Victory for civil society: Dudu Myeni declared delinquent director for life

Finally, South Africa sees justice served against a prominent individual involved in state capture. It was worth every rand spent, says OUTA’s Advocate Stefanie Fick.

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27/05/2020 16:18:18

                                                                                                                                                                                                                      Victory for civil society: Dudu Myeni declared delinquent director for life

                                                                                                                                                                                                                      A lengthy legal battle has ended with a victory against state capture culprit, Dudu Myeni, who was appointed to chair the SAA Board in 2012 and who, for five years, made headline news for all the wrong reasons.

                                                                                                                                                                                                                      Judgment was handed down today in favour of the Organisation Undoing Tax Abuse (OUTA) and the SAA Pilots' Association (SAAPA), with Judge Ronel Tolmay declaring former SAA chair Myeni to be a delinquent director for life.

                                                                                                                                                                                                                      “This declaration of delinquency is to subsist for the remainder of Ms Myeni’s lifetime,” said Judge Tolmay in the order. “This judgment and the evidence led is referred to the NPA for their consideration and determination of whether an investigation regarding possible criminal conduct should follow.”

                                                                                                                                                                                                                      Myeni was ordered to pay OUTA and SAAPA’s legal costs on an attorney and client scale, including the costs of three counsel.

                                                                                                                                                                                                                      OUTA and SAAPA made the decision to pursue this case three years ago and were determined to see it through, despite Ms Myeni’s legal team bringing four interlocutory challenges during the case. Myeni’s team lost their interlocutory challenges but raised appeals to two of them, which pushed the case out by another three months.

                                                                                                                                                                                                                      “We are extremely pleased to see justice meted out in a prominent matter related to state capture,” says Stefanie Fick, OUTA’s Chief Legal Officer. “When we set out on this matter three years ago, we knew it would take time and would be very costly. But every minute and every rand spent was worth it. We believed then, as we do now, that it is important to hold people like Ms Myeni to account, as opposed to seeing them get away with acts of gross misconduct, year after year. Imagine what could have been done with the endless amounts of taxes lost in her tenure to alleviate poverty and advance democracy.”

                                                                                                                                                                                                                      “This is a victory for the pilots of SAA. We believe it is important for internal organisations to take a stand against their directors when it is necessary to do so, as was the case with Ms Myeni during her tenure as the chair,” said Grant Back, Chairperson of SAAPA.  

                                                                                                                                                                                                                      We also salute all those who were willing to testify in the case, many of whom stood their ground against the abuse of power by Myeni and her cohorts, and lost their jobs at SAA. They are the heroes who exercised moral courage and stood up for what was right, on behalf of their fellows South Africans.

                                                                                                                                                                                                                      We are grateful for the immense support received from our supporters. We are also grateful to our legal team who spent hours in consultations with witnesses and working on court papers, often resulting in sleepless nights, and five weeks at trial.

                                                                                                                                                                                                                      OUTA and SAAPA believe that it is the duty of all boards to do the work of instituting charges against previous directors who have mismanaged the funds and assets of their organisations. The sad reality is that far too often, they leave this extremely necessary work to civil society, who are often in the most difficult position to bring these challenges and at great cost to them. 
                                                                                                                                                                                                                      OUTA and SAAPA calls on NPA to act swiftly. “We trust that Ms Myeni will meet the full brunt of the law and that the NPA will use this judgment and evidence to successfully prosecute Ms Myeni for her role in state capture,” says Fick.

                                                                                                                                                                                                                      SAA is an example of a state-owned entity massively damaged by state capture. The airline was in a financially disastrous position for years, culminating in being placed in business rescue at the end of last year. This left it in no position to survive the economic effects of the Covid-19 pandemic which has grounded it. Thousands now stand to lose their jobs.

                                                                                                                                                                                                                      Myeni is still a director of various entities and we shall now be writing to them to have the formal CIPC processes undertaken to have her removed from these boards, including the Jacob Zuma Foundation and the Mangaung metro’s electricity utility.

                                                                                                                                                                                                                      The Pretoria High Court judgment is here.

                                                                                                                                                                                                                      The judgment

                                                                                                                                                                                                                      “She was a director gone rogue, she did not have the slightest consideration for her fiduciary duty to SAA,” said Judge Tolmay.

                                                                                                                                                                                                                      The judgment was strongly critical of Myeni’s actions.

                                                                                                                                                                                                                      “To serve on a Board of an SOE should not be a privilege of the politically connected,” said Judge Tolmay. “Whoever serves on the Board of an SOE should ultimately be a servant of the people and whoever is appointed as such, has a sacred duty to society and should ensure that state resources are not squandered, or the economy placed at risk.”

                                                                                                                                                                                                                      Judge Tolmay referred to Myeni’s “dishonesty, breach of fiduciary duty, recklessness and gross negligence”.

