The state of State Owned Enterprises (SOEs) in South Africa has long been the object of public disdain. Exorbitant amounts of taxpayer money have been spent time and again bailing out failing and largely unnecessary state SOEs.
For years political parties, prominent figures and the public have called for South African Airways (SAA) to be privatised.
Today, Minister of Public Enterprises Pravin Gordhan announced Takatso Consortium as the new “strategic equity partner” for the ailing South African Airways airline. There are of course concerns surrounding this deal, and some are asking if it may be too little too late.
Takatso Consortium consists of Harith General Partners (an African infrastructure and airports investor with strong links to the ANC ruling party and the PIC – another State Owned Enterprise: the Public Investment Corporation), and Global Airways (Aircraft, Crew, Maintenance, Insurance – ACMI – specialists). The consurtium will own 51% of SAA.
Democratic Alliance (DA) Member of the Standing Committee on Public Accounts, Alf Lees MP, stated: “The first major concern is the fact that the board of Harith General Partners is chaired by Jabu Moloketi, who chaired the Public Investment Corporation and was also Deputy Finance Minister when Harith was granted R17 million in seed funding back in 2006. It is noteworthy that, whenever the ANC engages in public-private partnerships, it is almost always ANC bigwigs that benefit most.”
Mr Lees went on to say that the DA is deeply concerned by government’s confirmation that the consortium is still to undertake a normal due diligence exercise before the definitive sale and purchase agreement is completed. Even though Minister Gordhan appears to be confident that the consortium will provide R3 billion in capital for the “revitalised” SAA, there is no clarity regarding what will happen should the consortium not go through with the purchase of the majority-shareholding in SAA.
Mr Lees stated “Minister Gordhan has, after all, promised that the new SAA will be independent from the fiscus and thus taxpayers, so it is crucial that this promise be fulfilled lest even more taxpayer money is required for SAA in future. Government is still responsible for the historic liabilities of SAA and requires R14 billion in this regard, R10 billion of which will come from the Special Appropriations Bill currently in front of Parliament.”
Lees explained that with regards to a long-term goal to list SAA on the stock exchange through an initial public offering, there is no clarity with respect to the shareholding the consortium would maintain if SAA is to be publicly listed.
Concerns have been raised around the subsidiaries of SAA (most notably Mango) as the Minister stated that the future of the subsidiaries is still to be determined through a joint assessment with the consortium, and gave no further detail.
Lees stated “It is disconcerting that the announcement of a strategic equity partner has been made in light of the fact that the consortium still has to carry out its due diligence and that the issue surrounding SAA’s subsidiaries is still not even close to being resolved. Government also does not seem to be willing to finally let go of SAA any time soon, considering the fact that they’ve given themselves a “golden share” of 33% of voting rights and “certain areas of national interest”. It is also unclear whether the Public Finance Management Act was followed to the last letter with respect to the choosing of a strategic equity partner.
The DA fears that the Department of Public Enterprises has jumped the gun on the matter in a vain attempt to placate taxpayers whose monies are being wasted on an airline that should have been sold off in its entirety long ago.”
