High court declares Dudu Myeni a delinquent director
Disgraced former SAA chairperson Dudu Myeni has been declared a delinquent director by the high court in Pretoria for her conduct while leading the broke airline’s board of directors.
The lifetime order means Myeni will no longer be considered fit and proper to hold the position of director of any entity, and will have to vacate several directorships she currently holds, including her position on the board of Centlec, the stateowned utility that supplies power to several municipalities, among them Mangaung metro.
Although the order is for the rest of Myeni’s lifetime, she can apply to have it suspended after three years if she has rehabilitated, high court Judge Ronel Tolmay said.
During her tenure as chairperson of SAA’S board, Myeni, a close friend of former president Jacob Zuma and current chairperson of his foundation, presided over some of the airline’s most disastrous years, which have led to the airline being on the brink of failing.
So precarious is the state of SAA, which has received no less than R50billion
in government aid since 2009, that its government shareholder sees no other option but shut it down and start over, while the business-rescue practitioners appointed to try to save it see closure and sale of its assets as the only viable way out.
“It will not be inappropriate for this court to take judicial notice of the immense harm done to the country and its people in the last years due to the mismanagement, not only of SAA, but also other SOES [state-owned entities] and the suffering that it brought and continues to bring millions of South Africans,” Tolmay said.
“To serve on the board of an SOE should not be a privilege of the politically connected. Government has, as a custodian of the common good, an obligation to ensure that suitably qualified people with integrity are appointed in these positions.”
In her 114-page judgment on the matter, which was brought by the Organisation Undoing Tax Abuse (Outa) and the South African Pilots Association, Tolmay labelled Myeni “dishonest”, reckless, and grossly negligent. “Myeni not only proved to be dishonest in her dealings at SAA, but he has also been dishonest with this court,” Tolmay said of Myeni’s conduct since the matter was enrolled before the courts in 2015.
She also ordered that Myeni pay her legal costs, as well as those of the plaintiffs on an attorney and client scale, including the costs of two counsel. In addition, she ordered that the judgment, as well as evidence led during proceedings, be referred to the National Prosecuting Authority for investigation for possible criminal conduct.
Myeni’s trial was not without drama and has seen several delays, including when she did not attend court, arguing that she did not have money to travel from Richards Bay, to Gauteng to attend trial.
At the time, Tolmay noted in her judgment, Myeni was sitting on the boards of several companies, including Centlec, and earned hundreds of thousands of rands in fees. At SAA she had earned R4.3-million in directors fees, and another R3.5-million in fees at the Mhlathuze Water Board.
“She claimed that it was unfair to expect her to spend her own money on litigation, in circumstances where she believed that SAA’S insurers ought to have paid for her costs. This entirely contradicts previous pleas of poverty, demonstrating that she perjured herself [in an affidavit]. She admitted that she exercised a deliberate choice not to come to court,” said Tolmay. “Such dishonesty and disrespect of the court’s processes is worthy of the punitive costs order.”
Her trial, in which four former SAA executives — Nico Bezuidenhout, Wolf Meyer, Thuli Mpshe, and Sylvain Bosc — gave evidence, centred on two incidents when she willingly broke corporate governance rules and interfered in the running of SAA. Evidence led by the four painted a picture of an environment of fear and intimidation at the airline under Myeni’s tenure, including one meeting to which Myeni allegedly brought armed guards, and from which executives who defied her instructions or were seen to be in her way were removed.
Myeni was also accused of using her relationship with Zuma to have her way, including using his name to pressure former SAA chief executive Bezuidenhout into pulling SAA out of a memorandum of understanding with Emirates that would have earned SAA R1.5-billion a year.
In another example, Myeni brought the country within hours of a cross default — which would have had severe implications for the fiscus and other debt-laden SOES — when she failed to call an urgent board meeting to agree on an aircraft-swop deal that would have averted the airline defaulting on R1.6-billion in pre-delivery payments for aircraft it could not longer afford.
A cross default is a provision in a loan agreement that stipulates that should a borrower default on one loan, they are considered to have defaulted on all their loans. With the government guaranteeing SAA’S debt, this would mean it would have to pay all of it immediately, or face the possibility of the default triggering debt held by other creditors.
In a statement issued on its website, Outa chief legal officer Stephanie Fick said: “We are extremely pleased to see justice meted out in a prominent matter related to state capture.
“When we set out on this matter three years ago, we knew it would take time and would be very costly. … We believed then, as we do now, that it is important to hold people like Ms Myeni to account, as opposed to seeing them get away with acts of gross misconduct, year after year.”