Ground Handler Airlines Services

Swissport Dragged into South Africa’s State Capture Inquiry

As one of the world’s largest ground handling companies in the world, Swissport operates airside operations at numerous airports in at least eight African countries and counting, from Morocco to Tanzania to Ghana. The company’s ambitious growth plans however are hitting some serious turbulence.

The latest bump is that South Africa’s Commission on Inquiry on State Capture, a special investigative unit set up following the sprawling Gupta corruption scandal, has fingered Swissport as part of a scheme with the flag carrier South African Airways (SAA). Apparently, the ground handler had allegedly been awarded a tender and operated for years despite not having the appropriate license. This apparent unlawful status went on for five years.

State capture – a form of corruption whereby a government’s decision-making processes are significantly and unduly influenced by private interests – has plagued South Africa for years. Chaired by Justice Raymond Zondo, the commission’s mandate is to uncover this type of corruption in sectors ranging from the media to law enforcement to infrastructure.

The commission’s early investigations into accusations of maladministration and corruption against former SAA Chairperson Dudu Myeni have exposed a web of malfeasance that stretches back to before Myeni joined SAA as a member of the Board of Directors.

According to an email from June 4, 2008 from an official with Airports Company South Africa (ACSA) – the entity that issues grounding licenses – Swissport did not have a license at the time of the company’s submission to the July 1, 2008 bid.

This wasn’t the company’s first trouble in the Rainbow Nation. In the recent past, Swissport has also attempted to circumvent South Africa’s Black Economic Empowerment clause, even going so far as taking the matter to court in order to avoid meeting black employment and ownership quotas under the law.

In principle, failing to meet multiple eligibility requirements should have been a bit of a disadvantage for Swissport. In practice, however, a court ruled in 2009 that Swissport had been given an unfair advantage over another provider – Menzies Aviation – and, as a result, the entire tender process was set aside as unconstitutional and unlawful.

Despite this ruling, SAA awarded Swissport the contract, which was written in 2011 but remained unsigned until 2016. During this period, Swissport continued to provide services to the airline. When SAA and Swissport finally signed the contract, they did so without publishing an additional open tender.

There are indications that this sort of conduct may be a pattern rather than an exception for Swissport. In Tanzania, according to media reports, the concession for Swissport Tanzania has expired and they still continue to operate as a ground service handler at Julius Nyerere International Airport in Dar es Salaam. Some are voicing concerns that Swissport Tanzania may try to avoid an open tender process as they have for the past 19 years, though the Tanzania Airport Authority has previously promised to hold an open and transparent tender.

Contracts and the procurement processes that companies are bound to undergo for the right to sign them are critical to preserving accountability in private relationships with public entities. Without a contract, without fair, transparent, competitive tenders, private actors have excessive power over state-owned companies. They can underperform, overcharge, and cut corners at the expense of their workers and their customers without losing the government’s business. In turn, companies like SAA are motivated to preserve the status quo by financial interests and by the need to hide their misconduct from the public.

Swissport’s behavior has real-world consequences for South African workers and their families. In February 2020, SAA management cancelled eleven domestic routes, effectively retrenching workers in KZN, PE, Durban and East London, citing a need to cut costs. Meanwhile, SAA has paid R1.1 billion to Swissport since 2012 for services rendered without a contract – in other words, without any guarantee that such a steep price was appropriate.

A key reason state capture is so difficult to dislodge is that the parties involved have little incentive to meet standards of transparency and competitiveness, even when the law is not on their side. Swissport is likely to change when opacity is a centerpiece of its business model. South African Airways, however, is state-owned. In a democracy, that means it is the people’s company, and the people can demand better.