A bizarre battle to protect two Zuma-era spooks has decimated the board and management of the Air Traffic and Navigation Services (ATNS), raising questions about the efficacy of the agency responsible for the safety of every aircraft crossing South African skies.
Investigations by amaBhungane reveal an extraordinary effort by ATNS chief executive officer Thabani Mthiyane to appoint, secretly, a company called Concept Risk Solutions (CRS) – and then fight tooth and nail to retain the services of its director, Barney Mpanza.
Mthiyane snuck another company onto ATNS’s books. That company, African Estimate, was commissioned to draft a security strategy document at a cost of R900 000, but the CEO allegedly failed to disclose his acquaintance with both Mpanza and African Estimate’s Mulangi Mphego, a former head of crime intelligence.
Mthiyane contracted Mpanza and Mphego in violation of supply chain rules and later defied his managers and his board to keep Mpanza on, leading to an exodus of directors and senior managers that has left the air traffic agency reeling.
ATNS covers 10% of the globe’s airspace and provides services to nine South African and 12 regional airports.
Astonishingly, when the ATNS board discovered the irregular appointments and tried to discipline Mthiyane, the non-executive directors faced unexplained resistance from the deputy minister of transport, Sindiswe Chikunga, to whom ATNS reports.
Chikunga demanded that the board not take any action without her approval, despite a forensic report from audit firm Ngubane & Co. finding that Mthinaye should be charged – a recommendation later endorsed by an outside law firm.
Shortly after Chikunga’s intervention the chair of the board resigned.
When the deputy minister feared the board might indeed proceed with suspending and charging the chief executive, Chikunga summoned her supporter on the board, Edwin Mphahlele, out of a board meeting to a private meeting with her.
Mphahlele, a controversial lawyer who has been declared a vexatious litigant arising out of his role in the attempted hijacking of a company, refused to disclose to the rest of the board what was discussed in his meeting with the deputy minister.
When the board later persisted in pursuing charges against Mthiyane, the then minister, Joe Maswanganyi, appointed Mphahlele as the chair of the board, leading to the resignation of four board members in protest.
Now the ATNS board is limping along with only three directors, including the tainted chair and chief executive, while a slew of senior managers who challenged Mthiyane or Mphahlele have left or are on suspension, including the chief financial officer, William Ndlovu.
Mthiyane in the meantime has apparently appointed Mpanza as a fulltime executive at the company in charge of security, raising questions about why Mpanza seems so untouchable.
Recently lawyers for Ndlovu, the suspended CFO, have also written to the new minister of transport, Blade Nzimande, alleging that Mthiyane has used Mpanza to conduct an illegal witch-hunt against him, calling on the minister to intervene.
A statement issued on behalf of Chikunga noted: “The Deputy Minister is due to brief the new Minister on the performance of the ATNS and other related matters. We are therefore not in a position to comment further on this matter. It must also be noted that some of the issues raised in your inquiry are still under investigations. We are therefore not at liberty to comment on these issues.”
ATNS, responding on behalf of the company, the CEO and the chair, said: “ATNS is committed to conducting its business in an ethical, honest and transparent manner… We will follow the mechanisms created in terms of our internal policies to address the findings made in the Ngubane Report.”
The saga started in October 2016 when a tip-off was received on the ATNS whistle-blower line alleging that Mthiyane had appointed CRS, co-owned by his friend Barney Mpanza, as a security service provider to ATNS without following company procurement processes.
The tip-off was conveyed to the ATNS board which then engaged auditors Ngubane and Co to investigate the allegations.
The Ngubane report found that CRS had been working for ATNS for more than a year without anyone on the executive or the board knowing about it, other than the CEO.
The contract with CRS signed by Mthiyane in July 2015 only came to light in July 2016, when Mthiyane made a submission to the executive committee to appoint Mpanza on contract as chief security specialist for ATNS.
This was after the candidate selected for the advertised position decided not to take the job. Mthiyane argued that Mpanza could be seconded on the basis of an existing contract with CRS.
ATNS agreed to the appointment, but according to minutes of an executive committee meeting, ATNS would re-advertise for a permanent employee in that position. In the meantime, Mthiyane was supposed to provide documents relating to the initial appointment of CRS.
