South African Airways (SAA) was run on dictates of its former chairperson Dudu Myeni, her pliant board, and former president Jacob Zuma – referred to as “Number One”– when it came to procurement deals, which ran into billions of rands, the Commission of Inquiry into State Capture heard yesterday.
Giving her testimony before deputy Chief Justice Raymond Zondo, whistleblower and former SAA group treasurer Cynthia Stimpel, told of a state-owned enterprise (SOE) that was plagued by a culture of intimidation, with Myeni and Zuma not afraid of throwing their weight around in the running of SAA.
One of the biggest bones of contention was the R15 billion loan sought by the national carrier in 2015, bagged by the Free State Development Corporation (FDC), following a number of request for proposals (RFP).
To demonstrate the influence of “Number One” in SAA deals, Stimpel said former CFO Wolf Meyer recorded a meeting with a potential funder during which he was told the former president “wanted client Jayendra Naidoo to get the deal”.
“Number One” was understood to be a reference to Zuma.
“Wolf was told they must ensure that SAA gives this client the deal because Number One wants this client to get the deal,” explained Stimpel.
Myeni wrote to SAA CFO saying the board had decided to withdraw the RFP for a long-term loan. This was despite the board having received the borrowing plan and a submission from Stimpel on debt consolidation, which would allow SAA to save money.
Later, another player, named Sea Crest Investments also got involved, and proposed that it would lend the airline R15 billion at an interest rate of 5.8%.
But after due diligence conducted, SAA found that Sea Crest would not be providing the capital directly. The majority of the money would be supplied by a company called Grissag.
Grissag was to provide Sea Crest with the funds at a 4% interest rate, with Sea Crest earning the 1.8% difference in interest fees when it forwarded the money to SAA.
According to Stimpel, the second, safer option, was a loan from various banks who offered SAA R4.3 billion.
Stimpel expected the board to approve Sea Crest or the banks. But both were turned down.
“It was really unusual for me to see this. The board resolution recommended for us to go with funding from the Free State Development Corporation.”
A letter written by FDC chief financial officer Shepherd Moyo said the FDC was working with a foreign entity that could offer the required R15 billion at a lower interest rate of between 3% and 4%. That foreign entity was also Grissag.
The board recommended that SAA contract the FDC based on that letter alone, Stimpel said.
“I was extremely uncomfortable with it,” she said.