Publish date: 25 November 2015
Issue Number: 3887
Diary: Legalbrief Today
SAA’s failed attempt to cork the genie by getting an interdict to gag various media outlets from publishing a revealing legal opinion on the operating status of the national carrier is to be challenged by the affected news providers, notes Legalbrief. Moneyweb, Media24 and Business Day all indicated yesterday they would fight the interim High Court order gagging them from publishing the contents of a leaked memo dated 6 November 2015 to the SAA board from former acting CEO Thuli Mpshe. According to a report on the Fin24 site, Media24 is of the opinion that the order should never have been granted for lack of proper notice and substance, among other things. It also believes that the information contained in the memo is of great public interest. The report notes SAA brought an urgent interdict in the early hours of Tuesday morning to curb media outlets from publishing the contents of the memo which it described in court papers as ‘privileged’ and ‘highly confidential’. The document was an internal memo prepared by the head of legal, risk and compliance at SAA, Ursula Fikelepi, to the board of the airline. However, the cat was already out of the bag by the time news providers became aware of the interdict, notes Legalbrief. The interdict was too late to stop Business Day from publishing the article in its print edition yesterday morning, and it had already appeared on the Moneyweb, BDlive and City Press sites. The respondents were ordered to ‘remove all references to the opinion, including all or any of the contents of the opinion that has already been published on the Internet and social media’, an order with which they complied.
SAA was not obliged to share everything with the public, board chairperson Dudu Myeni, whom media reports describe as being close to President Jacob Zuma, said yesterday by way of explaining SAA’s action, notes Legalbrief. Myeni reportedly told Fin24: ‘SAA is a state-owned company and the public has a right to know certain things but we cannot discuss the day to day happenings of what is going on in the boardroom… we can’t do that.’ Myeni said the board was concerned about sensitive information that had been leaked into the media in recent months. ‘The board is concerned about the leakages but I want to assure South Africans that SAA is not in shambles. There is a handful of people that are leaking documents into the media. SAA is in good hands …,’ she is quoted as saying.
Editors of the affected publications were scathing of the SAA action, notes Legalbrief. ‘What is possibly worse than the term ‘technically insolvent‘ frequently being alongside reports of wasteful expenditure, questionable procurement directives, a revolt by the company’s pilots and the cowboy-like conduct of the chairperson,’ asked Ryk van Niekerk, of Moneyweb. Given that, he said in a commentary on the Moneyweb site, it was ironic that SAA’s Fikelepi states the following in her founding affidavit: ‘The opinion makes reference to highly confidential information of a very sensitive nature. That information has the potential of causing real and serious reputational and financial damage to the applicant and the government of the RSA.’ Van Niekerk argues ‘it is the board of SAA itself which has, over the past few months, already succeeded in causing ‘real and serious reputational and financial damage’ to the airline. He makes the point that had SAA not brought the interdict application, the article would have just been another negative article about the airline. ‘The court order has made this story much bigger and amplifies the public’s dismay at what is actually happening at the airline.’
Business Day says it was not able to defend itself ‘because we were not aware the airline was approaching the courts. Otherwise we would have opposed it vigorously’. It also points out that despite having access to the writer Carol Paton’s cellphone number, ‘SAA never tried to reach us to inform us of its action. Instead, it sent an e-mail after 10.07pm on Monday, which was only seen yesterday morning’. It notes the court order was delivered to its offices at 2.32am yesterday, long after distribution of the newspaper had started. It adds: ‘SAA’s contention was that an internal memo from which we quoted in yesterday’s article, was privileged. We are approaching the courts to have the order set aside because we believe the argument is flawed in law. Business Day says the litigation is a diversion from the real issue, which is an airline that was described by the Treasury in its 2015 Budget Review as ‘technically insolvent’. To date it has R14.5bn in state guarantees, and now needs billions more from taxpayers. Noting the board is chaired by a close associate of Zuma, it says ‘what is apparent is that the Treasury has not been able to assert its authority over a state-owned company it oversees. We have also not heard a word about the crisis from the office of Deputy President Cyril Ramaphosa, who was tasked by the Cabinet last November to oversee a turnaround at SAA. If there was any doubt about the paralysis of state institutions in the face of blatant cronyism, it has now been removed. This is no longer just about SAA, but the country’s governance. The Zuma administration faces an unprecedented challenge and is evidently unable to contain a damaging crisis’.
Meanwhile, Treasury is still considering the application by the SAA board for a restructuring of a lease transaction with Airbus, and had not reached a decision yet. This is according to a Business Day report quoting Finance Minister Nhlanhla Nene. The report notes the board’s intention to restructure the transaction has led to the collapse of a previous agreement with Airbus, which in turn triggered contractual financial obligations for SAA. Should these be enforced, the Treasury has warned, the financial sustainability of SAA would be threatened. Concern over the renegotiation of the lease also lies behind the drafting of the legal opinion by SAA executives, published despite a gagging order. The SAA board has argued that the restructured lease will save SAA money and reduce the currency risk.
See more at: Legal Brief