State-owned airline, SAA, has continued its dubious financial practices by awarding a R256 million award to a “boutique financier” without going through the appropriate tender processes.
This is according to a report by BDLive, citing the SAA’s internal memos and documents seen by its reporters.
According to the report, the SAA board waived tender procedures for the contract – against advice from its own treasury – and ended up paying three times what it had to for services.
The financier, BnP Capital, was initially appointed to advise SAA on the restructuring of its R15 billion debt.
The company then advised that it be hired, urgently, to raise the financing itself, securing a 1.5% success fee in the process.
The SAA board reportedly then cited the “urgency” as raised by BnP to waive the tender process. According to memos seen by BDLive, this cost SAA R256 million, when the same service could have been done for R85 million.
According to the report, five board members voted in favour of approving the contract on a confined basis, including SAA chairwoman, Dudu Myeni.
Myeni previously stopped a process initiated by the company’s former CFO in 2015, which would have consolidated SAA’s debt.
BnP Capital CEO Daniel Mahlangu told BDLive that there was no conflict of interest in having the SAA skip the tender process based on the “urgency” raised in his company’s own recommendations.
He said his company did not sign any contracts or agree on any fee structure, but had received an award letter.
SAA treasurer Cynthia Stimpel reportedly recommended to the board that the process go out to tender, and said she felt uncomfortable with the 1.5% award level.
SAA has repeatedly come under fire for its operational and spending practices, with claims that chairwoman, Myeni is core to the company’s problems.
The SAA chairperson is closely linked to Zuma, and was speculated to be one of the reasons behind the president’s decision to fire former finance minister Nhlanhla Nene.
At the time of his dismissal, Nene was clamping down on attempts by Myeni to renegotiate a deal with Airbus over the purchasing of planes, which would have enriched a third party company, and cost the airline significantly more money.
Nene also refused to give South African Airways guarantees and bailout when it was requested by the board.
There have been numerous reports saying that finance minister Pravin Gordhan has been trying to have Myeni removed from her position in the company, which has lost R18 billion over the past decade, and needs a R5 billion guarantee from government to stay afloat.
Gordhan said that SAA would not receive any guarantees from government until a new board, including a new chairperson, was appointed at the company.
Myeni said that the company still has money, and it will continue to operate without government guarantees in the future.