Johannesburg - An explosive forensic report by audit company KPMG has fingered former South African Airways (SAA) CEO Khaya Ngqula as being behind a series of irregular procurement practices that had cost the national airline millions of rands over a period of five years.
Following the report, the SAA board has decided to take action against Ngqula, demanding that he pay back the more than R30 million allegedly spent on among other claims, irregular retention bonuses that he apparently paid to himself and other employees.
The much-awaited report follows a year-long investigation by KPMG after then Public Enterprise Minister Alec Erwin ordered a probe on Ngqula following various allegations of financial mismanagement.
At the time SAA was in dire financial state.
A case has also been lodged with the Commercial Crimes Unit for possible criminal action against Ngqula and several SAA employees.
On Tuesday, SAA Board Chairperson Cheryl Carolus said the scope of the KPMG investigation addressed "all of the allegations in question".
The board had resolved to institute action against Ngqula for the recovery of approximately R27 million in respect of retention bonuses to employees of the national carrier in excess of the authority given to him in relation to such bonus schemes.
Carolus said the claim does not include the recovery of the bonuses received by Ngqula as this was recouped from him upon his departure from SAA in accordance with the retention bonus scheme.
An estimated R3.3 million is also being claimed from Ngqula for hiring hospitality suites at various stadia across the country which KPMG investigators found to have never been utilised.
"The report revealed that Mr Ngqula against advice received internally and externally concluded leases with a total rental value of approximately R3.3 million for various hospitality suites at four different stadia around the country which suites were hardly utilised," Carolus said.
Ngqula is also accused of spending at least R500 000 on "free junkets" which he granted to personal friends and associates in breach of his obligations to the company. These involved oversea trips to several sporting events including the 2006 Soccer World Cup in Germany, the 2007 Rugby World Cup and the 2008 ATP tennis tournament in Monte Carlo.
The investigation further found that Ngqula had concluded a number of sports sponsorships agreements, the values of which were substantially in excess of his delegated authority of R1 million until 26 November 2006.
At one stage, the report reveals, Ngqula approved a sponsorship deal valued at R21 million to an Argentinian golfer Angel Cabrena over a period of three years, with additional performance bonuses provided for. He also awarded a R120 million contract sponsoring the Association of Tennis Professional from 2006 to 2009.
Carolus said the board had referred the matter of the sponsorships to back to its attorneys for further considerations as to whether SAA had any claims against any of its employees or former employees involved in the conclusion of such contracts.
"The board wishes to emphasise that the investigation revealed no impropriety on the part of ATP and Mr Cabrera in relation to the conclusion of these contracts."
KPMG also investigated the awarding of jet fuel contracts during Ngqula's tenure and found that of the three tenders that were issued by SAA, a supplier in which Ngqula held a significant indirect interest, was awarded a portion of the contracts.
"In respect to two of the tenders, Dr Ngqula falied to disclose his indirect interest in the supplier in accordance with the requirements of the Companies Act and the Public Finance Management Act," said Carolus.
Further to this, the report revealed that the internal processes followed in respect of the evaluation of one of the tenders fell short of the requirements of SAA's procurement and supply chain manual. But despite this, the report did not reveal any financial loss to SAA as a result.
Carolus said despite numerous requests through his lawyers, Ngqula had failed to appear in front of the board to answer the allegations against him. "He has had more than enough time to respond and we felt we could no longer do this anymore so the ball was on his court".
Ngqula could face the possibility of having his assets attached if he fails to pay all the money SAA demands from him. Depending on the commercial crimes unit's investigations, he could also be in line for a possible jail term.
