Hawks probe SAA’s financial losses

Directorate for Priority Crime Investigations begins probe into financial losses at South Africa’s national carrier.

Johannesburg - The Directorate for Priority Crime Investigations has opened an investigation into financial losses at the national carrier as the government steps up efforts to stabilise SAA’s finances.

Sources familiar with the developments surrounding the probe told Business Report that Brigadier Nyameka Xaba, the sectional head of crimes against the state and tactical operation, wrote to the SAA board yesterday, informing it of the intention to probe charges of corruption and irregular closure of routes by the airline.

Xaba informed the board that the directorate, popularly known as the Hawks, particularly wanted to zero in on suspected corruption involving tenders, contracts, procurement and the SAA route to Dakar, Senegal, which is due for closure in February, and the Mumbai/India route.

The investigation is expected to involve current and former SAA employees and executives, according to the sources. The board is yet to inform the airline’s principal shareholder, the government and the Treasury, about the investigation.

But SAA board chairwoman Dudu Myeni yesterday confirmed receipt of the Hawks’ notice of the pending investigation. She refused, however, to comment further, saying she would pass the information to the Treasury, the airline’s principal shareholder.

Letter was sent

Xaba refused to comment on the investigation and Hawks spokesman Brigadier Hangwani Mulaudzi could neither confirm nor deny it.

But SAA sources confirmed that the letter was sent to the board and indications were that the board would give its full co-operation as the probe would shed some light on the airline’s financial woes.

Two weeks ago, SAA board chairwoman of the risk and audit committee Yakhe Kwinana told Parliament that an investigation by Ernst & Young auditors had uncovered major irregularities, which cost the airline R640 million in the first six months of the current financial year. The airline’s financial losses have ballooned to nearly R5 billion in the current financial year.

Kwinana said the airline’s miseries were a result of poor financial management and procurement planning, despite its planes flying at full capacity.

A source said the investigation would also look at the general corruption that had been reported at SAA, including the transfer of monies from SAA accounts into individual bank accounts, particularly on its overseas reservations stations.

“There is some proof that people act outside of their responsibilities and yet no charges have been brought forward,” said the source.

“Our interest is to know exactly who is actually responsible for all the problems that we are currently facing.”

SAA acting chief executive Musa Zwane yesterday said he was not aware of the Hawks investigation.

The investigation comes after SAA put senior executives on suspension last month, pending an investigation into the airline’s financial losses, and failure to give the board accurate information on the routes.

Last month, SAA charged its chief commercial officer Sylvain Bosc with misleading it on the Abu Dhabi route.

The company charged Bosc, a French national who had already been placed on forced leave at the time, after an investigation by ENSafrica revealed that he had allegedly manipulated figures and withheld two reports that showed that the route was not profitable.

Losses

SAA said the route, which was meant to fly passengers to and from China and India, had already racked up losses amounting to R400m.

Another source said the Hawks investigation also came on the back of an alleged intervention by the Senegalese government after a senior SAA executive, whose name is known to Business Report, went to Dakar to try to stop the airline’s long-haul operation to the country. “The executive acted dishonestly by telling the board that profitable routes did not make money, while those that caused huge financial setbacks for SAA were touted as profitable,” the source said.

The board also suspended chief financial officer Wolf Meyer, who subsequently resigned from the airline before charges against him could be brought.

BUSINESS REPORT