There were now two CRS contracts with ATNS – the initial one and the one for secondment of Mpanza – which would have created a duplication of roles, and payments, for the same service provider, and would have placed Mpanza in a conflicted position as the person steering ATNS security while his company provided related services.
In an affidavit, Ndlovu claimed that Mthiyane kept the contracts with CRS to himself and that “most of the invoices for CRS were either signed by the CEO or a manger in the CEO’s office.”
Ndlovu says that when the CEO’s office ran out of budget to pay CRS, Mthiyane was forced to turn to the CFO’s office for approval to pay out CRS for the termination of its initial contract, which would cost R232,560.
According to Ndlovu’s affidavit, he insisted on first seeing the contract. He said that the Mthiyane repeatedly stalled for time and eventually tried to argue that the contract was confidential.
According to Ndlovu’s testimony, Mthiyane eventually agreed to show him the contract after it was made clear to the CEO that he had no grounds to withhold it.
Ndlovu said that he then released the funds in good faith, on the understanding the CEO would give him the contracts. However, the CEO never honoured that promise despite attempts by Ndlovu to follow up.
AmaBhungane has seen the CRS contracts, which refer in vague and ominous terms to monitoring those involved in “anti-ATNS actions”, as well as uncovering of leaks.
It also gave Mpanza and his company access to sensitive flight records and air traffic data.
What Mpanza and CRS were up to at ATNS went largely under the radar. Staff were surprised to see a security contractor suddenly appearing in high level meetings and pointed to the irony of the security specialist himself not having gone through security vetting – something confirmed by the Ngubane report.
Mthiyane exposed himself further when he told Ngubane and Co that a board member, since departed, had signed off on the original contract with CRS, producing a copy of a memo to this effect.
The forensic report notes: “The memo reflects that the approval was granted by the chairman of the previous Audit and Risk Committee on the 21 of July 2015.”
But the former director told investigators that she did not recall CRS being discussed with her, she was not at ATNS on the date when she purportedly signed the memo, and she would not have signed as she was not authorised to approve the appointment of service providers other than those who provided audit services.
Yet another contract
The Ngubane report also details another dubious security contract, this time awarded to a company called African Estimate.
African Estimate was commissioned, at the behest of Mpanza, to draft a security strategy document at a cost of R900,000.
This created a duplication of efforts and meant that CRS was effectively outsourcing a role it was supposed to perform.
Referring to the security strategy document, one former board member described it as a crude “copy and paste job” that was “not relevant to ATNS”.
According to the contract – signed by Mthiyane on 25 August, the day after the second CRS contract – African Estimate was to report directly to Mpanza.
When asked what the justification was for ATNS bringing on security contractors and level of enhanced security, ATNS referred amaBhungane to its status as a national key point – a site designated as strategic and therefore requiring enhanced security – and the threats posed by terrorism and cyber-crime.
“It is therefore important to create a coherent security architecture that is able to identify and develop processes to optimally act and react to the perceived threats,” the company said.
In his submissions to the Ngubane investigators, Mthiyane also said CRS would provide a direct line to state security.
As a state-owned entity and a national key point, it is unclear why ATNS would not already have sufficient access to the state’s security services and why it would have to rely on private security contractors for that.
The Ngubane report points to potential cronyism in Mthiyane’s decision to procure the services of the two contractors.
It states that Mthiyane failed to disclose his relationship to both Mpanza and African Estimate’s director and CEO, Mulangi Mphego, the former head of crime intelligence.
In Mthiyane’s own account to the Ngubane investigators he acknowledged that Mphego was an acquaintance of his and that he knew Mpanza “socially” before the contracts were awarded.
To complete the triangle, Mpanza and Mphego were also in business together – both were co-directors alongside two others in a company called H5 Security from 2015. The company is in the process of being deregistered.
ATNS sources who met Mpanza say that Mthiyane introduced him as someone who worked in the presidency – something Mthiyane mentions in own testimony to the Ngubane investigators.
Mphego evaded direct questions, asking rhetorically why any private company would want to disclose the nature of its business relations with its clients.
He said that:
“It is very clear from your questions that you are poised to infer without any basis whatsoever that there is some unethical or impermissible relationship between ourselves, Mr Mpanza and the CEO of ATNS. This is as annoying as it is untrue.”
