2015

Myeni was reportedly unhappy with the deal and insisted on attending a meeting with Emirates, which was ‘highly unusual’. She then cancelled a meeting with Emirates executives in Dubai at the last minute and did not attend another meeting in Cape Town. The meeting took place in her absence and a non-binding Memorandum of Understanding (MoU) was drafted.

Nick Linnell, an independent legal advisor working with Myeni, presented the board with queries about the MoU that were contrary to the legal opinion that SAA’s lawyers had provided.

In June, Myeni cancelled a trip to Paris to sign the MoU with Emirates. Nico Bezuidenhout, acting SAA CEO at the time, went without her but, once there, Myeni reportedly instructed him not to sign the deal because Zuma had ordered him not to.

In a meeting with SAA executives and staff, Myeni allegedly confiscated everyone’s electronic devices, issued ‘action points that made no sense’, and prevented the circulation of a round-robin resolution to sign the MoU with Emirates. Ultimately, everyone who approved of the MoU resigned or was removed from SAA.

2015

In August, Mathulwane Mpshe, acting SAA CEO at the time, notified the board that she had approved the deal with Skychefs. The arrangement was structured so that Air Chefs would only lose out on some of the business and Air Chef employees would be employed by Skychefs to avoid layoffs. Dr Masimba Dahwa, Head of Procurement at SAA, informed Skychefs that they had been awarded the contract.

Myeni, Mpshe and Dahwa attended a Parliamentary Portfolio Committee meeting in September, where Myeni raised concerns that Lufthansa was a German company and stated that the tender should have been awarded to a South African company. Myeni reportedly berated Mpshe in front of colleagues, saying that her decision to contract Skychefs implied that ‘black people can’t cook’. Kwinana supported Myeni, allegedly accusing Mpshe of treason and threatening to get the Special Investigating Unit (SIU) to investigate.

Myeni instructed Mpshe to cancel the Skychefs contract. The board sided with Myeni and passed a resolution to cancel the agreement with Skychefs and give the contract back to Air Chefs. SAA’s legal panel warned Mpshe that legal action might be taken against SAA if it cancelled the agreement, which it was.

Myeni proposed that the board have a greater say in the day-to-day operations of the airline. Mpshe testified that Myeni and Kwinana were overly involved in SAA considering their positions as non-executives. The Zondo Commission concluded that Kwinana and Myeni ‘displayed a wanton disregard for the best interests of SAA’ and had ‘acted in gross disregard for the fiduciary duties to SAA’.

2011 – 2015

2015

Myeni and Kwinana reportedly began to pressure Dahwa, SAA’s Head of Procurement, into committing to suppliers on the spot at conferences and roadshows without due process. Following one roadshow, Kwinana allegedly instructed Dahwa to award 15% of the services pertaining to two large contracts (with Swissport and Engen) to all 60 roadshow attendees. When Dahwa told her this was illegal and unfeasible, Kwinana reportedly told him to create a holding company. Dahwa refused so Kwinana formed her own holding company, Quintessential.

Kwinana and Myeni reportedly also wanted to impose the ‘30% set aside’ policy on contracts that SAA had already agreed to, even if they were already BEE compliant. When informed about this, and aware that SAA should not be imposing these kinds of policies on its contractors, the acting Broad-Based Black Economic Empowerment (B-BBEE) commissioner instructed SAA to stop immediately. The National Treasury also informed SAA that their procurement framework was not in accordance with the national one.

In October, Kwinana reportedly asked Dahwa if he had advanced with the ‘30% set-aside’ policy, specifically in relation to the Swissport and Engen contracts. When he explained again to Kwinana that this was unlawful, Myeni allegedly threatened to remove Dahwa from his position. Kwinana provided Dahwa with draft letters giving a portion of the Swissport contract to a company named Jamicron and a portion of the Engen contract to Kwinana’s holding company, Quintessential. When Dahwa and Mpshe both refused to sign the letters, Myeni allegedly accused them of not wanting to support transformation efforts. She reportedly threatened that the Economic Freedom Fighters (EFF) would rid SAA of people who were against transformation and allegedly insinuated that Dahwa did not deserve his position at SAA because he was Zimbabwean. Kwinana then pushed for the board to consider the resolution pertaining to the Swissport contract, ignoring the concerns of Dahwa and Wolf Meyer, SAA’s CFO at the time.

Mpshe was removed from her role as acting CEO and returned to her previous role at SAA, Director of Human Resources. Zwane signed a letter attesting to her supposed misdemeanours dating back to 2012 and she was instructed to go on leave. Mbuleli Kolisi from BMK Attorneys drafted a letter outlining her suspension and in 2018, after 22 months of suspension, Mpshe accepted a severance package of 12 months’ pay.

Dahwa was subjected to a ‘grossly unfair’ disciplinary process, after which he was forced to resign and accept a six-month severance package. Kolisi also issued Dahwa his suspension letter on behalf of SAA. Dahwa did not receive any job offers for three and a half years, which led to his home being repossessed.

Mpshe was replaced by Musa Zwane, who claimed to work ‘very well’ with Kwinana and reportedly believed that a CEO should be more compliant with the wishes of the board. Dahwa was replaced by Lester Peter as Head of Procurement.

2016

Swissport decided to sign the contract after SAA reportedly threatened to cut all business ties with them. Under the terms of the contract, SAA could choose a BEE partner for Swissport. SAA chose JM Aviation. Kohl testified that he did not know at the time that Vuyisile Ndzeku, Swissport director, had shares in JM Aviation. Swissport paid JM Aviation R28.5m before the contract between Swissport and SAA had been concluded. This was JM Aviation’s first transaction as a company, except for an initial deposit of R1 000.

During this period, Ndzeku had allegedly collaborated with Kwinana on how to involve a company called Jamicron – Ndzeku had connections to Jamicron’s director, Daluxolo Peter. JM Aviation paid R20m of the R28.5m to Jamicron, and Ndzeku allegedly benefitted personally from R2.5m of the R20m. Another R5m was reportedly paid to Kolisi, the lawyer from BMK Attorneys who drafted the paperwork to have Dahwa and Mpshe suspended. Peter also received R5m for services rendered, and then paid R10m to BMK Attorneys. A further R2.5m was allegedly used to purchase two luxury sports cars for Lester Peter.

The other condition of SAA’s proposal was for Swissport to purchase the GPUs that SAA had bought in 2015 so that SAA could lease them from Swissport when needed. There are conflicting reports about the exact sums of money involved, but SAAT reportedly sold the GPUs to JM Aviation a year after purchasing them for an amount far below market price, especially considering that the GPUs were practically new. JM Aviation inflated the price and sold the GPUs to Swissport days later, making a profit of several million rand. It is reported that SAAT’s Nontsasa Memela was largely responsible for facilitating the transaction. Kwinana allegedly benefitted personally from R4.3m of the amount paid to JM Aviation via Ndzeku’s wife, who allegedly made a payment into Kwinana’s company Zanospark. Zanospark had only been created in February 2016, and its account had only one other recorded transaction before the JM Aviation deposit.

2015

Myeni reportedly announced that the presentation had focused too much on ‘policies and procedures’, implying that they had wasted the time of the MK members. She suggested they set aside 30% of vacancies at SAA for veterans’ children. Van Rooyen reportedly pressured Dahwa to award contracts to two companies related to the MKMVA. Dahwa testified that he was concerned that MKMVA was not requesting to bid for a tender, but rather instructing Dahwa to award it.

2013

2014

2015

In May, Dr John Tambi (SAA board member), Kwinana, Zwane and Memela visited AAR in the United States (US). This was also against SAA policy, which only permitted members of the CFST, not the executive, to engage with bidders on evaluating a service. Kwinana was allegedly ‘wined and dined’ during her trip, while Memela reportedly inappropriately provided information to AAR about SAAT’s support requirements and needs.

Shortly after this trip, the 2014 tender was formally withdrawn and an MoU between AAR and SAAT was concluded. This was against a provision in the Public Finance Management Act, which states that the board is required to check with the National Treasury if it intends to conclude an unincorporated joint venture.

