Last week, the High Court declared Dudu Myeni a delinquent director. Now, it is up to the NPA to show it is willing and able to act against state capture, writes Serjeant at the Bar.
Former SAA chairperson Dudu Myeni is the first but hopefully not the last to feel the might of the law as a result of the disaster of the Zuma decade and the corruption that grew exponentially. She has now been declared a delinquent director as result of her conduct during a period from 2012 to 2017 when she was at the helm of SAA.
The Supreme Court of Appeal in Gihwala v Graney Property Ltd has described the provision dealing with a declaration of delinquency of a director as follows: ‘Its aim is to ensure that those who invest in companies, big or small, are protected against directors who engage in serious misconduct of the type described in these sections. That is conduct that breaches the bond of trust that shareholders have in the people they appoint to the board of directors. Directors who show themselves unworthy of that trust are declared delinquent and excluded from the office of director. It protects those who deal with companies by seeking to ensure that the management of those companies is in fit hands. And it is required in the public interest that those who enjoy the benefits of incorporation and limited liability should not abuse their position.'
Of particular significance to this application was the role that Myeni played in the aborted deal between Emirates and SAA .Briefly, Emirates offered SAA an annual minimum revenue guarantee, which was a guaranteed income for SAA to sustain a new route from Johannesburg to Dubai.
The Emirates proposal and SAA's own modelling predicted that the minimum revenue guarantee for SAA would amount to approximately US$100 million annually, approximately R1,5 billion per annum at prevailing exchange rate at the time. [In terms of the draft agreement Emirates was willing to offer a range of other significant strategic benefits to SAA, including the ability to code-share on "nontrunk" routes, meaning the Emirates flights from Dubai to other destinations in Europe and Asia. The establishment of secondment opportunities for SAA pilots and other staff training exchanges and assistance with network planning and potential employment for SAA employees, who were facing possible retrenchment at the time. These benefits were all reflected in the draft agreement.)
A deal that had the potential to save SAA and staunch the flow of taxpayer funds to SAA was subverted at a horrendous cost to South Africa. The court had the following to say about Myeni’s role:
‘Ms Myeni did not have any reasonable grounds to block the signing of the Emirates MOU on 16 June 2015 or thereafter. This led to the inevitable conclusion that Ms Myeni breached her fiduciary duty to act in good faith, for a proper purpose, and in the best interests of SAA. The Emirates deal was never concluded, as a result of Ms Myeni's actions. This led to irreparable harm for SAA and the country. What motivated these reckless and detrimental actions to SAA and country, we still do not know. Ms Myeni acted recklessly and broke her fiduciary duty in sabotaging this deal and the people of South Africa and SAA's employees are paying the price for her actions.’
Myeni's conduct in blocking the Emirates deal alone sufficed to justify a declaration that she was a delinquent director.
After all as the court said, ‘Not only did she deliberately or through gross negligence inflict substantial harm on SAA, but her belated attempts to justify her conduct show that she acted dishonestly, in bad faith and not in the best interests of SAA and the country.’
Needless to say this was not the only problem at SAA during the Myeni period – there was a mountain of evidence that showed that Myeni’s role in respect of the Airbus swop transaction took SAA and the country to the brink of disaster by delaying the conclusion of the Swap Transaction.
On the basis of overwhelming evidence, Judge Sulet Potteril had little option but to declare Myeni a delinquent director for life. But, arguably the most significant part of the judgment was this conclusion:
‘All of SAA's woes can certainly not be attributed to her alone, she surely contributed significantly to the position SAA and the economy finds itself in today. SAA would in all probability have been in a much better position, if not profitable, were it not for Ms Myeni's actions. Her actions during the negotiations of this deal were inexplicable and there exists a reasonable possibility that something sinister was going on behind the scenes. This in my view constitutes sufficient ground for the NPA to consider the evidence presented during the trial and to investigate the circumstances surrounding the Emirates deal and the Airbus Swap Transaction, if they find it appropriate. These investigation if undertaken should include the other Board members who were implied.’
Ms Myeni’s reaction to the judgement came straight out of the best-selling work of Jacob Zuma entitled “When caught plead that radical economic transformation made me do it”. The only radical economic transformation appears to be the radical destruction of the national airline .Then she complained about the possible referral of the evidence in this case to the NPA for investigation.
It is now over to the NPA; the least the public should expect is that the NPA mandates an immediate investigation into the events both with regard to the Emirates and the Airbus transactions. Failure to do so will be but another question about the ability/willingness of the NPA to deal with the actions of state capture.
- Serjeant at the Bar is a senior legal practitioner with a special interest in constitutional law.
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