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SAA 'ran at a loss under Coleman Andrews'

Published Jun 10, 2001

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By Amanda Vermeulen and Bianca Williams

South African Airways (SAA) paid out more than R1-billion under the leadership of former chief executive Coleman Andrews without making a single cent in sustainable profits, a Business Report investigation has found.

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Andrews earned more than R220-million during his 20-month stay at SAA.

The airline reported profits of R350-million last year, but an investigation has found that this figure was swelled by the once-off sale of aircraft.

If the aircraft sales are stripped from the financial statements, SAA shows a loss for the year.

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Jeff Radebe, the minister of public enterprises, has asked Transnet chair Louise Tager for a full report on events at SAA since Andrews, an American, was appointed by then-Transnet managing director Saki Macozoma in May 1998.

The director-general of public enterprises, Sivi Goundon, said no action could be taken until the report had been completed. If there was evidence of recklessness, action was possible under the Companies Act and the Public Finance Management Act.

Andrews's salary was more than $1-million (about R8-million) a year, excluding perks such as a yearly bonus of 125 percent of his salary and options on 18 million SAA shares at one cent each.

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The shares were bought back from Andrews at R2,50 each when Transnet tried to restructure his package last year.

Andrews stepped down on April 1, 14 months before his contract was to expire, and was replaced on the same day by Andre Viljoen. Transnet announced its decision to end Andrews's contract at the end of February.

The Democratic Alliance was among many who called on Radebe to account for what it called "terrible wastage and discrepancies" at SAA under Andrews.

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In a motion tabled in parliament earlier this month through public enterprises spokesperson Rudi Heine, the DA said Andrews's "remuneration, the appointment of other consultancies and decisions taken during his tenure at SAA smack of nepotism, blatant waste of taxpayers' money and poor business decisions".

The motion also stated that the "much-trumpeted profit of SAA was gained through the sale of assets rather than sustainable operational improvements".

Radebe said he was waiting for Transnet's response about Andrews's package and management issues.

The public should receive an explanation if the allegations about Andrews's package were true, he said.

The government had no part in determining Andrews's package and terms and conditions of employment, Radebe said.

He warned that action would be taken against any employees or former employees if it was found they had acted outside the scope of their authority.

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