Ex-SAA chief grounds R200m damages claim

FIGHTING BACK: Khaya Ngqula, former CEO of South African Airways, says he has a valid defence. Photo: Leon Nicholas

FIGHTING BACK: Khaya Ngqula, former CEO of South African Airways, says he has a valid defence. Photo: Leon Nicholas

Published Sep 17, 2011


Last week, South African Airways declared a R782 million profit – now it’s facing a R200m legal nightmare.

Last year it sued its controversial former chief executive Khaya Ngqula for R200m for money it said he had no right to spend.

On Friday he hit back in court, saying SAA had taken out insurance against that.

The insurers agreed with him – but now they won’t pay out because they claim the airline lied to them.

SAA served Ngqula with three separate summonses last year. The first was for his retention bonus scheme for key staff that saw him giving himself R68 750 extra a month and R16 000 a month extra for junior executives – in 2008 when the carrier was restructuring and laying off jobs.

The unions were incensed and the airline claimed SAA blew its budget by R27.4m.

The second summons related to Ngqula contracting Argentinian golfer Angel Cabrera in August 2007 to be the face of SAA’s advertising campaigns until 2010. SAA claimed the deal exceeded the airline’s marketing budget by $3.6m.

The third summons claimed Ngqula had no authority to commit the airline to an ATP tennis tournament which cost the airline R120m.

Ngqula says he has a valid defence for all of these. He maintained in court papers yesterday that even if the court was to find he had no authority for the sponsorship deal, SAA had not suffered any damages as a result of it. He says the publicity it enjoyed from its association with the golfer exceeded any payments made.

He claims the SAA board lauded his achievements in getting the golfer to promote the brand, image and profile.

But yesterday Ngqula claimed SAA’s insurers, Chartis, should pay for the exceeded budgets during his time as chief executive, just as it would have been covered for other financial disasters from everything from aircraft crashes to mismanagement by key personnel.

Chartis is refusing to pay.

It claims the airline lied on their application form to renew their insurance by not telling them it was investigating Ngqula and had pending litigation against him.

SAA failed to inform Chartis that they had already initiated a forensic audit into their CEO which was being carried out by KPMG.

Last July SAA’s board announced that they would sue Ngqula, who had left the company in March the year before. SAA chairwoman Cheryl Carolus told journalists at the briefing that the airline had requested an interview with Ngqula but he had refused, forcing them to proceed on the “basis of the evidence”.

At the time, Ngqula’s attorney Billy Gundelfinger disputed this, saying Ngqula had co-operated fully with KPMG during the investigation, handing over all documents demanded by the auditors.

His client, he said, was agreeable to being interviewed and to answer questions, as long as he was given the opportunity to see documents they had on issues they would raise with him.

“I advised SAA’s attorneys that having regard to the fact that as at February 2010 SAA had spent in excess of R23m relating to the investigation against my client, one would have thought SAA would have driven the investigation to its logical conclusion by permitting my client to peruse the documentation and then be interviewed,” Gundelfinger said at the time.

Yesterday Gundelfinger declined to comment.

Last night the airline’s head of legal and compliance services, Advocate Sandra Coetzee, said: “As this matter is sub judice, at this point, SAA can only confirm receipt of the summons from Mr Ngqula’s lawyers and is preparing a response to be entered through court proceedings.”

Ngqula was known for his lavish lifestyle, spending R2m on his ex-wife as part of their divorce, before splurging R1m on a highly publicised wedding to former beauty queen Mbali Gasa. He had both a traditional wedding near King William’s Town, which included getting Eastern Cape authorities to upgrade 10km of gravel road for his 300 guests to travel on, and hosting a further 300 guests at Zimbali Lodge, north of Durban, booking luxury rooms for a weekend.

Within eight months of becoming SAA CEO, Ngqula spent more than R500 000 in helicopter fees to attend meetings in Gauteng, as well as chartering an aircraft for a 30-minute flight to fly from the UK to France for a meeting. He was in the UK at the time to look at ways of cutting costs at SAA.

Ngqula, whose perks included a BMW 745, a bodyguard and a chauffeur, earned more than R5.3m a year as CEO. - Saturday Star

Related Topics: