I was used as the wings of enrichment, Nhantsi tells #StateCaptureInquiry
Johannesburg - Former South African Airways chief financial officer Phumeza Nhantsi has accused former chairwoman Dudu Myeni and her board of using her to enrich certain individuals, including politicians.
Nhantsi - a chartered accountant - was testifying at the Zondo Commission of Inquiry into Allegations of State Capture on Tuesday where she was grilled on why she allowed SAA to conclude dubious lucrative deals, without proper processes and sometimes without any due diligence.
This included the 2015 flouting of procurement regulations when appointing the Free State Development Corporation to source R15billion for the airline for debt consolidation.
Former SAA group head of treasury Cynthia Stimpel had already told the commission that despite her team’s recommendations to the board - after an extensive procurement process - to either appoint SeaCrest Investments or opt for an R4.3bn consolidated loan from various banks, the board resolved to appoint FDC, which had not participated in the bid process.
Nhantsi said she had carried out the instructions of the board because at the time she had thought they were in the best interest of SAA, adding that she was still new in her role as she had just been seconded to her post in an acting capacity from the SizweNtsalubaGobodo accounting firm.
“I think in my mind I was acting in the best interest of the company looking at the interest rates that we could get. Legal (department) was doing their part, but from the numbers’ perspective for me it made sense to continue with them,” Nhantsi said.
SeaCrest Investments had offered to lend the full R15bn to SAA at 5.8% interest rate while the FDC undertook to charge around a 3% and 4% interest rate in its unsolicited letter to the board, which was written by its chief financial officer Shepherd Moyo.
While both SeaCrest Investments and the FDC were depending on a company called Grissag to provide the funds, SeaCrest Investments was disqualified after the conduction of due diligence because of its inability to supply the funds directly.
No due diligence was conducted on the FDC before Myeni and her board instructed Nhantsi and then SAA acting chief executive Musa Zwane to approve the contract.
“In my discussion with Mr Moyo at the time, he mentioned that the chairwoman of their board was the sister of (ANC secretary-general and then Free State premier) Mr Ace Magashule, and at the time I could not link anything because purely I was coming from the professional environment where we were doing audits, so I was not clued up on politics,” Nhantsi said.
However, the FDC failed to secure the deal after the National Treasury blocked the provincial state-owned entity from working outside its mandate.
Last year, Nhantsi and Zwane were suspended and an internal disciplinary inquiry recommended that they be summarily dismissed for gross financial misconduct, negligence and dishonesty in relation to a tender with BnP Capital, a company that was later roped in after the FDC was dropped.
The BnP contract, which would also depend on Grissag for funding, was aborted following controversies around it. This was not before BnP Capital director Daniel Mahlangu solicited a R49million cancellation fee from SAA that he said would cover the cost of sourcing the funding around the world by Grissag.
Grissag director Pieter van der Merwe has, however, told the commission that Mahlangu had misled the airline regarding the cancellation fee, which Nhantsi approved.
“Looking back, having especially the testimony of Mr Van der Merwe, I see that in a way I was used as a scapegoat or as a vehicle for people to enrich themselves,” Nhantsi said.