Paul O'Sullivan: Exposing fresh Myeni corruption at SAA. Documentary proof
Loyalty is among the most admirable of human traits. Blind loyalty one of the worst. And when it comes to one Duduzile Myeni, chairman of SA Airways and of the Jacob Zuma Foundation, South Africa’s President is, at best, guilty of the latter. Myeni, holder of a secondary school teacher’s diploma, is driving what is ostensibly a forceful empowerment agenda. But even if her intentions are honourable, the way she is going about it is misguided, and proving to be extremely costly for both the airline and her country. She was personally responsible for the attempted last minute interjection of Quartile Capital in a long-negotiated deal with Airbus. That was the last straw for the airline’s Financial Director Wolf Meyer, a thoroughly decent man as my direct engagements with him attest. Meyer’s resignation at the end of November last year was followed a fortnight later by Zuma’s firing of Finance Minister Nhlanhla Nene partly because of his resistance to Myeni’s machinations, sparking what we now know as Nenegate. No sooner had the Quartile Capital dust settled than he SAA chairman is now attempting to gouge R256m from the airline’s meagre coffers to benefit a three roomed outfit called BNP Capital whose licence, incidentally, has been suspended by the Financial Services Board. Also, despite being told by Treasury and the DTI she is acting illegally, Myeni has been driving ahead with her own version of BBBEE – forcing Bidvest and Engen to allocate 30% of the profit from recently awarded contracts into a trust to benefit a list of names she has given them, among them one Sizwe Zuma. The documentary evidence of all this, which is published below in the public interest, was provided by forensic consultant Paul O’Sullivan. He is the whistle-blower whose intervention led to a dramatic event in April when he was removed just before takeoff from an intercontinental flight, Dominique Strauss-Kahn style. O’Sullivan spent the next three days in what he describes as a rat infested cell at Pretoria Central with raw sewerage running through it. I caught up with him in London yesterday. Here is Paul O’Sullivan’s story. – Alec Hogg
Three months ago you were on your way to the UK but never made it, but now you’re here in London. It’s been quite an adventure….
Yes, that’s right, Alec. I was sitting in Seat 5A, which is my preferred seat when I fly to London. I had a glass of champagne in my hand. The doors were just about to close when a supervisor came in and said there were people outside wanting to see me. I must get off the plane. I must bring my children with me. I said, “Who wants to see me?”. They said, ‘It’s the police” so I took my two daughters and I got off the plane where I was promptly arrested and faced three days of abuse and torture at the hands of the South African Police.
Were you taken to prison?
Yes, I was taken to Pretoria Central at high speed (220kph) – blue light convoy. I think there were five or six cars with all their blue lights going. At one stage I saw that we were doing 220kph and I was shocked. It was a massive shock to my system. It emerged on Tuesday last week, under cross-examination by Barry Roux…it was admitted that the instructions for the investigations against me emanated from Lieutenant-General Vinesh Moonoo a person I’ve opened dockets of corruption against over the last two years.
What happened to your daughters? Presumably, they didn’t go with you to Pretoria Central.
My wife came to the airport and took my daughters. There were no seats on the next flight but the day after, they flew to London unaccompanied. Normally, I like to fly with them if I can. Occasionally, they do go unaccompanied so they’re not totally unused to it.
The trauma of having your father arrested is not something you get over easily…
In fact, they’re still suffering from it. I flew up here because one of them had a 10th birthday party so I flew up for that and when she saw me, she broke down crying. It’s quite a traumatic thing to put your children through.
Why this aggressive action from the South African Police towards you?
The reason given at the time was that I’d used my Irish passport to enter and leave South Africa on a number of occasions, which I did during 2015. I did so purely because I wanted to be under the radar as I knew that Radovan Krejcir and people linked to him wanted to murder me. Even as late as six or eight weeks ago there was another attempt at killing me. I thought – rightly or wrongly – that if I used my Irish passport they wouldn’t know I was in the country. I was out of the country when I got the information that crooked cops on Radovan Krejcir’s payroll were on the lookout for me. I decided ‘okay, let me try and stay under the radar’ so it was just one of the defensive mechanisms that I employed to stay alive.
It since emerged in court last week that the main reason I was arrested was because I’d sent an email to the Deputy President and to the Chief of Police and others where I stated categorically that I intended to fly to London on the 1stof April to expose the corruption in South Africa. They admitted in court that that’s the reason they arrested me.
