SAA BnP Contract Cancelation a victory for the South African taxpayer and the economy

21 July 2016

The DA welcomes the decision by SAA to cancel the contract with “boutique financier” BnP Capital. It is staggering that the decision to appoint BnP was ever made and mind-boggling that it took a concerted effort to force SAA to save the taxpayer some R 171 million. 

This contract is a small part of the reckless way in which SAA is being run by its dysfunctional board of directors. While we welcome this move it does not go far enough to mitigate the financial chaos to which SAA has sunk. We therefore reiterate the urgency for SAA to be placed under business rescue.

We have no doubt that the directors, led by Ms Dudu Myeni, are recklessly allowing SAA to continue to trade at a loss and that they know that the entity if “financially distressed” as defined in the Companies Act. It is clear that without further cash injections SAA will not be able to pay its debts as they become due in the ordinary course of business. The SAA board of directors are in breach of the following sections of the Act:

- s76 (2)(a)(ii) in that they have knowingly caused harm to the company.

- s76 (3)(b) in that they have not exercised the powers and performed the functions of director in the best interests of the company.

- s129(1) in that there have been no proceedings for liquidation initiated and the directors have not resolved that the Company voluntarily begin business rescue proceedings and consequently also in breach of sect 129 (7) as the board has not delivered a written notice to each affected person setting out the crieria as per sect. 128 (1)(f) that are applicable to SAA and the board’s reasons for not resolving as contemplated in that section.

S77(3) of the Act will apply to the directors of SAA and stipulates that a director of a company is liable for any loss, damages or costs sustained by the company as a direct or indirect consequence of the director having acquiesced in carrying on the company’s business despite knowing that it was being conducted in a manner prohibited by section 22(1). 

The Minister of Finance has not been able to implement the turnaround plan that he announced in February 2016. This stalemate between Minister Gordhan and SAA board Chair Dudu Myeni is rapidly driving SAA to total collapse and simply can’t be allowed to happen to the national carrier. The DA will continue to write to Minister Pravin Gordhan to urge him to take the necessary action to place SAA under business rescue. 

Issued by Alf Lees, Deputy Shadow Minister of Finance, 21 July 2016