Gordhan to finalise SAA deal despite failure to provide answers

Public Enterprises Minister Pravin Gordhan wants to go ahead with the sale of SAA despite his failure answers in parliament. Picture: Siphiwe Sibeko/Reuters

Public Enterprises Minister Pravin Gordhan wants to go ahead with the sale of SAA despite his failure answers in parliament. Picture: Siphiwe Sibeko/Reuters

Published Jan 21, 2024


THE Department of Public Enterprises is taking a step closer to finalising the sale of SA Airways (SAA) despite Minister Pravin Gordhan’s failure to provide relevant documents and answers regarding the deal with Takatso Consortium.

This is after Gordhan gave notice in the Government Gazette that he intended to introduce the repeal of the South African Airways Act of 2007 in the National Assembly in the coming weeks.

The repeal of the act is one of two bills meant to reposition state-owned enterprises and, Gordhan said, this was intended to facilitate the repositioning and restructuring of SAA through the introduction of a strategic equity partner.

Takatso Consortium would be expected to own a 51% stake in the airline while the government would be the minority shareholder with the remaining 49%.

The gazette said: “In terms of the sale and purchase agreement entered into between the Department of Public Enterprises and Takatso, the repeal of the Act is one of the condition precedents for the conclusion of the transaction in light of the fact that the Minister will no longer have full shareholder rights contained in Section 3(3) of the Act.”

“In light of the fact that the shareholder will no longer hold the majority of voting powers in SAA, and that the shareholder minister will not be able to fulfil the objects of the Act, it is imperative to repeal the Act.”

However, former Public Enterprises director-general Kgathatso Tlhakudi said Parliament and the public should be appalled by the behaviour of President Cyril Ramaphosa’s government in presenting a bill to repeal the SAA Act when so many questions of Gordhan's impropriety regarding the sale remained unanswered.

He said the bill should not be sent to Parliament without passing through Cabinet for consideration and approval.

“Prudence and diligent governance process demand that Cabinet seeks Minister Gordhan’s answers to the questions that remain unanswered in Parliament.

“The primary question that Minister Gordhan has failed to answer is how the Takatso Consortium was chosen as the preferred Strategic Equity Partner (SEP).

“The secondary and equally important question is whether the Takatso Consortium has offered a fair price for the assets of SAA. The latter question is even more glaring after SAA published its financials, which show an undervaluation of at least R5 billion,” Tlhakudi said.

Asked to comment on Tlhakudi’s view, Gordhan spokesperson Ellis Mnyandu said: “Please refer to the Government Gazette of 9 January 2024, wherein you will find a memorandum on the objects of the repeal of the South African Airways Bill, which provides the background and the rationale for the introduction of the bill.”

Parliament’s spokesperson, Moloto Mothapo, did not respond to questions sent on Tuesday.

Tlhakudi’s view came after Parliament’s portfolio committee on public enterprises (PCPE) said it could subpoena Gordhan to submit relevant documents regarding SAA’s sale.

This was after Gordhan refused to provide the committee with the shortlist of bidders and the sale and purchase agreement signed by Takatso.

Tlhakudi told the committee that Takatso had not been among the shortlisted bidders, and further said the company did not have the financial capacity.

He said there was a high level of corruption and irregularity in the deal.

“Cabinet’s approval of the bill to Parliament, while the matter of privatisation of SAA remains stuck in Parliament due to serious misgivings raised by Parliament with the process that produced the Takatso Consortium as a preferred SAA Strategic Equity Partner (SEP), is unfortunate and shows total disregard for the South African public.

“It can only be concluded that when President Ramaphosa stated on 16 December 2023 that he would urge Minister Gordhan to co-operate with the PCPE, it was a ‘kicking for touch’ tactic on a grievous matter of contempt of Parliament by Minister Gordhan, as the president and Cabinet have themselves, through this decision to approve the repeal of the SAA Act, shown a middle finger to Parliament and South Africans,” Tlhakudi said.

He said the committee’s inquiry had been necessitated by serious allegations of impropriety against Gordhan.

Tlhakudi said some of these allegations were that Gordhan illegally appointed Takatso Consortium as an SAA SEP, and that the SAA assets were deliberately undervalued to benefit the politically connected beneficiaries.

“This is nothing short of the state capture corruption playbook, where state institutions and processes are appropriated to enrich a few politically connected individuals - the very allegation that Minister Gordhan has levelled at everyone who dares to demand accountability from him and the failures of state enterprises,” Tlhakudi said.

“Despite Parliament giving him more than a year to produce documentation to support his insistence that the transaction is above board, the minister has failed to produce the evidence to support his assertions: the bidder’s evaluation report and the share sale and purchase agreement.

“The failure to disclose this information to an important accountability institution and an apex guardian of the interests of the South African citizens severely undermines and erodes the importance of the institutions and sets the very conditions that led the minister to famously coin the concept of state capture.

“Despite these serious allegations, the president and Cabinet have seen it fit to approve the repealing of the SAA Act, which should be the last in the privatisation of this critical state-owned enterprise. This is the proverbial ‘putting the cart before the horse’ except that it stands as an example of how to use state power at the expense of its citizens,” Tlhakudi further said.

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