I bought equity and served with Mr Mpanza and two others in the board of H5 Security at some stage but we have never been partners as much as we are not friends. For the record, H5 Security is deregistered. The allegations that I am a friend to the CEO of ATNS is nothing more than a fertile but twisted imagination. I have zero relationship with the fellow.”
He failed to respond to follow up questions when the details of the Ngubane report were put to him.
Mpanza also offered an obfuscating response, side-stepping detailed questions.
He denied that there was anything improper in the awarding of the CRS contract and tried to claim that the board had rejected the findings of the Ngubane report. He would also not be drawn into questions concerning the CEO.
ATNS said in a statement to amaBhungane: “Appropriate actions will be taken in accordance with the relevant company policies and legislative framework, if warranted… Both service providers’ services were procured for different reasons and in pursuance of the company’s integrated security strategy.”
The Ngubane & Co. investigators certainly believed action against the CEO was warranted. Their report contains a laundry list of other instances of potential wrongdoing, including that some payments to CRS could not be reconciled, a lack of supporting documents for contractors, and that some investigations conducted by CRS were beyond its mandate.
The investigators’ conclusion was unequivocal: disciplinary action should be instituted against the CEO for multiple breaches of procurement policy.
But it didn’t happen.
Board gets blocked
The board faced the decision on whether or not to discipline Mthiyane when it received the report in April 2017.
However, according to former board members, Chikunga, the deputy minister, was instantly opposed to the idea of disciplining the CEO and did everything she could to derail the disciplinary process.
Former directors say that after receiving the report they held a series of meetings with Chikunga to discuss Mthiyane’s fate.
According to two former board members, Chikunga warned of “third forces” taking over the aviation industry and suggested that disciplinary action against Mthiyane would destabilise ATNS.
Another told amaBhungane that during a meeting in May a hostile Chikunga denied that there was anything wrong with the actions of the CEO, and warned that the Ngubane report could result in reputational damage.
This person said that it was soon clear that the deputy minister, who would have seen the report, “did not even read the details”.
In a letter dated 11 May addressed to Chikunga, then board chairperson Phindi Riba writes that “the Board resolved to accept the findings and recommendations of the… investigation report”, adding that it had a preference for suspending and disciplining the CEO.
However, the letter noted that the deputy minister “strongly reiterated preference not to suspend”, citing, among other things, an upcoming civil aviation audit.
Later in May Riba abruptly resigned. Former board members believe this was because she felt pressured into dropping the case against Mthiyane, though this could not be verified.
Riba declined to speak to amaBhungane about the matter. In her resignation letter she cited the fact that her employer had revised its policy on employees’ interests in other institutions.
In an interview and written response, Chikunga denied ever interfering in the board, saying that ultimately the minister, not the deputy, is the shareholder.
However, it is clear from ATNS sources and documents that Chikunga was delegated to oversee aviation and ATNS and that the minister stayed at arm’s length.
On 10 July, the board again met with the Chikunga and agreed to keep the deputy minister informed of the disciplinary process and afford her a chance to give input before any action was taken against the CEO.
Through witness accounts and board minutes amaBhungane has pieced together events that took place later that month during a board meeting on 21 July in Midrand.
As soon as board members began to discuss the Ngubane report they were notified that Chikunga wanted to meet immediately with two of them – Edwin Mphahlele and President Dhlamini – at her residence.
Dhlamini was ill and absent, but Mphahlele, who is known to be sympathetic to the CEO, was released to meet with Chikunga.
Mphahlele refused to tell his colleagues what was discussed at the meeting.
Chikunga denied that she was protecting the CEO or conspiring with Mphahlele, and said that the secretive July meeting was merely an attempt to engage all sides.
Her spokesman said:
“The Deputy Minister does not summon officials from the entities. Instead she convenes meetings with them if the need arises and only on matters that require the Shareholders attention. The shareholder has the responsibility to raise concerns regarding the performance of the boards and entities. This happens during the course of the financial year and in Annual General Meetings.”
The minutes reflect that, as the meeting proceeded without Mphahlele, the board resolved to appoint law firm Hogan Lovells to get a second opinion on the Ngubane report’s recommendations and to keep the deputy minister updated.
Correspondence from the following weeks shows the board attempting to allay Chikunga’s fear that it had implemented its decision on the CEO without telling her, and noting that the company secretary had been instructed to urgently arrange a follow-up meeting with Chikunga.
