Former South African Airways (SAA) Group Treasurer Cynthia Stimpel has told the commission of inquiry into State capture that "Number One" - or former president Jacob Zuma - wanted a company linked to Jayendra Naidoo, First South, to be considered for a R15-billion consolidation loan sought by the State-owned airline in 2015.

Naidoo was founder of Lancaster Group and stepped down from the supervisory board of Steinhoff in January 2018.

The airline had approached the market to seek funding, in a process that was normally extended to financial institutions. Stimpel related a number of anomalies that surrounded the bidding process, including a push by the airline's board to broaden the request for proposals (RFP) to involve the participation of suppliers. The board would have to approve the list of companies to be included in the RFP before it was sent out.

Stimpel stated that during the course of the process, she was informed by former CFO, Wolf Meyer, that he had a recording of a meeting he attended with a potential funder, where he was told that "Number One" wanted a certain funder to be considered for the bid.

"He said he was told that they must ensure that SAA gives this client [First South] a deal because Number One wants this deal to happen."

She said she understood that Number One referred to Jacob Zuma, who was president at the time. 

According to Stimpel, Meyer had recorded the meeting using a pen with a recording device. He is also said to have made it clear that he had no power over the selection of a preferred bidder.

SAA in July 2016 suspended Stimpel for misconduct, alleging that "she had acted in contravention of SAA’s code of conduct". It was said at the time that Stimpel had objected to SAA’s decision to award Johannesburg-based BnP Capital a contract to advise on the restructuring of R15-billion of debt, as Fin24 reported.

Successful bidder

Stimpel recounted that several companies responded to the RFP, mainly banks and other international lenders such as Standard Chartered.

She said many companies came back with amounts lesser than the required R15-billion. SeaCrest Investment offered a full amount of the loan with a favourable interest rate, making it a preferred option.

However, it was resolved that due diligence needed to be conducted on the company, and it emerged that the company was not going to be providing the funding itself and funds were to be sourced from two institutions, one of which was Mazi Capital, a Johannesburg-based asset manager.

Such an arrangement raised discomfort, according to Stimpel.

The other alternative option which was also presented to the board was a combined proposal of three banks. The board declined the proposals at a meeting held on December 3, 2015.

New player introduced

Stimpel testified that the board turned down the two proposals, and asked team to include an entity called Free State Development Agency (FDC). It was highly irregular to introduce a new player after the closing of the bidding process, she said. 

She said she believed that the board was "not following proper governance process" by involving a new party which had not gone through the normal process.

FDC is a small agency which is not mandated to fund state-owned enterprises, but projects and developing enterprises within the Free State province, said Stimpel.