Who will be funding the obscene SAA business rescue plan, Minister Gordhan?

2 June 2020

The Democratic Alliance (DA) will write to the Minister of Public Enterprises, Pravin Gordhan, to obtain clarity on the source or sources of funds which is required by the South African Airways (SAA) Business Rescue Plan as proposed by Les Matuson and Siviwe Dongwana, the SAA Business Rescue Practitioners.

The Department of Public Enterprises (DPE) has repeatedly implied that funds are available to fund this obscene Business Rescue Plan.

A statement issued by the Department today emphatically states that the funds for the SAA Business Rescue Plan have been budgeted for. “The R2.2 billion budgeted for Voluntary Severance Packages (VSPs) for SAA employees is the best available option.” This statement seems to be quite clear that the R2.2 billion funding required by the SAA Business Rescue Plan to pay SAA employees the proposed VSPs is available.

But what are the sources of this money? We know that the Emergency Budget tabled by Finance Minister, Tito Mboweni, last month did not make any provision for funding directed to SAA. It would have been patently immoral to fund bailouts for SAA when there are millions of South Africans who have been made destitute by the lockdown economic crisis.

The proposed SAA business rescue plan requires total funding of R33 billion over the next three years. This funding includes R6.4 billion in order to fund projected operational losses over the next three years. There is no guarantee and indeed no likelihood that the operational losses will be as projected and will miraculously change to profits in the fourth year. It is inevitable that, unless SAA is privately owned and managed, it will continue to be a source of ANC cadre deployment, maladministration and corruption.

The DA will robustly oppose any attempt by the ANC government to provide any further funds for SAA, in particular the repeated use of Section 16 of the Public Finance Management Act (PFMA) to free funds for SAA. The funding of the SAA Dead Duck Vanity Project cannot rationally constitute an emergency situation as Section 16 of the PFMA was intended for.

A legal opinion provided by the Senior Parliamentary Legal Advisor to the Standing Committee on Finance in 2017, on the use by Malusi Gigaba, then Minister of Finance, of Section 16 to provide funding to SAA stated that: “In my respectful view it appears that the expenditure was foreseeable and as such, not unusual or atypical. It would not have been the first time such expenditure had to be effected”.

This was a clear opinion that the use by Malusi Gigaba was unwarranted and possibly illegal. And this precedent must stand should the ANC attempt to use an about way to fund the SAA Business Rescue Plan.

Issued by Alf Lees, DA Member of the Standing Committee on Public Accounts, 2 June 2020