A cabinet-level row has erupted between the South African Government and the former managing director of Transnet, the state-owned parent of South African Airways, over the "outrageous" remuneration package received by the airline's former chief executive, Coleman Andrews.

The Minister of Public Enterprises, Jeff Radebe, has vowed to investigate corporate governance issues and take action if breaches of rules can be proved. Andrews is reported to have received R232 million ($29 million) for the three years he served of a four-year contract as head of the airline. His package comprised a salary and bonus totalling nearly R100 million, a share payout of R58.6 million and a termination package of just under of R74 million.

Radebe says that Transnet's former managing director, Saki Macozoma, did not have the authority of the Transnet board or SAA to provide the package for Andrews. Transnet owns 80% of SAA, with the remaining 20% held by the Swissair Group

Macozoma, however argues that he was given a free hand by the former minister of the department, Stella Sigcau, to pay Andrews as he saw fit and that this was also agreed by South African President, Thabo Mbeki.

Macozoma, defending Andrews and the payout, says: "We now have a viable airline instead of the shambles we had in 1998." SAA made a profit of R350 million for the financial year 2000. However, critics argue that, without the sale of 15 aircraft and other airline assets, SAA would have shown a loss for the year.

A statement by the board of Transnet said that it would seek an urgent meeting with the minister "to clarify and resolve all the issues". It is widely believed that the board will come out in support of Radebe.

Source: Airline Business