The correspondence then goes silent, but sources say that the deputy minister’s office did not respond to attempts to arrange a meeting.
On 5 September the board met again and, once more, the CEO was on the agenda.
According to witnesses and board minutes, Mphahlele again left the meeting when the CEO and CRS were discussed.
After Hogan Lovells attorneys argued that there was sufficient evidence to charge the CEO, the majority of the board agreed. Crucially, the board also decided that Mpanza and CRS had to go, resolving to terminate the contract and pay Mpanza out the equivalent of three months’ work.
According to the minutes, “the Board further resolved to advise the Shareholder representatives (The Minister, Deputy Minister and the Acting Director General) of their intention to charge the CEO based on the second opinion of the Attorneys”.
On 8 September, a letter was sent to the deputy minister informing her of the decision.
The letter read:
“It was our intention for the two Directors that have been mandated by the Board to meet with you and to brief you prior to the AGM, but it being brought forward made the possibility of such a meeting logistically difficult. Should it be possible to still meet with you, as so much more can be clarified in a face-to-face meeting, we would be happy to meet at your earliest convenience.”
Things were set for a showdown with the deputy minister by the time the AGM came around on 13 September.
Former directors who were at the meeting say that it was heated from the start, and that Chikunga launched into an all-out attack on the board.
Chikunga dropped a bombshell when she announced that Mphahlele, who had received the worst score in the 2017 board evaluation report, would be made chair.
The non-executive directors, who had been without a chair since Riba resigned in May, were shocked. By the end of the week, four had resigned in protest.
One director’s resignation letter stated that “the Shareholder’s interference in independent and legislated Board processes is a huge risk for ATNS, especially if it is aimed at protecting individuals at the expense of an entity”.
In her statement to amaBhungane, Chikunga said: “The Department is in the process of assisting the shareholder to fill the vacancies that are available on the board. Regarding issues of corruption, the Deputy Minister is on record regarding her radical stance on the fight against corruption.”
Staff at ATNS believe that Mpanza is on a witch-hunt. Rumours that employees are being monitored are rife, and even former directors were concerned that CRS and Mpanza were carrying out illegal surveillance.
Board minutes from September note: “The Board expressed concerns with regards to employees of ATNS and/or Directors of ATNS being followed, having their telephones tapped and/or photographed without consent.”
One source, who requested anonymity because they still work at ATNS and fear reprisals, said that staff morale was at an all-time low.
The source was allegedly pressured into helping draft a document they felt was improper. “I’ve never worked with a company like this before,” said the source.
There has been an exodus of experienced staff and the organisation is left with an attenuated board of just two non-executive directors.
With key board members out of the way, Mpanza and Mthiyane appear to have focused on other executives they were at odds with. Key among those is William Ndlovu, the CFO and long-time ATNS employee.
Relations between Mthiyane and Ndlovu appear to have soured when Ndlovu began asking questions about the CRS contract in late 2016.
At around that time, Ndlovu found himself the subject of investigations by the CEO and Mpanza.
In an affidavit, an employee in the finance department writes about how in late 2016 and early 2017 the CEO and Mpanza began asking for documents concerning payments to consultancy companies contracted by the CFO.
The employee, who says he was sworn to secrecy, claims that they failed to find what they hoped to, but that Mpanza “did reveal that the emphasis had shifted to surveillance of executives… which included the CFO and Executive for Strategy. Surveillance in this case included tapping of phones… The intention was that this would be extended to tracking movements of vehicles and would be followed up by a request for information of physical home addresses of all executives.”
ATNS told amaBhungane:
“No complaints related to Mr Mpanza have been lodged internally and we therefore cannot speak to this. ATNS is committed to maintaining an organisational culture which is transparent and free of intimidation… The Chief Executive Officer respects the privacy of his staff and colleagues and at all times acts within the prescripts of our legislative framework, including the Constitution.”
Sources, including former directors, told amaBhungane that Mpanza and the CEO tried to set up irregular, parallel investigation and disciplinary processes to squeeze out Ndlovu and others. This is corroborated by internal documents.
The charges on which Ndlovu was subsequently suspended focused on the appointment of a contractor years before, in 2012, and a discrepancy in dates for when the contract was awarded and when it was signed.
