Zondo commission hears of ‘irregularities’ in SAAT contract

The trip undertaken by board members of South African Airways Technical (SAAT) on 4 May 2015 to visit an American-based bidder while the tender process for the supply of components was ongoing, was contrary to the supply chain policy.

This is according to the acting head of department (HOD) of supply chain management at SAAT, Schalk Hendrik Human who on Thursday took the witness stand at the commission of inquiry into state capture chaired by Deputy Chief Justice Raymond Zondo.

On 29 April 2015, the SAAT board evaluated a proposal for a partnership sent by American-based bidder AAR Corporation, the commission heard.

The proposal had been sent by AAR’s Cheryle Jackson to then acting SAA CEO Nico Bezuidenhout on February 2015 who then sent the proposal to SAAT CEO at the time Musa Zwane, the commission heard.

Human said it is common practice that board members and officials at an entity are prohibited to communicate with bidders while the tender process is unfolding.

One of the resolutions taken by the SAAT board in April 2015 was that a visit, led by Zwane, should be undertaken to AAR, where an agreement for collaboration would be signed, the commission heard.

Zwane, then board members Dr John Tambi and Yakhe Kwinana and then head of procurement, advocate Nontsasa Memela undertook the four day trip to the United States on 4 May 2015.

“The supply chain policy allows for engagement with [potential] suppliers when samples are required or [when the visit is part of] an evaluation process,” Human said, adding that a member of the board would commonly not be involved.

In a statement submitted to the commission, Kwinana’s response to the implication that the visit to AAR was improper, is that visits to suppliers are not unusual and that SAAT would not have signed a memorandum of understanding (MOU) with AAR without knowing who the entity was dealing with.

However, members of the cross-functional sourcing team (CSFT) would have been better suited to take the trip, Human testified.

The commission also heard of “totally inappropriate” communication between senior executives at AAR and Memela while the tender process was ongoing for a third tender to supply components.

This was the third similar tender to be cancelled, for reasons to allow for the finalisation of the agreement between AAR and SAAT, the commission heard.

Correspondence, which includes an email from AAR’s Ken Hein to Memela, regarding a meeting that would be convened by representatives from the company and SAAT, was dealt with at the commission.

Human said he was of the view that what was discussed at the said meeting was used to build a case that would prejudice the supplier at the time – Air France – and motivate for the pursuance of an agreement between AAR and SAAT.

“It [was] probably a method to solicit information to strengthen the proposal the supplier would put forward,” Human said.

Procurement legislation provides briefing sessions where this kind of information is presented to all potential suppliers, “and that would have been probably the correct method to use”, he added.

The commission heard that a senior executive at SAAT, Mike Kenny, raised a concern with Memela about the meeting with AAR while the tender process was ongoing.

Kenny raised a number of concerns about the proposed partnership between AAR and SAAT which culminated in his immediate resignation from the board and his call for an urgent independent investigation into the matter, the commission heard.

The commission also heard that AAR knew prior to the tender being officially retracted that it would be.

This appears irregular and suggests that the company obtained this information outside procurement processes, Human added.

Furthermore, it was strange that SAAT signed a contract with AAR for the same services that were required in the cancelled third tender, Human said.

The commission also dealt with documents that show that Memela purchased a property worth R3.8 million in Bedfordview and that a salary increase was approved for her.

“It’s not the normal annual increments or increase percentages,” Human testified.

Evidence leader at the commission, advocate Michael Mbikiwa said it was also found that JM Aviation paid R2.5 million towards a house that Memela bought in 2016.

The fifth similar contract for the supply of components was awarded on 16 May 2016 to AAR Corporation and locally-based JM Aviation. The value of the contract was R1,253,636,151.81.

The commission continues, watch live courtesy of eNCA:

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