                                                                                                                                                                                                                      “This constitutes reprehensible conduct and is sufficient reason for a punitive costs order,” said the judge. “Her actions caused SAA and the country immense harm and it was of the utmost importance that she be brought before a Court to answer for her deeds.”

                                                                                                                                                                                                                      Judge Tolmay said Myeni had claimed she couldn’t afford to get to court but failed to disclose earnings from her various directorships, that she remained a director of at least four companies, and that she owned a property worth R4.2-million in Richards Bay. She later offered another explanation for failing to attend, which the judge called dishonest, constituted perjury and was worthy of a punitive costs order.

                                                                                                                                                                                                                      Judge Tolmay referred to Myeni’s use of appeals against the interlocutory applications she lost to delay the case.

                                                                                                                                                                                                                      “This conduct was clearly calculated to cause maximum delay and disruption. In fact, it succeeded in prolonging this trial substantially and contributed to the plaintiffs’ costs. Ms Myeni finally elected not to attend trial for the duration of the plaintiffs’ evidence, despite this Court’s repeated warnings that this would compromise her defence. In these circumstances, justice and equity requires that the plaintiffs be fully indemnified, to the greatest extent possible, for the costs of this litigation,” said the judge, awarding costs against Myeni.

                                                                                                                                                                                                                      The background
                                                                                                                                                                                                                      OUTA and SAAPA filed the application against Myeni in March 2017.

                                                                                                                                                                                                                      In October 2019, tge started in the Pretoria High Court, heard by Judge Ronel Tolmay.

                                                                                                                                                                                                                      OUTA and SAAPA were represented by advocates Carol Steinberg, Chris McConnachie and Nada Kakaza, instructed by Rashaad Pandor Attorneys. Myeni was represented by Advocate Nqabayethu Buthelezi, instructed by Lugisani Daniel Mantsha. 

                                                                                                                                                                                                                      OUTA’s legal team spent hours in consultations with witnesses and working on court papers, often resulting in sleepless nights, and five weeks at trial.

                                                                                                                                                                                                                      Evidence presented by OUTA-SAAPA showed how Myeni was instrumental in scuppering deals which had dire financial consequences not only for the national airline but for South Africa as a whole. This resulted in losses of billions of rand for SAA and took it to the brink of bankruptcy; in December 2019 the airline was placed in business rescue and its future is still in the balance.

                                                                                                                                                                                                                      From 2009 to 2017, Myeni was the one constant on a constantly rotating SAA board. From 2012 until her departure in 2017, she was the chair. SAA has been technically insolvent since 2012/13.

                                                                                                                                                                                                                      Although Myeni opposed the OUTA-SAAPA action, she initially failed to turn up in court or even to send a legal team.

                                                                                                                                                                                                                      After much delaying, she arranged legal representation and eventually arrived to give evidence.

                                                                                                                                                                                                                      Her appearance in court was a significant victory in opposing state capture, as she was obliged to explain her actions. This is the former SAA chair who had failed to attend a meeting at Parliament where she had been ordered to appear, who finally arrived at our delinquent director challenge against her. Proceedings were aired on national television and the nation could finally see one of the state capture culprits being held to account for her actions.

                                                                                                                                                                                                                      The case revolved around two key matters from 2015: SAA’s failed attempt to sign a memorandum of understanding (MOU) on route sharing with Emirates airline and the Airbus swap transaction. Evidence was that a deal arising from the MOU would have brought SAA a guaranteed minimum of USD 100 million per year, while the Airbus swap transaction was aimed at saving SAA hundreds of millions of rand in bills and providing more fuel-efficient aircraft. OUTA-SAAPA did not bring evidence on additional incidents outlined in the original case against Myeni, due to time limits and the belief that the two main incidents provided sufficient evidence, but emphasised this did not concede any weakness in those allegations. OUTA-SAAPA called six witnesses against Myeni, included four former SAA executives. Myeni was the only witness in her own defence.

                                                                                                                                                                                                                      OUTA-SAAPA’s advocates prepared strong heads of argument and Advocate Steinberg delivered a powerful closing statement, asking the court to declare Myeni a delinquent director for life and to refer the matter to the NPA for criminal prosecution. Judgment was reserved on 28 February 2020 and delivered on 27 May.

                                                                                                                                                                                                                      Myeni tried to divert attention away from the delinquency action brought against her by OUTA and SAAPA and instituted a defamation claim of R8 million against OUTA. We are extremely confident that we can defend this matter and win a costs order against her. 

                                                                                                                                                                                                                      Voice Note by Advocate Stefanie Fick

                                                                                                                                                                                                                      Picture: OUTA

                                                                                                                                                                                                                      OUTA is a proudly South African civil action organisation, that is purely crowd funded. Our work is supported by ordinary citizens who are passionate about holding government accountable and ensuring our taxes are used to the benefit of all South Africans.