Why we're instituting action against Ngqula - SAA

A STATEMENT BY THE BOARD OF SAA REGARDING THE ACTION BEING TAKEN BY IT PURSUANT TO THE FORENSIC INVESTIGATION BY KPMG IN RESPECT OF CERTAIN MATTERS

Following a directive from SANs Shareholder, represented by the Minister of Public Enterprises, to investigate various allegations which had been made largely against the company's former Chief Executive Officer Mr. K Ngqula, the Board resolved to appoint KPMG to undertake a forensic investigation into such allegations.

The scope of the forensic investigation addressed all of the allegations in question, as well as ancillary issues relating thereto and a summary of the key conclusions has been published simultaneously with this statement.

Whereas the KPMG forensic investigation was prompted by allegations largely against Mr. Ngqula, the outcome of the forensic investigation also outlined various weaknesses in the company's internal controls and procurement processes. As a consequence of this, the company has already introduced measures to improve financial and risk management in its business, as well as further internal controls in relation to procurement. The process of enhancing financial and risk management is an ongoing one and the systems which are currently in place will continue to be reviewed and refined to ensure that the risk of loss or harm to the company is minimised.

Following the consideration of the final report of KPMG by the Board and the obtaining of legal advice by the Board from its attorneys and senior counsel, the Board has resolved to take various steps to address the issues which have emerged from the KPMG report.

SAA's attorneys requested an interview with Mr. Ngqula to seek his response to the matters raised in the KPMG report. Mr. Ngqula stipulated conditions for such an interview that were unacceptable to the SAA Board and accordingly no interview took place.

Although the legal advice received by the Board is legally privileged and not available for public consideration, given that the matter is in the public interest, involving a large state- owned enterprise and public funds, and has already been widely reported on in the media, the Board, without in any way waiving the aforementioned legal privilege, has resolved to make a statement that it has taken and intends to take the following action arising from the conclusions reached by the KPMG investigation.

The Board has resolved to institute action against Mr. Ngqula for the recovery of the following:

• Approximately R27 million in respect of monies which he caused to be expended on sign-on retention bonuses to employees of the company, in excess of the authority given to him in relation to such bonus scheme. The aforesaid claim does not include the recovery of any retention bonus received by Mr. Ngqula as this was recouped from him upon his departure from SAA in accordance with the retention bonus scheme.

• Approximately R3,3 million in respect of the hiring of hospitality suites in various sports stadia around the country.

• At least R500 000, being the cost of the free junkets which he granted to personal friends and associates in breach of his obligations to the company.

Summons is in the process of being served on Mr. Ngqula in respect of the retention bonus claim and it is anticipated that a second summons dealing with the remaining matters outlined above will be served on him shortly.

Amongst various other issues raised in the KPMG report, the conclusion of certain sponsorship agreements during the period 2006 to 2008 remains a cause for concern. These sponsorship agreements relate to a contract sponsoring Mr Angel Cabrera, the professional golfer from Argentina and a contract sponsoring the ATP (the Association of Tennis Professionals) from 2006 to 2009. The Board has referred this matter to its attorneys for further consideration as to whether SAA has any claims against any SAA employees or former employees involved in the conclusion of such contracts, to recover the amounts expended by the company in this regard. The Board wishes to emphasise that the investigation revealed no impropriety on the part of the ATP and Mr Cabrera themselves in relation to the conclusion of these contracts. SAA regards itself as bound by the contract with Mr Cabrera and intends to fulfil its obligations thereunder. Similarly the ATP contract, which had already run its term prior to the completion of the investigation, cannot be revisited.

In regard to the matters investigated by KPMG in connection with the Africa Open, the Board, notwithstanding the findings of KPMG, assessed the relative costs and benefits of pursuing any claims in this regard, and is of the view that there would not be a material benefit to the company to do so.

