By Simon Nare
The Special Tribunal has set aside South African Airways’ decision to extend its dry-lease agreement with Flyfofa Airways for 36 months, ruling that the decision was taken without a tender process and without approval from National Treasury.
In a judgment on Friday, the tribunal found that the SAA board’s decision breached Section 217(1) of the Constitution, which requires public procurement to be fair, equitable, transparent, competitive and cost-effective.
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SAA had extended its lease agreement for a Boeing 737-300 freighter for 36 months from July 1, 2019, at a total cost of more than R85 million.
The Special Investigating Unit (SIU) is now seeking to recover profits Flyfofa made from the agreement.
The SIU said in a statement that, to facilitate the recovery, the tribunal ordered Flyfofa to provide its attorneys within 30 days from September 11, 2026, with a full and detailed account, supported by underlying documents, of all amounts received from SAA and costs properly and actually incurred in performing the agreement.
“This must include an account of the period during which aircraft ZS-TGG was grounded and any substitute performance provided during that period,” the SIU said.
The tribunal further ordered Flyfofa to pay the SIU within 14 days any amount shown by the account to constitute profit or unjustified enrichment, together with interest at 11% a year from the date of the order.
The SIU said it approached the tribunal after an intensive investigation into the SAA decision, which found that the airline had effectively ceded its domestic overnight freighter operations to Flyfofa.
The unit found that in September 2015, the SAA board approved a deviation from its standard aircraft procurement process as a risk-mitigation measure. Flyfofa was subsequently among the companies invited to make representations to SAA’s Cross-Functional Sourcing Team in March 2016.
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“SAA’s own assessment at the time recorded Flyfofa’s financial position as ‘high risk’, citing the absence of audited financial statements, a solvency ratio of 0.1 and losses in the preceding two financial years. SAA and Flyfofa subsequently concluded a series of short-term wet-lease arrangements during 2016,” the SIU said.
The tribunal found that the 2019 decision was not authorised and declared it unlawful and set it aside on the grounds of legality.
It also ordered that the judgment be sent to Transport Minister Barbara Creecy, SAA directors and the board chairperson for consideration of whether appropriate steps should be taken against those who served on the SAA board when the 2019 extension was concluded.
The tribunal referred SAA to legal avenues through which individual directors or officials involved in the decision could potentially be held personally accountable, including financial misconduct proceedings under the Public Finance Management Act.
It also said applications could be made to declare the directors involved delinquent or place them on probation under the Companies Act, or that the matter could be further investigated and referred to the National Prosecuting Authority for possible corruption prosecution.
Creecy was ordered to file a short report with the Registrar of the Tribunal within 30 days, indicating what steps had been taken and the outcome.
