Johannesburg - The Organisation Undoing Tax Abuse (Outa) on Monday said it wanted the deal between South African Airways (SAA) and boutique financier BnP Capital to be cancelled, not to be put on ice.
This comes after SAA was placed on extended terms until Monday by Outa's lawyers to provide an undertaking not to continue with the BnP arrangement, failing which legal action would ensue.
The board of SAA allegedly went against the advice of its own treasury by agreeing to pay boutique financier BnP Capital a R256 million success fee to advise the airline on debt restructuring and fund-raising without putting the contract out to tender.
SAA spokesman Tlali Tlali said the contract was awarded without tender due to urgent loan repayments due at the end of June, but denied that the fee was set at R256 million.
“We have given BnP Capital an opportunity to respond to matters we raised with them and expect them to revert during the course of next week. Until we have received a response from them and have considered same, contracting between the parties will be stayed,” Tlali said.
On Sunday, SAA put the deal on hold after questions were raised about the awarding of the work.
Outa's director of legal affairs, Ivan Herselman, said in a statement that their urgent application to interdict the contract was still ready to be launched if need be.
Herselman said they had also requested SA’s National Treasury to put BnP Capital on the “restricted suppliers” list for failing to disclose the suspension of their FSB licence, which would bar all government institutions from doing business with BnP Capital.
“SAA cannot simply put the deal 'on ice' as we maintain their appointment is completely unlawful, even if BnP manage to get the suspension of their FSB licence lifted,” Herselman said.
“Therefore, we still require an undertaking in writing from SAA or their lawyers that they will not proceed with the transaction at all.”
Herselman said SAA did not exist for the enrichment of individuals or companies and all transactions should be conducted at the lowest cost or best outcome for the airline and thereby, the South African public.
“The current SAA board and its chairperson should resign, or be removed by the minister or a court order, as Outa believed they were not fit for office and positions they currently occupy,” Herselman said.
SAA has been sustained by state guarantees of around R14.4 billion and has asked for an additional R5 billion from the Treasury.
Finance Minister Pravin Gordhan last week asked Parliament to postpone the release of SAA's 2015 earnings report until September, the fourth such request as the Treasury mulls whether to extend more guarantees to the company.
The carrier has been marred by controversy and financial mismanagement for years and has been singled out by ratings agencies among other state companies as a risk to the country's investment grade status.
ANA & REUTERS