1 May 2016, Month to Month. Approved Budget R10 000 000. Over paid by R6 200 431.69/
- CUB3D, Contract from 1 Feb 2015 to 31 Jan 2018. Approved Budget R22 800 000. Overpaid by R27 625 245.37. Contract not signed.
- SFU Engineering. Contract from 1 Nov 2014 to 31 Oct 2017. Approved Budget 27 210 114.65. Overpaid by R 994 042.03
- The issue of pilots salaries, their accommodation and perks they receive is so exorbitant that you ought to be ashamed as the Board for allowing this level of corruption to occur under your watch, but then again it is seemingly free for all.
Potential Irregular payments made without a signed contract
I won’t bore you with all the suppliers who are being paid without signed contracts but will only highlight a few due to the fact that this is an open letter.
- CUB3D – Contract not signed and the contract has been overpaid by R27 625 245.37 already
- Guardforce – contract signed 14 months later
- Dimension Data – Contract signed 7 months later
- Catercraft Harare – No contract in place, three years later
- Kees Beyers Chocolate cc – Value of tender R11 780 627. No contract in place. 27 months since tender was awarded
- KWE (Pty) Ltd – No contract in place 29 months after the awarding of the contract
- Lufthansa Munich – Contract value R23, 465,634.18. Contract not signed 2 years later
I don’t need to remind you that there is an obligation for SAA to apply section 217 of the Constitution of the Republic of South Africa, (Act No 108 of 1996, as amended) by contracting for goods and services in accordance with a system which is fair, equitable, transparent, competitive and cost effective. I implore you to assist me with identifying procurement within SAA that has followed this constitutional requirement.
As the Board, your duty among many is to prevent irregular expenditure, fruitless and wasteful expenditure, losses resulting from criminal conduct, and expenditure not complying with the operational policies of SAA. I must say you have failed.
As the Board, yours is to manage, including the safeguard of the assets and for the management of the revenue, expenditure and liabilities of the SOE [Section 51(1)©]. I say on this one too you have failed.
You’re expected as the Board to take effective and appropriate disciplinary steps against any employee of SAA who [Section 51(1)(e)]:
- Contravenes or fails to comply with a provision of the PMFA;
- Commits an act which undermines the financial managementand internal control system of the SOE; or
- Makes or permits an irregular expenditure or a fruitless andwasteful expenditure.
My question here again, is; what have you done?
I intend sending you this letter in your personal capacities as the Board of SAA so that you can answer. South Africa’s Black majority have waited for twenty-three years to see some spoils from one of the most brutal battles against colonialism and apartheid. The liberation for which much blood and lives were lost was not so that state owned entities perpetuate white economic supremacy.