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Business rescue practitioner has no power to sell Mango, says Minister Gordhan

A Mango Airlines aeroplane docked on the tarmac at King Shake Airport. Picture: Karen Sandison/African News Agency (ANA)

The ministers of public enterprises and finance are challenging the Gauteng High Court, Pretoria, judgment ordering a decision to be made on the sale of state-owned low-cost airline, Mango. Picture: Karen Sandison/African News Agency (ANA)

Published Oct 22, 2023



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Mango’s business rescue practitioner (BRP), Sipho Sono, has no power to sell the struggling state-owned low-cost airline, Public Enterprises Minister Pravin Gordhan has told the Gauteng High Court, Pretoria.

Gordhan, with his finance counterpart, Minister Enoch Godongwana, have applied for leave to appeal Acting Judge Moses Phooko’s September 6 ruling directing the minister of public enterprises to make a decision on Mango’s sale within 30 days, communicate and furnish Sono, Mango’s parent company SAA and the National Union of Metalworkers of SA (Numsa) with reasons.

Phooko also ordered that should Gordhan fail to make a decision Sono, Numsa and SAA may assume that the application to give the green light for the airline’s sale had been approved under the Public Finance Management Act (PFMA).

Mango has been under business rescue since July 2021.

In addition, Gordhan’s failure to make a decision was reviewed, set aside and declared unlawful and constitutionally invalid.

Gordhan’s application for leave to appeal states that Mango is SAA’s subsidiary and therefore the SAA board of directors is the accounting authority within the meaning of the PFMA.

”The powers of the board of Mango devolve to the BRP. However, SAA (shareholder) retains its position regardless. The disposal of assets in Mango, in business rescue proceedings, must be decided with the concurrence of the shareholder and creditors.”

He said the disposal of assets on SAA’s balance sheet had to occur with his concurrence as the shareholder’s representative.

Gordhan said that while the Companies Act prescribed the powers of the BRP, the general responsibilities of an accounting authority were prescribed in the PFMA, which required the assumption of the accounting authority’s responsibilities subject to the National Treasury’s approval.

”Treasury has not authorised the BRP to assume the responsibilities of the accounting authority in relation to Mango.

“An issue which clearly arises is whether or not the exercise of powers in section 140 of the Companies Act trumps even the injunction in Section 49(3) of the PFMA, even in the face of Section 3(3) of the PFMA which proclaims supremacy over any other legislation in the event of conflict,” he said.

Godongwana and the National Treasury noted that there were no court decisions applying the PFMA and the Companies Act in instances where a company was under business rescue and its shareholder had obligations under the PFMA.

”This is an important public interest issue that involves proper interpretation of these two critically important pieces of legislation but also implicates the protection of the public purse,” they argued.

Godongwana and the Treasury said Sono and Numsa failed to make out a case that the failure to decide on Mango’s sale was illegal and that they were not the SAA board and that neither of them could usurp its statutory entitlement.

”The BRP is not the accounting authority of the public entity and therefore is not entitled to submit relevant particulars to the public enterprises minister,” Godongwana and the Treasury said.

In response, Sono said he did not believe that there was any merit in the arguments raised by Gordhan and Godongwana. He was taking legal advice on the matter.

He said the decision to appeal the judgment was strange because Gordhan was not ordered to approve the application but to make a decision on it, based on information he had in circumstances where it had been made clear that no further information could be provided to him.

”If the minister believes his demands are rational, then he should be justified to decide the application in the negative and the matter would reach its logical conclusion,” Sono said.