DA gives Mboweni legal notice to stop bailout of SAA

16 July 2020

The Democratic Alliance (DA) has served Finance Minister Tito Mboweni with legal notice of our intention to challenge any disbursement of public funds to SAA using his “emergency” powers under the Public Finance Management Act. See this notice here.

If Mboweni does not confirm that no public funds will be dispersed using section 16, we will approach the courts on an urgent basis to stop him from doing so.

Yesterday Mboweni signed a letter committing “to mobilise funding for the short, medium and long term requirements to create a….national airline”.  It remains to be seen where they will find the money. It would be totally unacceptable to inject yet another bailout into SAA using public money, or to offer government guarantees for new loans. Even this commitment shows Minister Mboweni has backtracked on his previous stance not to countenance any further support for the bankrupt airline.

Mboweni has often spoken out against providing any more support to bankrupt state owned entities like SAA. He has made this, correctly, an issue of principle. If he is forced by the ANC and Cabinet to disburse public funds to SAA again, then he will have to carefully reconsider his position in the government.

In 2017, a legal opinion obtained by Parliament with regards to a R3 billion bailout that the then Finance Minister MalusiGigaba had extended to SAA, found that the use of section 16 was likely illegal. SAA has received nearly R50 billion in bailouts and guarantees over the last decade.

The DA hopes that Minister Mboweni will take heed of the advice in our legal notice and stop any disbursement of public funds to SAA. His credibility and authority as Finance Minister depends on him doing so.

Issued by Geordin Hill-Lewis,DA Shadow Minister of Finance, 16 July 2020