Struggling SAA spends R35m on bodyguards for five key personnel

'Unpopular news' on restructure prompts airline to take steps

18 March 2018 - 00:01 By SABELO SKITI


Broke flag carrier SAA is splurging up to R35-million on bodyguards for five "key personnel" in anticipation of an unpopular announcement from the airline that it intends to make "significant" staff cuts.
The plan to slash payroll costs comes as the SAA board's finance committee rejected a proposal to award multinational consultancy Bain & Co a R149-million contract - R90-million higher than that of the second-placed bidder EY - to "optimise SAA's organisational design".
Bain recently assisted, on a pro bono basis, SAA CEO Vuyani Jarana's office in putting together a five-year corporate plan.
The developments follow the National Treasury's rejection of a number of procurement deviations by SAA, including taking loans worth billions of rands and hiring outside experts to develop its turnaround strategies.
This week the airline, which has announced the suspension of its chief financial officer Phumeza Nhantsi and former acting CEO Musa Zwane, said media questions about the bodyguards and the retrenchment plan bore the hallmarks of "a malicious campaign designed to distract SAA from implementing its turnaround strategy".
"This [campaign] is being executed through a series of information leaks to the media calculated to impugn the reputation [and] blemish the image and good names of those who insist on accountability and good governance at SAA," said airline spokesman Tlali Tlali.
Internal SAA documentation seen by the Sunday Times shows that UK-based Control Risks was appointed on a 24-month contract at a rate of R10500 per person per day to look after five SAA executives.
The retrenchments are one of the measures being considered by Jarana and his team in a bid to streamline the airline and bring it back to profitability. Other initiatives include reviewing SAA's routes, selling a portion of the airline, and retiring old and inefficient aircraft.
The board resolution on the security company reads: "The board hereby invokes its authority in terms of supply chain management policy, to approve the procurement of the security company, Control Risks (Pty) Ltd, to be done outside the normal procurement processes that are governed by the SCM policy. The total value of the contract amounts to a once-off fee of R175,000 and R10,500 per day per person."
Treasury regulations allow deviations from normal procurement processes only in cases of emergency and where no other supplier can provide the required goods or services.
Tlali did not give details of the process followed in initiating the contract, only saying the board was empowered to procure goods in line with supply chain policy.
No money paid over
But he said the contract was never implemented. "Notwithstanding the enabling policy provisions, the services were not procured for a number of reasons and thus the company has incurred no expenditure."
Board member Geoffrey Rothschild said no action was taken on the resolution and Control Risks had not done any work for the airline.
But the Sunday Times has seen Control Risks' appointment letter signed by Jarana stating that the contract will run from March 1 until the end of February 2020.
The Sunday Times has established that Jarana is the only SAA executive involved in engaging the company, through its South African-based senior partner George Nicholls.
"It is not Control Risks' policy to comment about who we do or do not undertake work for as we maintain strict client confidentiality," said Nicholls.
Tlali said the current board and the new leadership of SAA would not compromise on implementing the turnaround strategy.
"We accept that those inside SAA who could be facing serious allegations of committing commercial crimes against the company as fingered in various forensic reports ... will fight through very sophisticated mechanisms to maintain the status quo in the airline," he said.
Jarana was appointed at the crisis-hit state airline last November with a mandate to eliminate corruption and fix its finances.
One airline insider said Jarana had clashed with procurement officials at the National Treasuryover the process of seeking R13-billion in loans and contracting highly paid consultants.
Insiders say Jarana had pushed for Bain & Co's bid to be accepted, demanding to see minutes of a bid adjudication committee meeting at which it was criticised after the board had rejected it.
Concerns raised by the committee were noted in the submission to the board made by chairman Thapelo Lehasa.
Lehasa wrote: "I am deeply concerned about the conflict in the versions of the verbal and written account given to the BAC firstly on March 8 [meeting] and subsequently at the BAC meeting of March 12 2018 about the process that was followed in approving the shortening of the tender advertising (done without approvals as per supply chain policy)."
Bain's head of external relations, Marlynie Moodley, said the company could not comment on its work with SAA as the company was bound by confidentiality agreements.
"Given our aspirations to be a force for good in all geographies we operate in, we do annually select three to four studies that we elect to do pro bono, dependent on level of importance to the country or institution and our ability to have a significant impact. This is not done quid pro quo," she said.
The National Treasury yesterday deferred all procurement questions on SAA "until the minister of finance has been fully apprised of all the details".
"It is important for the government and media to provide the space for the recently appointed board and CEO to deal with the structural challenges they face, until they are able to make announcements in this regard at an appropriate time.
"It is important not to jump to conclusions on any restructuring processes or discussions that may or may not be taking place."

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