In July, SAAT issued a third, short-term tender of five months for similar services contemplated in the second tender. This tender was short-term to give SAAT time to conclude its deal with AAR. It was unlawful to exclude AAR from the tender, so the third tender was withdrawn.

A fourth tender resembling the third was issued, this time including AAR as a bidder. AAR declared Nziza Aviation as its BEE partner. SAAT followed through with its original plan, issuing a five-month tender to Air France, reportedly to allow time to finalise the MoU with AAR.

A fifth and final tender was issued in December for a five-year period. AAR submitted its bid along with its new joint-venture BEE partner, JM Aviation, in which Ndzeku was a shareholder.

2016

2018

2007

2008

Figure 2: ACSA, Nedbank, Standard Bank and Regiments employees orchestrated additional ‘fee’ payments totalling R50m for interest swap transactions

2012

2013

SAA issued a consulting tender to help the company ‘unlock its working capital’, with most of the changes proposed by Wood included. The bid was only open for 15 days, but Regiments had allegedly been aware of some of the criteria for around six weeks. Regiments submitted its bid and named McKinsey as its partner.

2014

SAA paid McKinsey almost R12.5m, from which Regiments earned R6.2m. Regiments in turn made payments totalling R2.8m to companies Homix and Albatime. Homix is allegedly linked to the Guptas and their associates, Essa and Narayan. Albatime is owned by Moodley, another Gupta associate.

There is no evidence that McKinsey was aware of any corrupt dealings pertaining to this contract and paid SAA back its part as well as Regiment’s.

2015

2011

2013

PwC and Nkonki signed a one-year contract with SAA but went on to work for SAA for another four years (2013 to 2016) without being subjected to in-depth quality evaluations. During this time, shortcomings in their services went undetected. Even though the appointment of PwC and Nkonki was only for a year, and the subsequent years were therefore irregular, the AG did not detect this irregularity and continued to grant concurrence for the appointment of PwC and Nkonki. From this irregular contract, PwC and Nkonki received a total of almost R70m from SAA, which was not disclosed in financial statements.

2015

2016

2014

2016

Email correspondence from Kwinana’s daughter, Lumka Goniwe, reportedly claimed that the firm’s turnover in 2015 was more than R50m so the contract worth R6.2m was not significant by comparison. However, the Zondo Commission’s investigations into the firm’s tax returns showed that their turnover was around R10.6m in 2015. In 2016, the firm made R21m, of which just less than R6.2m came from PwC. This means that PwC’s payment accounted for almost 30% of the firm’s turnover that year. Kwinana denied a conflict of interest.

2012 – 2016

The AG found that PwC-Nkonki’s audits lacked important supporting documentation, which forced the AG to conduct additional procedures. It discovered that governance was a huge problem at SAA, and that certain SAA employees lacked the competence to prepare financial statements. It also found that SAA’s compliance with legislation was very weak and there were many instances of ‘fruitless and wasteful expenditure’. The legal team was under capacitated, and formal contracts were rarely signed – instead, the legal team relied on tender award letters. Procurement was also a huge problem – in 2016/2017, 121 contracts out of 140 (valued at R6.6bn) were irregular. These and other issues led the AG to be extremely concerned about the fact that PwC-Nkonki had given SAA clean audits all those years.

The Zondo Commission criticised PwC-Nkonki’s poor auditing for that period and its lack of accountability, given that it only began to speak up during the Zondo Commission, years after it had stopped working with SAA. The auditors were also criticised for not detecting issues with the Swissport contract, especially given how high profile it was at the time. The Zondo Commission reported that: PWC and Nkonki failed in their duties as a watchdog institution. Had they performed their functions properly, the shambolic state of financial and risk management in SAA would have been picked up earlier, and could have been addressed. It took the intervention of the Auditor General to finally expose these deep deficiencies.

