The Institute of Directors in South Africa (IoDSA) has raised concerns about allegations of political interference in appointing the Chief Executive at South African Airways. It urged the government to consider recommendations when appointing directors.

Prof Parmi Natesan, CEO of IoDSA, referred to recent media reports alleging that the transport minister recommended a less qualified candidate for the airline’s CEO position.

Natesan said the media report alleged that the ANC deployment committee, chaired by Deputy President Paul Mashatile, went against the SAA board's recommendation and recommended John Lamola (SAA’s interim CEO since May 2022).

She stated that the SAA board and an independent headhunting firm reportedly both named Lamola as the least preferable of the final three shortlisted candidates and allegedly scored lowest of the three in evaluations for the position.

“If the allegations about this appointment are correct, they raise concerns about undue political influence, leading to inefficiencies and poor decision-making.

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“This is particularly worrying when considering that one of SAA’s previous apparent political appointments, former chairperson Dudu Myeni, was declared a delinquent director.

“Best governance practice, as outlined in King IV, states that a board should have the authority to choose and appoint the CEO to ensure proper oversight and accountability,” said Natesan.

She added that a CEO chosen by the board ensures alignment with the company’s strategy, culture, and performance expectations and creates the trust needed, arguing that when a minister appoints a CEO contrary to the board’s recommendation, it undermines the board’s ability to govern effectively.

“While this practice is in line with public sector legislation, it does create a misalignment of accountability, where the CEO may feel more answerable to the minister than to the board.

“If the board is not fully empowered to choose the CEO, it weakens governance structures and can create tension between the board and management. This may lead to board instability, high turnover, or reluctance from qualified professionals to serve on the board,” says Natesan.

“A lack of proper governance in CEO appointments has historically contributed to poor performance and even financial distress in SOEs.”

In addition, IoDSA stated that the public and other stakeholders lose confidence in the SOE’s leadership when appointments appear to be politically motivated rather than merit based.

Natesan underlined the need for governance reforms to ensure that SOE boards have authority in CEO appointments, in line with sound corporate governance principles, adding that “at the very least, if things stay the same legally, the minister should be taking the board’s preference into strong consideration.”

IOL