Johannesburg - South African Airways (SAA) on Thursday, pulled the plug on the controversial R256 million deal with unlicensed boutique financier, BnP Capital, following an outcry over its failure to follow proper tender procedures.
The board of SAA allegedly went against the advice of its own treasury by agreeing to pay BnP Capital a R256 million success fee to advise the airline on R15 billion debt restructuring and fundraising without putting the contract out to tender.
The Organisation Undoing Tax Abuse (Outa) has been vehemently against the deal and calling for it to be cancelled, even taking the airline to court.
Under enormous public pressure, SAA caved in on Thursday.
“South African Airways has taken a decision to terminate the services of BnP Capital as a financial services provider to the airline,” SAA said in a statement.
“The effect of this decision means that SAA has terminated both its appointment of BnP Capital as Transaction Advisor and the appointment to source funds on behalf of the airline.”
SAA said the decision was communicated to BnP Capital on Wednesday.
The national carrier said it had initially taken a decision to arrange debt consolidation as part of management decisions taken to introduce interventions aimed at managing the airline’s revenue and/or financial resources more efficiently.
The airline denied that it had breached any procurement procedures, saying that management followed a process provided for in the Supply Chain Management (SCM) Policy, to deviate from open tender and go on a confinement process.
“The process, which is also recognised by National Treasury as one of the justified methods under specified circumstances, was duly approved,” SAA said.
One of the claims against BnP Capital was that it had failed to disclose the suspension of its license by the Financial Services Board (FSB).
This came after Webber Wentzel, the legal representatives appointed by Outa, contacted SAA raising concerns on a range of issues including the license standing of BnP Capital.
SAA on Thursday said it contacted BnP Capital to enquire specifically about claims that had been made involving the FSB licence and BnP Capital duly responded to enquiries.
“After considering all relevant information received from BnP Capital, SAA management took a decision to terminate all BnP services to the airline as a prospective financial service provider in relation to SAA’s initiative on debt consolidation,” SAA said.
“No payments had been made to BNP Capital. The decision to terminate the service was arrived at after a review of the award to BnP Capital.”
SAA went on to warn its employees about leaking information to the media.
African News Agency