MPs unimpressed about secrecy over SAA-Takatso deal
“Even during the time of state capture, [former SAA chair] Dudu Myeni, perhaps in this very room, would come to a meeting of the finance committee and give us all the details about the finances of the airline.
“It always used to astound me that someone who was destroying the airline was quite happy to give the information, and yet now we get a one-liner. It cannot be. We need the full report,” said exasperated DA MP Alf Lees.
How was Takatso selected? Who were the other bidders and what were they offering?
What about SAA’s performance? What are its losses and profits since September 2021, when it resumed scheduled flight activity? How are operations funded?
If there is a resurgence, why is government still selling SAA? At what price?
These were some of the questions MPs asked, but it was like talking to a wall.
Public enterprises minister Pravin Gordhan said while SAA was a government entity, it operated within a competitive industry.
“In such an environment you have players with reasonably strong elbows and weak elbows who will attempt to gain advantage of one kind or another and as any competitor would do,” he said.
Gordhan said it was not about secrecy or withholding information, but the deal should be viewed in the context of a close period.
“It’s about walking this very interesting but difficult path between commerciality on the one hand and business reality, and the fact that it’s a government entity that must account for public funds being used towards it.”
He said there was nothing in law that helps government to manage the kind of balance needed.
Gordhan said they could not respond to MPs questions about the expressions of interests nor could they divulge information about the airline’s monthly operations as this could also be competitive information other airlines do not share in the public domain.
“The only limitation to presenting the full facts or the report as requested is the confidentiality element because there would be a non-disclosure agreement signed between the transaction adviser [on behalf of government] and each of the interested parties on the other hand,” he said.
Public enterprises deputy director-general Melanchton Makobe said the transaction — the disposal of the 51% shareholding to Takatso — was not yet concluded.
“It is a live transaction that is in progress and has not been finalised. This is what we call in commercial terms a close period, where the transaction is at this stage.”
He said a close period is when the finer details of the transaction could not be communicated publicly as the deal was at a commercially sensitive stage.
Once the transaction has been finalised and the deal has become unconditional, the finer details will be shared with parliament and the people of South Africa, said Makobe.
SAA was placed in business rescue by its board in December 2019.
Government provided R10.5bn of the R14bn required for the implementation of the business rescue plan. The balance of the funding is outstanding.
SAA exited the business rescue process in April 2021.
Government decided it will no longer fund SAA from the fiscus and a strategic equity partner would be sought to provide the necessary capital injection into SAA.
“ I must indicate we followed due process in line with the applicable legislation, Takatso consortium was then identified as the preferred strategic equity partner for SAA,” said Makobe.
A memorandum of understanding was signed in June 2021. In February 2022 the sale and purchase agreement that contains the terms and conditions of the transaction was entered into.
The terms and conditions of the transaction have been kept under wraps but the key elements of the partnership are that the Takatso consortium will own 51% of the airline and government will own 49%.
Government also negotiated a golden share of 33% which gives it a veto right on issues of national interest, including the fact that the airline will remain in SA, will be a national carrier and will retain the flag.
The transaction is before the Competition Commission, one of the steps it has to go through before it can be concluded.
Gordhan said the transaction was expected to be completed before the end of this financial year.