Enough is enough: Treasury must intervene in SAA urgently
13 July 2016
When is enough enough for a battered and bruised SAA? The latest shenanigans at SAA follow a series of issues that all show that the SOE is in dire need of an entirely new board.
The DA will be write a letter to the Minister of Finance, Pravin Gordhan, calling on him to now take the action that he committed to in his budget speech in February and replace the SAA board entirely.
The SAA board have continuously ignored the new shareholder compact signed with Treasury in 2015, that requires consultation in appointing or suspending any executives. The latest incident being the SAA treasurer, Ms Cynthia Stimpel, who was suspended for misconduct.
This comes on the back of her objection to the appointment of BnP Capital as SAA’s boutique financiers at an exorbitant price. The credentials of the financier is also under question with BnP Capital’s licence allegedly suspended by Financial Services Board for "serious transgressions" prior to securing the contract with SAA. The call for an investigation into the BnP deal with SAA was echoed by the SAA Pilots Association yesterday.
SAA has been plagued with financial problems for over a decade now with assessed losses of R18 billion to date and little sign of a turnaround in sight.
In his February budget announcement, Minister Gordhan stated that a plan was in the pipeline to turnaround this ailing SOE including talks of privatization and board restructuring. Deputy Minister Jonas came out in May saying that Treasury would only consider providing the struggling airline with the financial support required to underpin its status as a going concern once a new board has been put in place and has appointed a competent CEO and finance chief.
To date, nothing has changed with no board restructuring or plan for privatization released. Instead, SAA lurches from one crisis to another. These include:
- The reported uncompetitive behaviour of leasing planes to Mango at lower rates which is being investigated by the Competition Commission;
- This appointment of a boutique financier, BNP Capital, that will charge inflated prices;
- The suspension of certain executives for pointing out or objecting to irregularities in management decisions in violation of Treasury’s shareholder compact with SAA;
- R22 million paid in severance packages through the turnstile of executives at SAA; and
-Delayed financials from 2014/15 that require a state guarantee to remain a going concern, which will probably reflect a massive loss.
It is our belief that this latest breach of the Shareholders contract is the leverage that the Minister needs to replace the board – a move which he must now urgently make.
The DA will continue to fight for a clean and well-functioning SAA that is competitive, privatized, self-reliant and well governed. As our economy slides ever closer to recession and unemployment rises, the time for inaction is over. No more public funds can be used to rescue mismanagement, corruption and incompetence at state owned firms.
Issued by Alf Lees, DA Deputy Shadow Minister of Finance, 13 July 2016
