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DPE has come out swinging to dispel irregularities in the SAA, Takatso deal

File photo of Deputy Director General of Department of Public Enterprise Kgathatso Tlhakudi before the commission of inquiry into allegations of state capture. Picture: Dimpho Maja (ANA).

File photo of Deputy Director General of Department of Public Enterprise Kgathatso Tlhakudi before the commission of inquiry into allegations of state capture. Picture: Dimpho Maja (ANA).

Published Jul 5, 2022

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The Department of Public Enterprises (DPE) yesterday came out swinging to dispel irregularities in the Takatso Consortium deal at South African Airways (SAA) and threatened to take legal action on “leakage of official information and the peddling of false and distorted information about this process”.

In a statement yesterday, the DPE slammed the “deliberate misinformation|” that was being spread about the transaction and processes of acquiring the Strategic Equity Partner (SEP) for SAA, saying this distortion of facts negatively impacted and compromised the process.

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“Members of the public and all interested parties in the process need to be treated with respect and be given accurate information,” it said.

The DPE detailed its appointment of Rand Merchant Bank as a transaction advisor to select a SEP for SAA through lengthy timelines, which eventually saw Harith General Airways and Global Airways being preferred to take a 51 percent stake of the national carrier for R3 billion equity.

"It is also very important to state that the Department had entered into a non-disclosure agreement (NDAs) that prohibits the disclosure of details of the offers made by the parties in this process. It is for this reason that the Department is unable to provide detailed information relating to the processes, and in particular offers made by the interested parties," it said.

The DPE said it was important to state that the impact of the Covid-19 pandemic on global aviation became increasingly debilitating world-wide, and as a result some of the parties who had expressed an interest in the process could not provide the capital required to operate the airline.

The department also took umbrage at the suggestion that the transactions were conducted without the knowledge of recently suspended DPE Director-General (DG) Kgathatso Tlhakudi.

This as speculation exploded in the wake of the suspension last month and the reasons behind it. Media reports allege the relationship between Tlhakudi and Public Enterprise Minister Pravin Gordhan was rocky. The reports say Tlhakudi disagreed with Gordhan on the valuation for SAA, which in the sale and purchase agreement was R51.

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Tlhakudi was precautionarily suspended from office with immediate effect last month pending disciplinary proceedings the department said related to an undisclosed complaint about him filed with South Africa's Public Service Commission.

“There is misinformation in the media space that the suspended Director- General was not involved in the SEP process. This is incorrect. The Director-General was involved in the process. Only the Sale and Purchase Agreement was signed by the Acting DG on the 22nd of February 2022 as the DG was on sick leave, but he was privy to the sale and purchase agreement and its contents or terms and conditions,” it said.

The DPE said the DG had been part of the SEP process throughout, had engaged with the potential SEPs when the NDA was signed, and had communicated the outcome of the expression interest to the parties.

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“Furthermore, the letter of acceptance of Harith General Partners as the preferred bidder for SAA was signed by the DG. The DG was actively involved in engaging with local and international parties wishing to invest in SAA. He was intimately involved in the SAA transaction and further engaged with the media in the process,” it said.

"All interested parties made it clear that the Government had to take responsibility for all historic costs, inclusive of bank debts," the DPE said.

The latest salvo in the controversial SAA saga also comes hot on the heals of the government having to defend the deal in the High Court in Cape Town after bid contestant, Toto Investment's Bongani Gigaba, last month filed documents on what it alleged was an “unlawful and constitutionally invalid" sale.

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According to CH-Aviation, an international air marketing and publication group , Gigaba in a supporting affidavit alleges the current transaction is "shrouded in secrecy" and "not transparent, fair, equitable, competitive, and cost-effective," according to the filing. He claims,"Toto was a direct victim of the unlawful and secretive process that led to its exclusion".

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