2014

Four airlines, including SA Express, submitted proposals. SA Express’ proposal was far more expensive than the other airlines, valued at R100m versus R4.5m. The Transport Department sought approval from the provincial Executive Council (Exco) to appoint SA Express on a five-year contract. Exco did not ordinarily play a role in the appointment of service providers for the Transport Department and the proper procurement process was allegedly bypassed. No justification was provided for why SA Express was worth the price of its proposal and Exco officially approved the appointment of SA Express.

2015

The Head of the Transport Department, Bailey Mahlakoleng, requested the Office of the Premier to pay the first invoice because the Transport Department did not have a budget for the project. The acting Director General of the Office of the Premier, Professor Tebogo Mokgoro, approved the payment.

SA Express’ commercial manager, van Wyk, awarded the management company subcontract to Koreneka. He allegedly awarded the contract without conducting a proper open tender process, on the condition that Babadi Tlatsana, the director of Koreneka, added three people to the company: van Wyk’s life partner’s mother, Joyce Phiri, Victor Thabeng and David Kasilira. Kasilira was to be Koreneka’s accountant. He then recommended, without explanation, that Tlatsana open an account with First National Bank, which she did in January 2015. Van Wyk reportedly requested that Tlatsana use his personal email address for these exchanges.

Van Wyk arranged a meeting with Tlatsana to sign the subcontract. He reportedly presented her with a pile of documents and ‘guided’ her where to sign. Tlatsana testified that she did not read them properly but understood that they pertained to her company providing ground handling services at the airports.

Koreneka began working at the Pilanesberg Airport in May. It issued an R8.5m invoice to SA Express for services that reportedly had not been mentioned in the contract. SA Express made the payment.

A second payment of R8.5m was made for the same services outlined in the first payment, which had not been detailed in the contract. Third and fourth invoices worth R14m followed in the same manner, detailing services not mentioned in the contract. Van Wyk was involved in the authorisation of these payments, and the second and third payments were co-signed by the CEO of SA Express, Inati Ntshanga.

Tlatsana approached the Divisional Manager of Security Management at SA Express, Timothy Ngwenya, about her unease with the Koreneka/SA Express deal. Ngwenya began investigating and uncovered the details of the payments. Tlatsana reportedly told Ngwenya that the invoices had been prepared by Kasilira, the accountant van Wyk asked her to appoint.

Koreneka began working at the Mahikeng Airport in September and invoiced the Transport Department for R20.6m, which was paid.

2016

R9m of the money paid to Koreneka was in turn paid to a company called AMFS belonging to Kalandra Viljoen. Viljoen allegedly allowed her company to be used as a cash-in-transit business to convert the SA Express money into cash, making it untraceable. It has been reported that her business could not plausibly have been cash-in-transit, because the value and volume of the deposits it was receiving qualified it more as bank (although it had none of the proper licensing to be one). Another R9.9m was paid to an entity called Neo Solutions. Vivien Natasen, a CA, was the sole shareholder and director of Neo, and allegedly allowed Neo to be used to launder the money. Neo reportedly in turn paid R9.6m of the R9.9m to a company called Batsamai, which was owned by Sipho Levy Phiri (van Wyk’s life partner) and the remaining R300 000 was allegedly paid out to van Wyk in cash.

Tlatsana challenged van Wyk, recording a meeting with him during which he gave various reasons for why payments had been made or needed to be made and mentioned various people, including ministers Lynne Brown and Dipuo Peters, Mahlakoleng and Supra Mahumapelo, the Premier of the North West. The Zondo Commission could not verify that these payments were made and recommended that the South African Police Service investigate.

Van Wyk cancelled the contract with Koreneka and gave it to a company called Valotech Facilities Management. Valotech received R15m from the Transport Department without rendering any services, after which it was liquidated. Valotech was replaced by two companies: Pilanesberg Airport Management Company (PAMCO) and Mahikeng Airport Management Company (MAMCO). Ntshanga signed off on their appointments, and they received R15.8m and R15.5m respectively. It is unclear if this came via SA Express or directly from the Transport Department or the Office of the Premier. The Zondo Commission struggled to establish to what extent services had been rendered to warrant these payments.

