Mboweni will be breaking the law if he uses 'emergency' powers to fund SAA
15 July 2020
I have written to Finance Minister Tito Mboweni today to call on him to refuse any additional funding requests for SAA. We have also made it clear that any attempt to invoke Section 16 of the Public Finance Management Act to fund SAA now would be illegal. If Section 16 is used, the Minister and SAA is put on notice that we will consider legal action to stop this transfer of funds.
Now is the time for Minister Mboweni to draw a line in the sand and refuse to fund the “new” SAA. He has repeatedly said that South Africa cannot afford to fund a dead airline, and no matter how many times it is bailed out, it will always need more. If Mboweni caves to ANC pressure, he will have to seriously reconsider his position in government.
Section 16 allows for spending of money that is unbudgeted in “emergency” situations which are “exceptional” and “unforeseen”. It is impossible to argue that those conditions apply to a bailout (again) for SAA, after it entered business rescue in December 2019, well before the 2020 budget. The Minister also had the chance to include an additional allocation to SAA in the Emergency Budget, by which time the business rescue process was far advanced.
SAA has required nearly R50 billion in bailouts and guarantees over the last decade. It is simply not plausible to argue that an additional bailout was unforeseeable.
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. Treasury is the custodian of the PFMA, and should conduct itself according to the letter and spirit of that Act.
The Democratic Alliance rejects the new demand for additional funding for SAA and cautions Treasury against the use of section 16 of Public Finance Management Act (PFMA) to justify any un-budgeted bailouts to the airline.
Issued byGeordin Hill-Lewis,DA Shadow Minister of Finance, 15 July 202
