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Tue Jul 29 20:53:09 SAST 2014

Kona suspension a concern: portfolio committee

Sapa | 13 February, 2013 16:09

The suspension of SA Airways (SAA) acting CEO Vuyisile Kona this week is concerning, Parliament's portfolio committee on public enterprises said on Wednesday.

"Over the past few months the national airline has experienced resignations from board members and top executives," committee chairman Peter Maluleka said in a statement.

A number of SAA board members, including chairwoman Cheryl Carolus, unexpectedly quit last year before the annual general meeting in October, when their term was due to end, and on Monday the SAA board announced it had placed Kona on precautionary suspension.

His suspension was with immediate effect. The board said it was based on allegations which it had a fiduciary duty to investigate.

Maluleka said the committee was not surprised by the latest developments at SAA.

The committee went an oversight visit to SAA in November and the members were not satisfied with the outcome of the discussions.

"The presentations made by the SAA board and its management were not detailed. The committee recommended and appealed to SAA to expand on its strategy and give regular progress report on implementation," Maluleka said.

However, the governance problems at SAA had affected the execution of their turnaround strategy.

"But we have full confidence in the board and the Minister of Public Enterprises [Malusi Gigaba] that they will bring about stability in the entity."

SAA was invited to brief the committee on the annual report and financial statements on February 19, Maluleka said.

On Wednesday, Kona was quoted in Business Day as saying he would not resign.

"[The SAA board] must prove whatever they are saying."

He said he was uncertain what the allegations against him were.

Kona told the newspaper he had the option to leave SAA in December or January, but had decided against it for the sake of stability and credibility at the airline.

In response to the report, SAA spokesman Tlali Tlali said the decision to place Kona on a precautionary suspension had been taken so that an investigation could be conducted.

He said questions about Kona's resignation should be put to him.

"The substance of the allegations amounts to contraventions of the Public Finance Management Act in relation to the procurement of certain service providers," he said.

"This exercise forms part of due process which must be allowed to take its course before any conclusions are reached. The investigation will be conducted by an external and independent law firm."

Tlali said based on this it would be inappropriate to provide further details.

On Tuesday evening the SAA board said it had confidence in its new acting CEO Nico Bezuidenhout, who was appointed on Monday.

"Nico is a very experienced colleague and airline executive, having been appointed CEO of Mango in 2006. We are very pleased that he agreed to oversee operations and we have every confidence that he will... provide the necessary leadership during this period," said chairwoman Dudu Myeni.

The board's decision to ask Bezuidenhout to oversee the business in the interim was meant to allow for business continuity.

Over the years, SAA has had to ask for several bailouts from government because of its precarious finances.

Most recently, in January, it received a R550 million bank "facility" to cover fuel and other short-term commitments, the Sunday Times reported.

During the annual general meeting in October SAA reported a R1.3 billion operating loss for the year. The airline's losses over the past decade amount to R14.7bn.

In early October, the National Treasury announced that SAA had been given a R5bn government guarantee to recapitalise. This would enable it to borrow from financial markets and buy new aircraft.

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Tue Jul 29 20:53:09 SAST 2014 ::