Picture: Armand Hough/African News Agency(ANA)
Picture: Armand Hough/African News Agency(ANA)

DA raises concerns over SAA possibly using UIF funds to pay out retrenchments

By Zintle Mahlati Time of article published Jan 30, 2020

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Johannesburg - The Democratic Alliance (DA) alleges that South African Airways (SAA) business practitioners may be eyeing the Unemployment Insurance Funds to payout retrenchment packages for its staff. 

DA MP Alf Lees said he had written to business rescue practitioners Les Matuson and Siviwe Dongwana seeking clarity on the matter. 

SAA has been struggling to survive with a low supply of funds. President Cyril Ramaphosa had announced in December that airline would be placed under business rescue which also resulted in flights being cancelled. 

On Tuesday Dongwana and Matuson announced an R3.5 billion bailout for SAA which will be obtained from the Development Bank of SA.

The move has caused controversy as questions have been raised on the terms of the deal. Another concern was that funds intended for funding development projects would be shifted to bail out SA. 

"If there is any truth to these rumours, it would mean that Matuson and Dongwana are trying to provide SAA with another bailout by stealth – because these packages fall outside of the mandate of the UIF and should be paid by SAA itself. The UIF does have an obligation to meet the legislated unemployment payments that would become necessary should SAA members of staff be retrenched," Lees said. 

"However, this would exclude the retrenchment benefits required in law to be paid by the employer, in this case, SAA. These employer benefits would amount to a considerable amount of money and as SAA is under business rescue, would not be guaranteed (although section 16 of the Companies Act does provide protection for such employee claims whilst SAA is under business rescue). Employee claims would get preferential status in liquidation of SAA."

Political Bureau

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