Zondo-linked case took off in US, stalled at home

The first and only conviction flowing from the Zondo commission of inquiry into state capture, involving SAA and airport services company Swissport, is in danger of sliding under the radar. Organisation Undoing Tax Abuse (Outa) CEO Wayne Duvenage has called it a “disgrace” that the National Prosecuting Authority’s Investigating Directorate has taken no action following a US conviction last year.

While the sums involved pale in comparison to the estimated R57bn in state contracts tainted by corruption during the state capture era, the SAA/Swissport case remains the only one to result in a conviction – and notably, it happened outside South Africa – even though the evidence was substantial.

In July, the US department of justice convicted US citizen Julian Aires of bribing SAA procurement officials and SAA director Yakhe Kwinana under the Foreign Corrupt Practices Act. Aires admitted to two separate bribery schemes as part of a plea deal: one involving aviation parts company AAR Corp, and the other involving Swissport’s South African subsidiary.

He admitted to orchestrating a bribery scheme between 2016 and 2020 involving more than $5.3m in illicit payments to SAA Technical (SAAT) officials to secure a $125m aircraft components contract. Additionally, he facilitated a $2.7m bribery arrangement related to a ground-handling contract for Swissport.

Aires has not yet been sentenced, but under the plea agreement, he faces a maximum of five years in prison and a fine of up to $250,000. He also agreed to forfeit $5.4m – roughly the full amount received from the bribery schemes.

The Zondo commission found that the ground-handling contract between SAA and Swissport was awarded without a proper procurement process. The original tender, awarded in 2012, was for five years and expired in 2017. However, in 2016, SAA signed a new five-year contract with Swissport without issuing a fresh tender, effectively doubling the contract’s value without competitive bidding.

The evidence presented was that Swissport paid R28.5m to JM Aviation under a service-level agreement just a month before the new contract with SAA was finalised.

That evidence was later confirmed through Aires’s conviction in the US, and several individuals from SAA were implicated by name, including Vuyisile Ndzeku, who held directorships in both Swissport and JM Aviation, as well as SAA officials, including then procurement head Lester Peter and board chairperson Kwinana.

Lay criminal charges

Though Swissport’s executive team has changed significantly since then, the company continues to provide passenger handling, ramp services, cargo logistics and lounge operations at three major South African airports: OR Tambo, Cape Town International and King Shaka International.

Duvenage says that aside from the number of people at SAA and SAAT involved in these bribes and underhanded deals with JM Aviation and Swissport, “we cannot understand why Swissport’s South African operations have not yet been held accountable for their role in these serious matters”.

“Just as McKinsey, Bain, KPMG and others were compelled to come forward and divulge their part in the corrupt conduct they were implicated in, so too should Swissport have acknowledged their role and gone out of their way to assist the Zondo commission and the criminal justice system authorities, to hold all perpetrators to account, including Swissport management involved in this matter. The current Swissport management should go further, just as EOH management did, and lay criminal charges against their previous managers/directors.”

In response to a list of questions, Swissport responded in writing that: “At Swissport, we have a zero-tolerance policy towards bribery and corruption and have strengthened our compliance programme. Swissport no longer has a relationship with this company (JM Aviation). We are committed to upholding the highest ethical standards in all our operations.”

The Hawks have previously said the case is being handled by the Investigating Directorate, and that no charges have yet been laid.

However, Outa says this does not resolve the issue. “It is extremely concerning to Outa that far too often, executives in the private sector often do little on their part in this regard,” Duvenage says.

He questions why Swissport has not apologised to the South African public for allowing taxpayer funds to be wasted on bribes facilitated through its dealings with SAA. He also asks why the company’s current leadership has not made any attempt to recover the money or pursue former employees and executives responsible for the illegal conduct.

Outa believes that the inaction of Swissport’s current directors and senior management renders them complicit in the wrongdoing of their predecessors. They had access to the records, payment evidence and details of the deals in question, and cannot simply ignore the company’s role in the matter.

“By remaining silent and looking away, they are part of the problem. Ignorance does not exonerate them from the bad deeds of the past,” Duvenage says. “As far as we are concerned, the current leadership of Swissport are cowards and very poor examples of the kind of courageous and ethical leadership this country needs today.”

Swissport said in statement that since 2016, the ownership and management of the company have completely changed. “We no longer have a relationship with this third-party provider in South Africa, and the individuals involved are no longer employed by the company.”

It added: “We have a comprehensive compliance programme in place, which includes a code of conduct and a whistleblowing process. Swissport has certified its global anti-bribery management system with the ISO 37001 standard, and our strategic suppliers are committed to our supplier code of conduct, ensuring a responsible supply chain. Our code of conduct is aligned with the 10 principles of the UN Global Compact.

The company says all its employees receive training on its code of conduct, as well as anti-bribery and anti-corruption policies. There are also mandatory training courses for all relevant employees — including management at local, regional and global level.

“We comply with the Foreign Corrupt Practices Act, the UK Bribery Act, the Swiss Criminal Code, as well as anti-corruption directives from the European Union,” it said.

“Swissport has implemented a third-party anti-corruption compliance procedure to ensure we engage only qualified, reputable third parties and has put in place appropriate controls, including a fraud risk management procedure. The company is committed to conducting its business ethically, responsibly, and in full compliance with all applicable laws and regulations.”

This story has been update to reflect additional comment from Swissport.