SCA judgment opens way for more delinquency actions against SOE directors

‘No reasonable prospect of success’: Supreme Court of Appeal dismisses Myeni’s appeal attempt

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13/04/2021 09:10:33

SCA judgment opens way for more delinquency actions against SOE directors

Dudu Myeni remains a delinquent director for life, barring her from holding any directorship ever again.

The Supreme Court of Appeal (SCA) has dismissed Dudu Myeni’s application for leave to appeal against the 2020 judgment which ruled her a delinquent director for life.

“The application for leave to appeal is dismissed with costs on the grounds that there is no reasonable prospect of success in an appeal and there is no other compelling reason why an appeal should be heard,” said the SCA in the order. Myeni was ordered to pay costs of the application.

The case against Myeni was brought by OUTA and the SAA Pilots’ Association (SAAPA).

At the time, it was the first such action to be brought against a director of a state-owned entity and was opposed throughout.

“OUTA is obviously delighted,” says Advocate Stefanie Fick, OUTA’s Executive Director for Accountability. “We’ve worked long and hard and believe this is really a win for civil society and a groundbreaking case. This opens the way for broader civil society to take such actions to defend state assets.”

SAAPA says it is very pleased with the result. “Ms Myeni, who served as chairperson of the SAA board from 2012 to 2018, played an instrumental role in the financial demise of SAA, ultimately leading to it being placed in business rescue. Her delinquent actions played a significant role in the collapse of the airline resulting in the retrenchment of thousands of SAA employees,” says SAAPA. “It’s notable that it took civil society (OTA) and a labour organisation (SAAPA) to intervene to stop the former SAA chairperson’s delinquency and hold her accountable.”

Who’s the next to be declared delinquent?

The delinquent director action is a legal strategy which OUTA is now considering using again, against other individuals who have used their powers as directors to manipulate, capture and loot state-owned entities.

“Who’s going to be the next delinquent director?” asks Fick.

The case against Myeni took four years from filing the papers to finalisation but OUTA considers the result worth the long battle, to remove her access to directorships of all entities including state-owned entities, private businesses and non-profit organisations.

OUTA’s possible targets for future delinquency actions include Anoj Singh, the former CFO of Transnet and Eskom, and Brian Molefe, the former CE of Transnet and Eskom. The pair have been heavily implicated in the capture of first Transnet and then Eskom. Both entities lost billions of rand in their capital expenditure programmes: the Transnet locomotive acquisition projects paid billions of rand in backhanders to the Guptas, and Eskom’s power station construction projects overspent by tens of billions of rand. 

OUTA has already taken action against both Singh and Molefe. In 2017, OUTA laid a complaint against Singh with the South African Institute of Chartered Accountants; he was finally struck off the role in August 2020. In August 2017, OUTA laid criminal complaints with the SAPS against both of them, in separate cases; no significant progress appears to have been made in these matters.

The end of the road for Myeni

The SCA heard Myeni’s application for leave to appeal last week. Myeni had filed her application for leave to appeal late, after the deadline, so had to apply for condonation for this. The SCA granted condonation for late filing but dismissed the application for leave to appeal.

An appeal by Myeni to the Constitutional Court is only possible on the basis of a constitutional argument, which OUTA believes is not a viable argument in this case.

The main delinquency judgment against Myeni was handed down on 27 May 2020 by the Pretoria High Court, and also referred the matter to the National Prosecuting Authority for possible further action.

The delinquency judgment against Myeni is a result of an application brought by OUTA and SAAPA, initially filed in March 2017.

In December 2020, the Pretoria High Court dismissed Myeni’s application for leave to appeal against the delinquency order. At the same time, the court granted OUTA-SAAPA’s application for an interim enforcement order of the delinquency order, pending finalisation of any appeals. This prevented the suspension of the order while an appeal was in progress.

Myeni had also applied to the SCA for leave to appeal against the interim enforcement order; this is presumably now academic.

The delinquency order means Myeni may no longer serve as a director on any entity’s board.

The Companies and Intellectual Property Commission (CIPC) records show that Myeni resigned as a director of the state-owned municipal electricity entity Centlec on 30 October 2020 although this record was updated only in December. Myeni is still listed as a director of the Jacob Zuma Foundation.

After winning the interim enforcement order, OUTA-SAAPA wrote to the Jacob Zuma Foundation, Hope Fountain Investments 54 and Orestitrix, the three businesses in which she was still listed as an active director, requiring them to remove her as a director in terms of the court order. No responses were received. The CIPC lists all three entities as being in process of deregistration.

A long list of legal losses

Myeni has repeatedly lost her legal battles in this case. She has also been through several legal teams, failed to turn up in court and claimed this was due to financial difficulties, and missed legal deadlines.

She filed an interlocutory application challenging OUTA’s status to bring the case but lost both this and an attempt to appeal that ruling.

She filed an interlocutory application asking to change her original pleadings but lost both this and an attempt to appeal that ruling.

She filed an interlocutory application asking to join 28 other people to the case to share the blame, but lost this.

She lost the main application when the Pretoria High Court ruled her a delinquent director for life.

She lost her application to the Pretoria High Court to appeal the delinquency judgment.

She lost OUTA-SAAPA’s application for an interim enforcement order against her.

Now she has lost her appeal attempt against the main judgment at the SCA.

More information and documents

The SCA judgment is here.

More information on this case is here.


Picture: OUTA