How was R5.5bn spent?
SAA: GORDHAN WANTS ANSWERS, SAYS GOVT HAS SEEN LITTLE PROGRESS
Says business rescue practitioners should not move towards liquidation.
Five months and some R5.5 billion down the line, the South African Airways (SAA) is still under business rescue with no clear plan in sight and Public Enterprises Minister Pravin Gordhan is not impressed with the little the rescue practitioners have done.
Giving a presentation on stateowned enterprises in a joint parliament committee meeting on Wednesday evening, Gordhan said business rescue practitioners (BRPs) Les Matuson and Siviwe Dongwana should not make a move towards liquidating the airline when there are many alternatives that could still be explored.
Matuson and Dongwana have previously made it clear that without further funding from the government they would have no option but to implement a structured winding down of the airline or a liquidation.
These plans have been placed on pause at least until Monday May 11, to give workers a chance to accept wholesale retrenchments and for government to find the requisite funding.
The show must go on
But Gordhan told MPs there will be no “fire sale” of SAA assets and that despite the BRPs saying they will not be operating any flights from today, this will need to be relooked.
Gordhan said one of the issues government was contending with is the lack of a “proper and fully-fledged” rescue plan from the BRPs. “At best what we had given to us yesterday [Tuesday] morning is an outline, but much of it is about the history and not too much of it is about solutions.”
Gordhan added that government would be engaging with the BRPs on the specifics regarding the shape and design of a future new airline and how that transition will happen.
He said the department would also meet with the practitioners to examine the company’s finances to locate savings from the R5.5 billion that will fund the continued operation of the airline beyond today.
Clarity
Another issue raised by Gordhan is the “sole discretion” the BRPs have had regarding how the R5.5 billion is used, saying more could have been done to save costs. “The Company’s Act does prescribe that when there are important decisions to be made by the BRPs there must be adequate consultation with the shareholder. Our view is that that has not been entirely the case.”
For instance, a United States consultancy firm Alvarez & Marsal was appointed by the BRPs on the recommendation of the lenders who contributed to the post-commencement funding.
The work done by this firm resulted in a bill of around R35 million and Gordhan said government has “not seen the product of what has been done”.
He said: “We want full access to that information so we can determine if there was value for money in that regard.”
The BRPs were also supposed to present management accounts to the Standing Committee on Public Accounts in parliament but have not done so.
Gordhan said the BRPs and the other consulting firms have been asked to reduce their fees by up to 40% “so they also contribute like the staff would be contributing to a proper outcome of this process”.
“We haven’t heard from them in this particular regard...” the minister said.