But the board felt that dismissing or suspending the CFO would be too harsh, and that there were several mitigating factors that needed to be taken into account. These included the amount of time that had lapsed, that the CFO was not given adequate time to prepare a defence, and that the board was pleased with the CFO’s overall performance.
In February 2017 the board decided to overturn the decision to suspend, which in any case they felt to be irregular, and instead issued the CFO with a final written warning valid for nine months.
Mthiyane was warned not to conduct investigations in this manner and told that he should use proper processes involving board structures.
It wasn’t long afterwards, however, that Ndlovu found himself the subject of another investigation carried out by Mpanza. This time other executives, including the company secretary, would be ensnared.
According to at least two ATNS sources, Mpanza continued sniffing around for something to pin on Ndlovu, allegedly making inquiries about how one could manage procurement processes so that an external investigator could be appointed without Ndlovu’s involvement.
As the board was dealing with the Ngubane report and attempting to engage the minister, Mthiyane and Mpanza, undeterred by their previous attempt to sack Ndlovu, forged ahead with a new investigation of Ndlovu.
The CEO hired audit company Nexus to look into allegations Ndlovu had irregularly awarded contracts to a financial services company to the value of some R10-million.
When the board got wind of this parallel investigation it reminded the CEO to follow proper procedures and submit the matter to the board. This had still not happened by the time of the board’s last meeting before the AGM in September.
Not long after the four board members resigned in mid-September, the axe fell on Ndlovu. He was suspended the following month, followed shortly after by the company secretary.
The two remain on suspension.
Other high level staff have left recently, including the human resources executive, the chief information officer, procurement manager and industrial relations specialist.
One source said: “It’s like the CEO wants to go down with the entire executive.”
ATNS told amaBhungane: “There is nothing untoward about the rate of attrition within the organisation nor can it be said that the current employee turnover is suggestive of an organisation in turmoil. Attrition is a fact of life in organisations, with employees leaving for a variety of reasons.”
When amaBhungane interviewed the deputy minister she deflected questions about the CEO’s conduct by pointing to the allegations made against Ndlovu. Mpanza did the same.
ATNS and Mpanza would not provide proof of Ndlovu’s wrongdoing other than a charge sheet without any substantiating evidence.
Mpanza digs in
Having got the company secretary and CFO out of the way, the space was now open for Mpanza to entrench himself at ATNS and for Mthiyane to kill his disciplinary process.
The duo set about ensuring that Mpanza be made a permanent employee and that his role as security specialist not be advertised.
AmaBhungane has seen internal ATNS documents and correspondence from last December and January in which Mthiyane demands that Mpanza be appointed permanently as chief security specialist with effect from 1 January and that the post not be advertised.
In response, an employee from the HR department says that Mpanza cannot be appointed in that manner and that he would have to go through a formal process of shortlisting and interviews, as in all other positions.
The employee also points out the investigation into Mpanza’s irregular appointment and the problems it caused.
Mthiyane replies, acknowledging the “recommendations” but saying that “my decision is final. Implement as instructed.”
The executive subsequently resigned.
AmaBhungane understands that Mpanza has now been appointed permanently, though he would neither confirm nor deny this. Meanwhile, there are no indications that the current board intends to pursue the case against Mthiyane.
But the change of guard at the Presidency may have shifted the ground from under their feet.
New transport minister Blade Nzimande is understood to be less enthusiastic about the prospect of keeping Mthiyane on.
Amabhungane has been told that before the new minister was appointed, Chikunga was headhunting for new board members. The process was finalised and waiting for Nzimande on his desk when he came into his new job, but he rejected it and ordered that the process start afresh.
That stance may have been bolstered by a letter to the new minister, dated 15 March 2018.
The letter, from lawyers representing the suspended CFO, details the corporate shenanigans at ATNS involving Mthiyane, Mpanza and the deputy minister – and calls on Nzimande to intervene in the disciplinary process against Ndlovu, which it argues is tainted by the allegations against Mpanza and Mthiyane.
A well-placed source told amaBhungane that Chikunga is now in the political wilderness.
“It looks like the minister doesn’t have confidence in deputy minister and that he’s keeping her at arm’s length.”
AmaBhungane understands that board vacancies have been re-advertised and the CEO has announced to his management team that his contract will not be automatically extended.