Furthermore, the company is in the process of taking disciplinary action against a number of its employees who were involved in failures to comply with the company's procurement procedures and policies and the requirements of the PFMA. fri respect of other former employees who were involved in the identified failures, SAA is obviously not in a position to take disciplinary action against them.
The report has also brought to the attention of the Board that conduct on the part of its employees (both present and past) and its directors may also constitute contraventions of various statutes which might expose such persons to criminal prosecution.

The Board has referred certain possible criminal contraventions to the relevant commercial crimes unit for investigation and consideration by it. Further matters may be referred by the Board to the National Prosecuting Authority for its consideration as the Board, with the assistance of its advisors, continues to review the evidence at its disposal.

In respect of the tender relating to domestic and regional in-flight catering services for SAA and the disposal of Air Chefs' assets, at the time of the KPMG investigation, the process had reached a stage where a preferred bidder had been identified for the part of the tender that related to regional and domestic in-flight catering services and the disposal of Air Chefs' assets. That bidder was a consortium consisting of a local and foreign entity. The foreign entity, being the principal member of the consortium, withdrew from the tender process, as a consequence of which the participation of the consortium in the tender process came to an end. SAA accepted the withdrawal of the consortium and subsequent thereto terminated the tender process, as it was entitled to. SAA has subsequently received correspondence from the local member of the consortium, objecting to the termination of negotiations with the consortium for the conclusion of contracts in regard to the above, and the termination of the tender process relating thereto. SAA has responded to this correspondence through its attorneys, disputing the validity of the contentions and allegations against it. It is unclear whether any litigation will arise but should this happen, SAA will defend same.

None of the other tenders investigated by KPMG have to date resulted in claims or disputes.

In relation to the tender for the outsourcing of SAA's call centres, the factual findings in the KPMG report were not of a nature which required SAA to set aside its decision to award the tender to the successful bidder. The investigation revealed, however, that one of the directors of the SAA Board failed to disclose an indirect interest in a member of the consortium which was awarded the contract, or to comply with the obligation of directors, so conflicted, to recuse themselves from participating in any deliberations on the contract in question. However, the fact that this took place did not of itself mean that the SAA Board had acted beyond its powers or that the deliberations and decision of the Board were affected thereby.

The Board will deal with and respond to any further issues which may emerge from any aspect of the KPMG investigation, insofar as they arise.

Throughout the investigation, national carrier maintained its world class status with the SAA brand remaining one of the most recognised South African brands internationally. The Board would like to thank SAA staff for their loyalty and continued dedication throughout the investigation period. The investigation has now been concluded, with the Board taking decisive actions. The Board is very keen to see the company moving beyond the investigation and focus its attention in building this great national asset in line with international best practice such as the King Ill and the Companies Act. The Board will continue to encourage a culture of reporting and whistle blowing within SAA which trigger the forensic investigation that the Board has concluded.

Statement issued by Mr. Fani Zulu, Head: Group Corporate Affairs, SAA, July 20 2010

Source:www.moneyweb.co.za

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Subban, Soobs and Julie May are the spice girls of Sutcliffe Sutcliffe has placed these students in strategic positions so that he can use corrupt practices to steal money. Ali Baba and the forty thieves are recreated . John Mchu also got a R40 million tender from Sutcliffe. Wonder if John Mchunu is . .more sleeping well knowing that Derek Naidoo and Krish Kumar will get caught for stealing soon. John Mchunu and Sbu Ndebele (ANC politicians) Krish Kumar (The man that takes loans for corrupt money) Derek Naidoo (steals for himself and shares the rest of the tender monies with Mike , John, Krish ) It is well known that Derek's wife took a 37 million loan from the Development Bank of South Africa. Derek is also involved in the Shallcross Housing Scandal. Mike Sutcliffe the man who ensures that the cash can be stolen using corrupt methods and SECTION 36,s via his SPICE GIRLS. Is would be nice to know how mush was stolen from the stadium project. The ANC youth League knows about corrupt Mike and are keeping quite. Why? . .less by Town Planner on July 20 2010, 19:45 Find this comment inappropriate? Report it

