Majority of SAA procurement ‘questionable’

An EY forensic report into 48 procurement contracts across South African Airways (SAA), Air Chefs, Mango and SAA Technical (SAAT), found that 28 of the contracts are improperly negotiated, poorly contracted or weakly managed, the embattled airline said in a statement on Tuesday afternoon.

This comes days after SAA’s head of procurement Dr Masimba Dahwa was placed on special leave. SAA spokesperson Tlali Tlali could however not confirm a link with the E&Y findings.

SAA CFO Wolf Meyer recently resigned, its commercial head Sylvain Bosc has been suspended and its former acting CEO Nico Bezuidenhout was sent back to subsidiary Mango a few months ago.

According to the statement, the SAA board “asked the question of management (particularly the financial executives) how it takes an external Ernst and Young investigation to identify these whilst management does not.”

The board also hit out at financial media, saying: “These questions are relevant to the financial media which tend to report favourably on press leaks by internal ‘sources’ as though these sources are entirely reliable. The media might wish to consider whether these leaks are questionable.”

This comes a day before the South Gauteng High Court will be asked to reconsideran interim interdict granted to SAA in the early hours of November 24 against Moneyweb, Business Day and Media24 to stop them from publishing an internal memo outlining SAA’s precarious financial situation.

In its statement on Tuesday SAA said E&Y tabled a draft report following its forensic investigation into procurement at SAA.

“This report is the first of a number of investigations that will examine specific areas of the business that will identify reasons for the company’s unprofitable trading,” SAA stated.

It said the report is currently being studied by the board, after which specific action plans will follow to address identified weaknesses. “The report and the action plans will also be placed before the Minister of Finance.”

According to the statement E&Y selected 48 of the largest contracts in an effort to identify and, if applicable, quantify the losses caused by failings in either the procurement, contracting phase or implementation phase of the identified contracts, SAA said.

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