Did you send the email?
Did you set up a press conference here to fulfil the threat?
No. I think sometimes you need to shock people into taking action. The intention of the email was to try and shock these people into taking action about the serious cases of corruption that I’ve opened. Those cases of corruption include government ministers, state-owned entity management and senior police officials. We’ve got this situation, which appears to be taking place right now where President Jacob Zuma is appointing what can best be described as criminals, to run the Criminal Justice System. If it goes unchecked, we’re going to see a Police State in South Africa and I think that’s what scares a lot of people in South Africa. You can’t have this situation where cops can ride around, immune to the criminal acts that they’ve committed and then target the people that are exposing their criminal conduct.
You’ve also done a lot of work on South African Airways where corruption has once again raised its ugly head….
Yes. I wrote an email to Duduzile Myeni, the Chairman of South African Airways, and I told her in no uncertain terms in November 2014 that if she did not resign from the airline I would expose her conduct. In that email, I talked about the fact that private detectives had come to my offices to solicit my assistance in obtaining cellular phone records and bank records of three directors of South African Airways. I mentioned this in the email and I said, “This conduct is unacceptable.” It’s crystal clear from the email chain I have, that the emails triggering this action on the part of this private detective went from Myeni to Advocate Lindiwe Nkosi-Thomas, who was then a director of SAA. The detective made it clear to me his client was Lindiwe Nkosi-Thomas and that he wanted bank records and cellular phone records.
I prepared a sworn affidavit and I sent it to the then CEO of SAA because he was one of the people whose bank records they wanted. They made it clear that they were looking to unlawfully obtain bank records and cellular phone records. Ironically, no action has been taken. Nkosi-Thomas was called to order. A special meeting of the board was convened. She didn’t turn up and she resigned.
The SAA saga goes back to 2012 when former CEO of the JSE Russell Loubser and the chairman Cheryl Carolus, and some other highly respected directors resigned. Dudu Myeni was still on the board at the time. Russell Loubser famously said, “If she has any business acumen, it’s very well-hidden.” How much of an influence does Myeni have on the airline?
I think she’s got too much influence. The King Report makes it clear non-executive directors should not have their shoe leather in executive decisions. What they should be doing is having an overview of the organisation that they are non-executive directors of and making decisions based on their rational understanding of what’s going on in the business. In the case of Myeni, this woman is so arrogant she even has her picture in every issue of Sawubona (SAA’s in-flight magazine) so that all the passengers get to look at her every time they go on a plane. My concern first arose after the incident with private detectives attempting to buy cellphone records and bank records of those three directors of SAA, one of which was the then CEO.
That CEO phoned me and he said, “Paul, I’m shocked at what’s going on.” I asked, “What’s the problem?” He said, “Well, you know I appointed Transactional Advisors to oversee the wide-bodied aircraft tender transaction, as requested by (former Public Enterprises) Minister Malusi Gigaba and I was shocked when Myeni walked into my office and told me ‘we don’t need transactional advisors. We can do all this in-house’”. The CEO told her ‘No, this is what the Minister wanted’. Gigaba was subsequently removed and replaced as Minister by Lynne Brown. That then CEO made it clear Myeni told him that she wanted to go on pension and his decision to appoint Transactional Advisors would delay her ability to do so. I’m left wondering what the hell’s going on here? This is a state-owned entity – one that’s not making a profit. In fact, it’s the opposite. It’s running at a loss. We have a chairperson (as I think she calls herself) who decides that this airline is hers to do with as she wishes.
That all raised the story of Quartile Capital. Myeni tried to put Quartile Capital in between a deal that SAA was doing with Airbus. It was stopped. It cost the country a lot through the whole Nenegate saga and Finance Minister Nene was fired, but at least it seemed the corruption attempts over. That’s not the case?
No, it’s not the case, unfortunately. In the docket that I opened in January this year, I made it clear that Quartile Capital were not fit for any purpose. They had judgements against them going into the millions. Not only against the company but against the directors personally. You have the situation where it would have been impossible for them to obtain a Tax Clearance Certificate (a requirement to do business with any public sector enterprise) because there was over R1.5m owing in unpaid VAT. How can you appoint a company like that to be engaged in a purported R6bn deal to finance ten aircraft? I included all that information in the docket. But it’s now clear from the supplementary statements that I’ve put into the docket that the dust hadn’t settled on Quartile Capital when, in early 2016, we had another Request for Information (RFI), seeking Transactional Advisors to advise South African Airways on the restructuring of its R15bn loan book and leases.
