Update: On Thursday the parties agreed to have the hearing postponed until August 22. Until then SAA would not proceed with the disciplinary hearing on the charges related to Stimpel’s disclosure. This agreement was made an order of the court. One of the charges is not covered by the court order and SAA would be entitled to proceed with a disciplinary process in this regard.
Suspended South african Airways (SAA) group treasurer Cynthia Stimpel has implicated acting CFO Phumeza Nhantsi as having played a central role in the national carrier’s cancelled deal with BnP Capital to restructure its R15 billion of debt.
Nhantsi was appointed to act in this position in November last year after being seconded from accounting firm SizweNtsalubaGobodo of which she is a director. The position became vacant after the resignation of former SAA CFO Wolf Meyer.
Stimpel spilled the beans about the BnP Capital deal in an affidavit supporting her application to the labour court for an interdict to prevent SAA from proceeding with a disciplinary process against her. The application will be heard on Thursday.
She argues that she made a protective disclosure to civil rights group Organisation Against Tax Abuse (OUTA) about her concerns regarding the legality of the deal. In terms of the Labour Relation Act any occupational detriment as a result of a protective disclosure is considered an unfair labour practice. Protective disclosures are commonly known as whistle blowing.
In an affidavit to court Stimpel describes in detail how a tender for transaction advisory services was extended to include the sourcing of R15 billion funding at a fee of R256 million.
Stimpel maintains the procurement process was flawed, that SAA could have sourced the funding itself and it could have done so for a fraction of the cost. To add insult to injury BnP is a small company with an annual turnover of only R5 million and no experience in sourcing such a large amount of funding and had its license to do so suspended by the Financial Services Board, Stimpel says.
She describes a process that started more than a year ago. By December last year, following a request to the market, the SAA board rejected a recommendation from its treasury to appoint Seacrest Investments to source the R15 billion funding.
It also rejected a bid by Absa, Standard Chartered and Nedbank to provide R5 billion long-term funding because it wanted the full amount sourced. It approved the appointment of the Free State Development Corporation to source the R15 billion. Stimpel maintains this decision was also taken in contraventions of procurement provisions.
Without Stimpel’s knowledge at the time, Nhantsi motivated to the board in January that it appoint a transaction advisor to assist with the R15 billion debt restructuring
The Request For Proposals (RFP) was issued in early in March. When Stimpel received the submission from the Bid Adjudication Committee (BAC) in this regard later that month, she raised her concerns with Nhantsi, saying SAA could do the job itself and didn’t need a middleman.
Without involving her or her deputy, BnP was appointed as the Transaction Advisor in April. The appointment required the company to advise on the efficiency of SAA’s current loans and leases and not to source funding.
About a week later Stimpel learnt in a meeting with Nhantsi that the agreement with the Free State Development Corporations was “off the table” and that Nhantsi would ask the Transaction Advisor (BnP) to source the R15 billion. The SAA board accordingly made a resolution to extend the scope of the agreement with BnP.
Stimpel only learnt of this development on 6 May and refused to sign a document in support of it, due to her concern about the legality of the process followed and the fact that the fee was exorbitant.
She in fact got hypothetical quotes from other banks. The highest quote was R85 million, while BnP stood to be paid R256 million for the same job.
Stimpel says she advised Nhantsi to issue a new RFP, but Nhantsi did not respond to her emails and refused to meet with her.
She disclosed the state of affairs to National Treasury on May 11. A senior colleague warned her against raising the issue internally in SAA, saying she might be suspended as was SAA Head of Commercial Sylvain Bosc earlier.
Suspended SAA Head of Human Resources Thuli Mpshe advised her to make disclosures to National Treasury, the Public Protector and OUTA.
SAA had to make debt repayments of R7.3 billion by the end of June, which increased the urgency of the matter. She says she realised she could not just wait for a response from the authorities and met with OUTA chairperson Wayne Duvenhage.
Stimpel denies ever disclosing information to the media about the matter.
She says OUTA filed a court application to stop the BnP contract. Facing the action SAA did not defend the lawfulness of the agreement, but instead announced that it would cancel it.
Stimpel argues her conduct meets the requirement of the Protected Disclosures Act.
The Labour Court is expected to hear the matter, including the response of SAA, which is contesting the application, on Thursday. Moneyweb will publish SAA’s response as soon as we have it.
Oops! We could not locate your form.