SIU investigation’s preliminary findings describe “devastating” picture of corruption at SAA

The preliminary findings of the investigation on allegations of corruption within South African Airways (SAA) conducted by the Special Investigating Unit (SIU) have revealed what Members of Parliament have described as a “devastating” picture of the extent of corruption at the airline.

On Tuesday night, the SIU presented a progress report to Parliament on its ongoing investigations about various allegations related to irregular contracts, flouting of procurement processes and conflict of interests by the entity’s employees who were doing business with it while working there.

Last month, the SAA Business Rescue Practitioners  announced that it will soon conclude payment of Voluntary Severance packages  after receiving further funding from the Department of Public Enterprises .

The report revealed that millions of rands were spent unaccounted for through dubious contracts with some of the service providers that are implicated in the Commission of Inquiry into State Capture such as the management consulting firm Mckinsey and Company.

At the core of the SIU preliminary findings is the non-compliance with the procurement processes, irregular contracts entered to and large amounts spent on maintenance and repairs of aircraft.

Some of the service providers who are alleged to have benefitted in these corrupt activities, according to the report, include the Bank of China Aviation, Mckinsey, Flyfofa private charter aircraft.

In addition, it has also emerged that a number of employees had been doing business while working for the company without any declaration of doing so.

Disintegrating organisation

Head of the SIU, Advocate Andy Mothibi, says the situation of the company is a classic case of a disintegrating organisation.

“This is the situation, this is the company that has grounded to a halt and its almost disintegrating so we need to determine as quickly as possible where we can recover, or where we can recover or where we can ensure that SAA claims back whatever has been lost to anyone.”

While the investigation is ongoing, Mothibi told the Standing Committee on Public Accounts that there is an urgent need to ensure employees who are found to have taken part in wrongdoings have their pension monies withheld until the SIU recovers what is owed.

He says, “In the same way as we do with those employees who resigned in the face of wrongdoings and we approached the courts to freeze the pensions. I do not think that there is any legal impediments that says anyone who is about to be paid a severance package, we cannot seek legal interventions to hold that in the interests of ensuring that when the time to recover we should be able to recover.”

Contracts

About 79 contracts related to procurement and maintenance of aircraft are currently reviewed by the SIU. The SIU says it has identified about six hundred million so far related to corrupt activities.

The SIU delegation’s Zodwa Xesibe says, “Our investigations are ongoing. We have identified at least about R600 million that was linked to the loss that SAA has incurred in terms of these matters but when we investigated we finalised two of these matters that had no related to irregular we find.”

Xesibe says the controversial consulting firm, Mckinsey, had signed a dubious contract with SAA that cost R12 million.

“In this regard, they were paid in excess of R12 million and in this contract Mckinsey then appointed regiments as their strategic partner. So as a result of the evidence that we have presented to them at the State Capture Inquiry, then Mckinsey offered to pay the entire contract before appearing at the Zondo Commission of Inquiry.”

The SIU says it expects the investigations to costs R35.1 million for SAA alone.

Pilots

In December, the airline locked out pilots due to disagreements over a rescue deal.

Aviation expert Guy Leitch says he expects SAA to be back in the air:
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