Cabinet takes exception to SAA CEO's financial settlement

Wednesday, March 18, 2009

Pretoria - Cabinet has taken exception to the financial settlement reached between the Board of South African Airways and its former Chief Executive Officer Khaya Ngqula.

This, as the reported settlement was reached at a time when serious allegations of misconduct were being investigated by the board.

"Government's preference was that the CEO should have remained on leave whilst the allegations were being investigated," Government Spokesperson Themba Maseko said on Wednesday following cabinet's ordinary meeting in Pretoria.

Last week, Jakes Gerwel, the Chairman of the board announced that by agreement Mr Ngqula's employment with SAA was terminated. He said the terms of the settlement would remain confidential but any payments would be reflected in the airline's Annual Report.

It was reported that Mr Ngqula had been on special leave since mid-February after the national carrier's board started an independent investigation into allegations of mismanagement.

Cabinet has now asked the Minister of Public Enterprises Bridgette Mabandla to seek an urgent audience with the SAA board to establish the reasons for and the details of the settlement.

Mr Maseko said the state would seek legal advice on the processes that were followed by the board in reaching the settlement with Mr Ngqula without the express approval of the state as the shareholder.

"Cabinet also decided that the department should submit a report on the state of affairs at the national carrier to Cabinet at its next sitting. This report must look at issues of governance, management and the reasons for the reported under-performance of the airline."

He said government was not prepared to accept impunity with regard to any instances of misconduct at its state owned enterprises.

"Government wants to take steps to ensure that state owned enterprises, especially those that are under performing and continue to receive cash injections from the state, do not utilize those resources to pay large bonuses to non-performing managers," said Mr Maseko.

Government has budgeted R1.6 billion in the next financial year to support the airline's turnaround strategy including reducing costs and improving efficiency.

The department was also tasked with preparing a report on all state owned enterprises with a view to address all the problems that are being experienced by these entities.

"Cabinet believes that all these enterprises are valuable assets to the South African tax payer and play a key role in the economy.

"It is therefore important that urgent steps are taken to ensure that they can perform effectively. A report on all these matters will be tabled at the next Cabinet meeting," said Mr Maseko.