SAA’s Head of Security, Jason Tshabalala, reportedly organised for Ngwenya to meet someone called ‘Sipho’ at Luthuli House. Sipho explained that the transactions Ngwenya was investigating related to funds for the ANC, and then allegedly offered Ngwenya a bribe of R3m to stop investigating. Ngwenya refused and reportedly tried to confront van Wyk, but van Wyk excused himself from the meeting and then ‘literally ran from the building and did not come back’.

Tlatsana reported that she had received threats and intimidation after she took SA Express to court, and that nothing was done about this. The Zondo Commission noted the following: When people have spoken out about the acts of state capture, corruption or fraud in which they have been involved and which implicates high-ranking officials, they have often been threatened and intimidated. When those same people have sought the protection of the police services, their cases have not been treated with the seriousness or attention that they deserve.

2015

The resolution was signed by the board and the National Treasury approved the transaction. Finance Minister Nhlanhla Nene signed off on the transaction.

Myeni failed to ratify the deal following ministerial approval. She was absent from a board meeting and reportedly contacted Airbus directly to request that only two planes be leased. These exchanges were reportedly ‘highly irregular’ and the board was unaware of them. Myeni’s stalling was allegedly an attempt to get African Aircraft Leasing Company involved. Myeni reportedly suggested that African Aircraft would buy the aircrafts from Airbus and then lease them to SAA. She claimed that involving an African company would save SAA money from losses incurred by exchange rates. This was not true because all aircrafts are purchased in US dollars.

Myeni reportedly tried to get Quartile Capital involved as a transaction advisor to determine whether her proposal should have been reconsidered by the National Treasury. Quartile Capital ‘demonstrated a complete lack of understanding of the transaction and aptitude to advise on the matter’.

Nene rejected Myeni’s requests and urged her to ratify the deal. Nene was eventually fired by Zuma and replaced with Des Van Rooyen, who, after four days, was replaced by Pravin Gordhan. Nene reportedly expressed his concerns about Myeni to Zuma, which he believed was a factor in his removal from office. Gordhan guided the National Treasury to reject Myeni’s proposal and save the deal.

2015

Cynthia Stimpel, the Acting Group Treasurer of SAA, and Wolf Meyer, the CFO, drew up a borrowing plan to submit to the National Treasury, which was approved by the board in April 2015. The plan showed that converting its short-term debts into long-term ones over 10 years and taking advantage of the R15bn guarantee would save SAA around R400m. The standard funding process is different to ordinary procurement and entails offering Requests for Proposals (RFP) directly to five major banks (as reliable, established institutions). With a plan in place, SAA sent out RFPs to the five banks. However, towards the end of April the board began questioning the process and Kwinana insisted that it be cancelled and replaced by a traditional tender process. Stimpel explained to Kwinana that this would contradict the protocols that existed for the procurement of such large sums of financing, and that the major banks were historically the best bet for SAA.

However, the board decided to cancel the original RFP and create a new one. They instructed Stimpel to draft the RFP and include smaller unsolicited bidders, which surprised her.

In a meeting between Meyer and Jayendra Naidoo from First Self Financial Services, Naidoo allegedly informed Meyer that SAA should give the deal to First Self because Zuma had instructed as much. Meyer recorded the meeting with a device encased in a pen. A month later, Meyer was called into a board meeting and his recording pen and laptop were reportedly confiscated by non-SAA personnel. Stimpel testified that it was scary that Myeni was aware of Meyer’s recording device. Meyer resigned amidst negative press and he was replaced with Phumeza Nhantsi as interim CFO. Myeni reportedly insisted Nhantsi be shortlisted for the position.

SAA received responses to the second RFP and the leading bidder was SeaCrest Investments. Stimpel felt that there was insufficient information available about the company. Its main funders were Mars Capital and Grissag. Grissag was formed by Pieter Johannes van der Merwe and a retired Russian national, Sergey Pokusaev, in 2014. SAA’s due diligence report showed that SeaCrest and its investors did not want to provide certain documentation until a successful bidder had been announced, but this information was critical for SAA to make an informed decision. Stimpel recommended dismissing the SeaCrest bid unless a more thorough due diligence could be conducted first.

