Banks must not extend any loans to the insolvent SAA
6 August 2020
The Democratic Alliance (DA) is urging Banks and creditors to reject the recent appeal for another R5.3 billion loan, submitted by the Departments of Public Enterprises and Treasury, to recapitalise the insolvent South African Airways (SAA).
It is simply ludicrous for Government to go hat in hand begging for a new loan from the same banks whom it is yet to pay back existing loans. The desperation to save SAA, when all evidence points to the undeniable fact that it is irredeemable, confirms that this business recue process has become a political project to appease factional politics in the ANC.
Banks now have an opportunity to redeem themselves from their previous reckless practices of repeated loan extension to SAA when it was clear that the entity had become insolvent. Ethical business practice demands that Banks stand their ground and refuse to refinance a business operation that has failed turn a profit in 9 years, only managing to rake up R32 billion in losses.
Previously, SAA creditors/lenders have shrewdly obtained security from Government on the back of South African taxpayers without appearing to have any due regard on how this will impact the fiscus and the delivery of basic services. This hostile lending practice has damaged the creditors/lenders standing as good corporate citizens.
Refusing any further funding to SAA will suffice as an apology to South Africans whom Banks have made to carry the cost of their clearly reckless lending.
I urge all interested parties, in particular creditors and banks, to refuse the latest appeal for a new loan for SAA and ensure that no taxpayer’s money is wasted further on the SAA/ANC vanity project.
Issued by Alf Lees, DA Member of the Standing Committee on Public Accounts, 6 August 2020