Government to reappoint Zuma ally as chair of state airline

September 1, 2016 11:46 AM

Critics say that move would limit current Finance Minister Pravin Gordhan's control over the firms.

Passengers board a South African Airways Boeing 737 aircraft at the Kamuzu International Airport in Lilongwe, file.

South Africa is set to reappoint the chairwoman of its loss-making national airline, an ally of President Jacob Zuma, despite objections from some Treasury officials, a Finance Ministry source said on Thursday.

South African Airways (SAA) has failed to submit financial statements for the past two years, with results for 2015/16 held back by the Treasury's refusal to grant the carrier 5 billion rand ($340 million) in additional loan guarantees.

Word of the reappointment of SAA chair Dudu Myeni came a day after asset manager Futuregrowth said it had halted lending to state-owned firms over concerns of political interference in their administration.

"An announcement is to be made either today or tomorrow," the source said, adding that ministry officials opposed to Myeni's selection had however managed to push through some preferred candidates to the cash-strapped airline's new board.

Zuma last December denied rumours that he had an affair with Myeni. Local media had speculated that their ties had led to the sacking of then-finance minister Nhlanhla Nene, who had rebuked Myeni for mismanaging a 1 billion rand deal with Airbus.

Zuma's office at the time also criticised as a "malicious fabrication" reports that Nene was removed because Myeni was not happy with instructions from the respected ex-finance minister.

The presidency has defended a plan to form a new committee that would oversee state-owned enterprises like SAA, and be supervised by Zuma. Critics say that move would limit current Finance Minister Pravin Gordhan's control over the firms.

Responding to speculation on Thursday that Myeni's contract would be extended, the main opposition Democratic Alliance said such a move would be "bad for SAA, bad for our economy and bad for ".

The rand has taken a knock this past week as investors fretted that Gordhan could be charged over the activities of a surveillance unit set up when he was head of the tax department. Police say the surveillance unit illegally spied on politicians.

Zuma has reaffirmed his support for Gordhan but cannot stop the investigation.

($1 = 14.6867 rand)