DA: Statement by Manie van Dyk, Democratic Alliance Shadow Minister of Public Enterprise, on SAA (29/09/2009)

29th September 2009

The 2008/09 South African Airways (SAA) annual report, tabled today, has revealed that former Chief Executive Officer Khaya Ngqula was paid over R13-million on settlement despite him being under investigation for mismanagement, conflict of interest and procurement irregularities.

The figure includes R9.3 million paid out for the termination of his contract. Ngqula was paid the amount despite SAA posting an operating loss of R72-million for 2007/08, during which time the airline was under his management.

The payment is a slap in the face of the South African taxpayer. And the ANC government shows no signs of adopting the requisite attitude necessary to address the problem. The DA will be asking parliamentary questions on the matter.

The annual report reveals that Khaya Ngqula was paid:
• R3.9 million in salaries
• R9.3 million in termination benefits after being fired for mismanagement
• R756 000 in retention premiums
Ngqula's payment follows the R12 million paid to former SABC CEO Dali Mpofu on his exit from the public broadcaster, despite it being some R800 million in the red.

No doubt SAA was legally obliged to pay Ngqula out for his contract but, increasingly, there seems to be a trend at state-owned enterprises whereby poor management is rewarded with huge payouts.

The consequence of this is that the public has to pay twice for poor management. First, it is required to fit the bill for a bale-out, when the relevant institution loses money; then, instead of their being consequences for that poor management, it is forced to once again payout the relevant CEO.

Even when poorly performing CEOs aren't fired, their management seems to be rewarded:
• The current CEO of Eskom, Jacob Maroga, who was awarded a R5 million salary increment despite Eskom posting R9-million in loss.
• The Armscor 2008/2009 annual report reveals that CEO Sipho Thomo received a total increase in remuneration from R1.7 million to R3.27 million (89%); this despite a long list of black marks against his name from formal grievances to decreasing surpluses.
What we are seeing is the firm hand of mediocrity taking hold of the public service. Excellence is no longer recognised and poor performance is not only tolerated but, often, rewarded. It amounts to disdain for the public and its interests and the money it invests, through the taxes it pays, in sound management and best practice. With this comes a lack of accountability and the lowering of standards.

The DA submitted questions to the Minister of Public Enterprises in July to determine how much money has been paid to former members of the executive of each public entity in termination of contract payouts and bonuses, for each of the last ten years and is still awaiting a reply. The DA will further be asking questions to determine who was responsible for Ngqula's payout and on what the decision was based.