True Sutcliffe ia a LIAR and Cheat This City manager is a crook and we all know it. He needs the boot now , not tomorrow. It's a disgrace , the lies that Sutcliffe speaks. He has bought out the editors of the Daily News and Natal Mercury. These guys take money to write pro . .more Sutcliffe stories. Money makes people sell their souls . But Sutcliffe is using ratepayers monies for his personal fake CV . .less by Akona on July 20 2010, 19:47 Find this comment inappropriate? Report it

Do not trust eTV, they have sold out to the ANC Unfortunately, Debora Patta has sold out . by special on July 20 2010, 19:52 Find this comment inappropriate? Report it

SAFM Radio has also sold out I have been listening to SAFM during the day . They are now concealing corruption by aradi listender on July 20 2010, 19:52 Find this comment inappropriate? Report it

Beware of SABC Sellout SABC has also sold out to corruption. They now report S*** and hide the corruption happening in the country. by Vries on July 20 2010, 19:54 Find this comment inappropriate? Report it

Sutcliffe is SHITCLIFF This idiot is a doctor of Geography . He is useless in Science and Mathematics. However does someone call SHITCLIFFE a doctor. He is a spin doctor that steals ratepayers money. by Dawid on July 20 2010, 19:55 Find this comment inappropriate? Report it

MSHOLOZI NXAMALALA Take your time and you will sort out these parasites which you inherited from the previous now COPES,we gave you 65% and until the SON OF MAN comes back by ZM on July 20 2010, 20:45 Find this comment inappropriate? Report it

Where was the Board The function of a Board is to look out for the best interest of a Company - an entity with rights but no voice. How do they suddenly "wake up" after so much loss to claim against an individual who wont have one single cent of this money left! And how . .more much is the taxpayer forking out to pay KPMG and legal firms and other such costs?! We as the taxpayer have been let down by the Board and they too must bear the brunt of this mess! Khaya Nqula is but one of many other parastatal pilferers! . .less by mikita on July 20 2010, 22:56 Find this comment inappropriate? Report it

Thieving clown This Ngqula fellow seems a prime speciman of a kleptoclownocrat... Wouldn't you agree? by Injala Apera on July 20 2010, 22:58 Find this comment inappropriate? Report it

Encouraging, but a few "currently politically connected" cadres would be even better Ngqula cam from the old regimes network so he is considered fair game along with Selebi. How about a few obvious targets like Nyanda, Gumede, Zuma etc. That would create enormous optimism - naive, I know but a nice thought by Mike on July 20 2010, 23:39 Find this comment inappropriate? Report it

@Eugene Now do it man!! Give the cctv stuff to BBC and Aussie and CNN and Sky. Dont wait. It must be current to be interesting nuh? Gooi boetie. The vrot goed is a grape vine of piles nuh? by kliling on July 21 2010, 06:08 Find this comment inappropriate? Report it

Grow up or shut up! There appears to be some sort of clique that uses any article, whether relevant or not, to launch vicious attacks on Michael Sutcliffe and his cronies. Freedom of speech is indeed enshrined in the Constitution of this coutnry, but these people are . .more abusing that freedom is a singularly mindless and irritiating way. If they have nothing to say about the issue at hand, it would be better to say nothing rather than to spew forth their monomaniac, infantile and ill-educated diatribes. I do not intend to defend Sutcliffe - he is the worst thing ever to have happened to Durban, and I would be delighted to see him go - but this gang of poltroons is a shame to any decent society. . .less by Dr. Angelo Lambiris on July 21 2010, 07:06 Find this comment inappropriate? Report it