The board ignored both of Stimpel’s suggestions and signed a resolution for funds from a new company, Free State Development Corporation (FDC). The resolution allowed Nhantsi (acting CFO) and Zwane (acting CEO) to sign off on any contract to make the deal happen. The board was reportedly pursuing FDC solely on the basis of a brief letter written by Shepherd Moyo, FDC’s CFO, which did not even set out the terms of the loan agreement. FDC was also governed by legislation that prevented it from developing enterprises outside of the Free State. Stimpel was instructed to ratify the agreement with FDC but she refused on the basis that the process was irregular. It emerged that one of FDC’s partners was Grissag – one of the funders of the rejected company, SeaCrest.

2016

The National Treasury reviewed the FDC deal and confirmed that the legislation prohibited FDC from conducting this kind of business. Nhantsi confirmed that BNP would be taking over the role, even though BNP was only supposed to advise on SAA’s debt, not help source the funds. The board ignored this original agreement and decided that BNP would also source the funds.

Nhantsi told Stimpel the board had approved the contract with BNP, including the funding provision, and that the company would charge SAA a 3% sourcing fee. Stimpel refused to sign the document and went on leave after instructing Michael Kleyn, who took over her role, not to agree to anything while she was away. The Bid Adjudicating Committee (BAC) claimed that the deal needed to be signed urgently and that the transaction advisor was a necessary link to make it happen, both of which were untrue. While Stimpel was away, Kleyn signed the agreement as per the BAC’s instructions, which resulted in SAA agreeing to pay BNP a 1.5% fee, which amounted to R225m. Stimpel testified that this was a much higher fee than the industry norm. This greatly concerned Stimpel so she sent a whistleblower report to the National Treasury while on holiday. On her return, Kleyn reportedly told Stimpel that Lester, who had replaced Dahwa as Chief Procurement Officer, had pressured him to sign the document.

Stimpel did what she could to find alternative quotes from big banks and dissuade Nhantsi from following through with the deal by showing the potential savings if SAA chose a different bank. Nhantsi was reportedly uninterested and the board approved the resolution. The letter of award to source funds was sent to BNP on 25 May 2016, as the award for the financial advice had already been given to BNP. BNP accepted the award the same day, stating that a cancellation fee of R114m would be charged if the event arose. Stimpel testified that this was unusual for a number of reasons, including the fact that this kind of cancellation fee would not normally have been tolerated in the money-saving climate of SAA at the time. SAA was stuck with working with BNP unless it was willing to pay the exorbitant cancellation fee.

BNP allegedly had access to confidential notes taken during a meeting between SAA and the National Treasury, and referred to these matters in a letter sent to SAA on 8 June. The same letter outlined the costs that their funder, Grissag, had already incurred to source the financing. BNP requested that SAA sign a term sheet acknowledging that it had elected Grissag and remove the ‘non-binding’ clause of the term sheet to essentially lock SAA into working with Grissag. Nhantsi agreed and signed the term sheet, which promised Grissag a 3.5% fee as well as a 1% fee that was payable each time SAA made a drawdown. The final amount payable to Grissag was described as ‘unclear and onerous’.

Stimpel approached OUTA to blow the whistle on the deal and provided them with procurement documents she had found on the floor of the procurement office. Nhantsi suspended Stimpel the same day for taking confidential documents. She settled for six months’ salary with no benefits and took early retirement after SAA repeatedly delayed her case at the Commission for Conciliation, Mediation and Arbitration.

Nhantsi prepared a submission to give to the board to approve paying the cancellation fee to BNP, which was reportedly supported by Zwane and Myeni. Around the same time, it emerged that BNP knew its financial licence had been suspended since May and had not disclosed this to SAA. Lawyers at OUTA applied for an interdict to stop the transaction on 21 July, and SAA released a statement the following day to say it had stopped the transaction and terminated BNP’s appointment.