You’re just left wondering why the board appointed a previously unknown company to handle this R15bn restructuring? By the way, SAA had the in house capability to do everything that was included in that Request for Information. They have their own treasury division. Why would you hire outsiders to do something you can do yourself?
Deloitte tendered. Nedbank tendered. There were some other big names. A company called BNP Capital, which was chosen. Do you know much about them? Have you discovered how substantial they are?
Well, of course I have. When I saw what was going on, I investigated. I went to their registered offices. They’re not there. It’s an old building, partly run down, and with lots of empty offices there. They moved out of that building years ago and it’s still their registered office. I then located their new premises which they’re operating from and they’ve got three rooms. Now I’m left wondering. I’ve got a small business. My business turns over R7m per year and in my small little business, I’ve got seven rooms. I’m just left wondering what kind of operation are you, where you’ve got three rooms – a reception and two offices?
So this business that operates out of three rooms was given the task of restructuring R15bn in South African Airways’ debt. Why?
Well, that’s the big question, isn’t it? What one has to understand is the original scope of their tender. I don’t know what their tender price was, but you couldn’t be looking at more than R1m to R1.5m in fees for the work that they had to do – maximum. I would have thought somebody like Nedbank, Deloitte, or somebody like that would have been much better placed to professionally look at the situation at SAA if it wasn’t going to be done in-house. But by April the scope of the contract awarded to this BNP Capital had been bastardised and now converted into one of actually raising the R15bn in funds, not just advising on it. In other words, by the 24th of May a board resolution had been given to bypass all the procurement regulations – not only of SAA but of Treasury and the PFMA – completely ignore those regulations and appoint BNP in a confined process, without going out to tender, to not give advice on restructuring the loans, but to actually re-raise SAA’s R15bn in finance. They would get a success fee for that of R256.5m for probably about a month or six weeks of work. I’m just left wondering what a three-room outfit would be doing, charging R256m for six weeks’ work. It’s just unfathomable.
Then when you look at the evidence it is rock solid. SAA’s own treasury department said ‘this is ridiculous. If we were to go out to get an outside organisation to finance us, the raising fee would not be more than ¼ of a percent’. These people (BNP) have negotiated a deal of 1.5%, which is six times the amount. You’re just left wondering: this cannot be anything more than a cash siphoning exercise. Then you’re left wondering: who is arranging it? You’ve only got to look at the signatures on the board resolution. Those people have completely neglected their duty of care. On the one document, it says there’s budget provision for it. There was no provision for R256m to be spent as a raising fee to be given to an outside entity.
Let’s just understand this. Dudu Myeni who is the Chairman of President Jacob Zuma’s Foundation, first tried to inject an unknown company called Quartile Capital in 2015. That was stopped after the firing of the Minister of Finance who tried to block it, causing Nenegate. No sooner had the dust settled, than Myeni has done something similar with a company called BNP Capital that operates out of three rooms. It will be paid R256m for doing a job that it’s not really qualified to do. What happens if this is allowed to go ahead?
Well, it can’t go ahead now, can it? I’ve had several meetings with OUTA which has threatened legal action if SAA goes ahead. They’re a non-profit entity – a public interest entity.
They’re the toll road guys?
Yes, but I think they’ve expanded their scope now and call themselves the ‘Organisation Undoing Tax Abuse’. I can’t see a better example of tax abuse than what we currently have, where out-of-budget expenditure of R256m is going to a previously unknown entity. There’s more though, Alec. A week before this company had their contract extended to provide all these additional services, their license was suspended for malfeasance by the Financial Services Authority.
So the Financial Service Board suspended the guys who were given this huge contract by SAA?
Well, surely one would expect… If I’m BNP Capital (which, thank God I’m not), my licence was suspended, and I’m about to be granted a R256m fee for twiddling my thumbs, I would at least notify the people that were about to appoint me ‘oh by the way, my license has just been suspended’. The failure to notify the airline, in my opinion, amounts to fraud because it’s what I would call a material non-disclosure of fact. I’ve got no doubt whatsoever that the appointment of BNP Capital is nefarious, it’s unlawful and it’s criminal and everybody that signed documents permitting it to take place should be held criminally liable.