Die Weduwee se Kruik en die Hollandse seuntjie Soos Tony Leon altyd gese het : BAAAANTJIES VIR BOETTTIES ! En Boet hoeveel reken jy is nou oor van die miljoene? Zilz Baby Zilts. Skande, skande die mense wat aan boord is, tap alles leeg, selfs die Weduwee se Kruik sal dit nie maak in SA . .more nie. Dis soos die Hollanders met die duike, die arme seuntjie het een watergaatjie toegemaak, helaas na hy al sy vingertjies gebruik het was daar te min vingertjies en die hele land het oorspoel. JA NEE BOET, SO GAAT HULLE AAN, DAG VIR DAG, JAAR NA JAAR - 15 JAAR AL. . .less by MARIE VAN GRAAN - WESTONARIA on July 21 2010, 09:54 Find this comment inappropriate? Report it

@angelo lamberis i agree whoever filters politics web comment ,please don't publish this ongoing attack on sutcliffe on every topic that is printed. i mean what has nqula got to do with corruption in durban.? rather give us an article on sutcliffe to satisfy these poepals by uitgeslaap on July 21 2010, 10:09 Find this comment inappropriate? Report it

@Eugene@Klilling@CCTV TIPs: About that CCTV footage.... 1. Have digital DVD copies made, and 2. Lodge more than 1x DVD back-up copy in separate secure storeage outside Africa (as insurance), and 3. Release digital/DVD/email copies . .more simultaneously to @ least 5x separate reputable western media (e.g. Australia, Canada, Holland, USA, UK, Sweden). 4. Simultaneously release digital copies in SA to just one media house (I would suggest the Editor, POLITICSWEB, since you raise the matter here). 5. EXPECT trouble - plenty (& bear in mind that a just - or any - outcome is not guaranteed). That's why the back-up copies are required.... you might need to repeat the excercise at a later opportunity. Good luck to you & your country. Aluta continua. Chikurubi Veteran . .less by John Austin on July 21 2010, 10:12 Find this comment inappropriate? Report it

Corruption - Ngqula - ANC SAA used to be a world class airline. No longer. I use to fly SAA by choice. No longer. Anything the ANC touches turns to sh*t. This has become so obvious that even the ANC can no longer deny it and it has them worried. That is why belated action is now . .more being taken against some former 'high flyer' Mbeki men. damage control pure and simple a la closing the door after the horse has bolted. @Mike. You are absolutely correct. @Angelo, true but I suspect that the people you are aggravated with are frustrated beyond compare and this is probably the only way that can protest. I repeat, anybody who votes ANC or even supported them in the past deserve all the hardship they presently experience. Afrikaner leaders before FW de Klerk knew the true character of the ANC and fought to keep them from power grabbing for more than 40 years. The DA and its fore runners ceaselessly agitated for black majority rule. They should not complain now. The answer is in every-body's hands. Exercise it at the ballot box. . .less by Jacko on July 21 2010, 10:49 Find this comment inappropriate? Report it

Mike is right Some Mbeki-ites now out of favour are being fingered, but the likes of Zuma, Nyanda and Malema can expect the support of the ANC and Menzi Simelane as NDPP to keep them out of jail. Problem is, what happens when they get so deep into . .more criminality, as Mugabe was, that they dare not lose power? . .less by mpho on July 21 2010, 11:54 Find this comment inappropriate? Report it

SAA Let us hope that "Dr" N will be paying his own legal fees and that same will not be funded by the taxpayers as is the case in many of these prosecutions........ by Who pays the costs on July 21 2010, 14:11 Find this comment inappropriate? Report it

Public Relation exercise ! Selective thinking? We expose those we hate because of the "snake mentality ".Dont read the "riot act " to the snakes we all need impartial government if we are to get rid of corruption and succed as a nation.What happened to Andrew ?We allowed that man . .more to walk away with Millions of Dollars in gratuity and a billion dollar debt for the national airline .Now we are to crucify the man that saved the country prior to his deployment to SAA.We should visit the Andrew SAGA and call our minister then to answer.All must answer and not the one "WE" hate . . .less by Joe on July 21 2010, 20:54 Find this comment inappropriate? Report it

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