20.1 C
Johannesburg
Tuesday, November 29, 2022
HomeNewsPravin set to authorise sale of another state-owned airline

Pravin set to authorise sale of another state-owned airline

Pravin set to authorise sale of another state-owned airline

- Advertisement -

Johannesburg – Public Enterprise Minister Pravin Gordhan is expected to soon give the green light for the sale of troubled state-owned low-cost airline Mango.

Mango, which is a wholly-owned subsidiary of SAA, has been under business rescue since July last year. At the time the airline’s creditor liability stood at R2.8 billion with forward sales and un-flown ticket liabilities of about R183 million.

If the sale of Mango goes ahead will be the second time Gordhan has authorised a state-owned airline to be sold.

A 51% stake in SAA was sold to the Takatso Consortium, which was identified as a strategic equity partner, for R51 with the promise that the entity would invest R3bn in the airline over two years.

The SAA/Takatso deal hit turbulence two weeks ago following the resignation of Gidon Novick from the consortium’s board over potential conflicts of interest with LIFT, a low-cost airline he established.

The DA will ask the Competition Commission to investigate whether the Takatso Consortium entered into the SAA deal under false financial pretences and is simply unable to raise the requisite equity to fulfil its end of the agreement.

The sale of SAA has also pitted Gordhan against his director-general Kgathatso Tlhakudi who has since been suspended.

Last week, the standing committee on public accounts (Scopa) questioned Gordhan and his bureaucratic charges about the transaction in which the Takatso Consortium took over 51% of the state airline's shares, and the turbulence surrounding the transaction.

Despite Gordhan's assurances, MPs weren't convinced by the discretion around the deal. Tlhakudi said Takatso's financial capability should have been taken into account before the deal was concluded.

He said Gordhan "needs to be transparent with South Africans on the details of the transaction including how was Takatso Consortium chosen, how was the value of SAA determined, was there any due diligence done to determine the Consortium's ability to consulate the transaction?"

“Transparency means sharing the documentation on the transaction with South African citizens who are the ultimate owners of state-owned companies.

“The Minister has chosen to hide information by claiming in Parliament, and misleading Scopa, by saying the Takatso transaction is in a closed period,” he said.

“This is not true because the closed period only applies to publicly listed entities whose shares would be suspended during takeover negotiations.

“This does not apply to a state-owned company, in which a share sale and purchase agreement has already been signed in February 2022.”

Tlhakudi said the Takatso transaction was awaiting regulatory approval including from the Competition Commission, the BBBEE Commission are still to pronounce on the transaction.

“We urge these institutions of State to act in the best interests of the South African public and not affirm the nefarious actions of the Minister to defraud the citizenry of its assets,” he said.

Business rescue practitioner (BRP) Sipho Sono has informed Mango’s stakeholders that Gordhan wrote to him and SAA last month to resolve the concerns raised by its parent company.

“SAA is thereafter required to provide a written motivation to the minister on why the application should be approved.

“The minister has also requested that the 30 days stipulated in section 54(3) of the Public Finance Management Act (PFMA), being the time afforded to the minister to consider and approve the PFMA application, only commence once SAA's concerns have been resolved with the BRP,” Sono said.

In terms of the PFMA, a public entity may assume that approval has been given if it receives no response from the executive authority (Gordhan) on a submission for the acquisition or disposal of a significant shareholding in a company within 30 days or a longer period as may be agreed to between itself and the executive authority.

Pravin set to authorise sale of another state-owned airline
Mango airline. Picture: Supplied.

Sono has indicated that he has met the SAA board and is engaging with the airline as directed by Gordhan and anticipates that areas of concern raised by SAA will be resolved expeditiously and that an updated PFMA application and written motivation will be submitted to the minister during November.

“The issues highlighted by SAA in the letter to the minister are more of a housekeeping nature and are therefore not material.

“They will be addressed directly with the DPE (Department of Public Enterprises),” the BRP stated.

Gordhan’s spokesperson Richard Mantu referred queries about the sale of Mango to SAA but the airline’s Vimla Maistry did not respond to questions from the Sunday Independent.

Meanwhile, the National Prosecuting Authority (NPA) has announced that the Special Investigating Unit had referred the R1.2bn ground handling contract entered between SAA and Swissport for possible prosecution.

The investigation relates to corruption, fraud, theft, contraventions of the PFMA, the Prevention and Combating of Corrupt Activities Act and the Prevention of Organised Crime Act and other unlawful activities as well as the appointment of JM Aviation South Africa as a black economic empowerment partner.

The NPA said the probe was authorised in August and that the reason the matter was taking long was due to the complex nature of the investigation.

Sunday Independent

Original Article

- Advertisement -
RELATED ARTICLES
- Advertisment -

Most Popular

- Advertisment -