‘Don’t use PIC funds on SAA’

COSATU has strongly objected to the use of workers’ pension money in the Public Investment Corporation (PIC) to bail out SAA, saying this would be akin to throwing money into a bottomless pit.

The trade union’s tough stance in Parliament yesterday came after a strategic expert in state-owned entities called on the government to put SAA into business rescue.

National Treasury has injected R10 billion into SAA to keep it afloat and pay the banks it owed.

Matthew Parks of Cosatu told members of the standing committee on appropriations that the airline needed to be salvaged.

He warned however that there was a tendency by the government to use the PIC to bail out ailing state-owned enterprises (SOEs).

Parks said one of the things the government could do was to engage the government of Angola on the R600 million owed to SAA for airline tickets.

Angola, Nigeria and two other countries on the continent owe substantial sums to SAA for unpaid tickets with Angola the largest debtor.

SAA has raised the issue in Parliament previously and said it was trying to recoup the money.

Parks also warned against attempts by President Jacob Zuma to tap into the Unemployment Insurance Fund (UIF) to get R50bn to fund free education. This followed reports that Zuma was planning to announce free education and would obtain funds for this plan from the UIF. Parks said the problem was the looting of SOEs including Eskom and SAA.

He said the federation supported the idea of the PIC investing in state enterprises, but there had to be clean governance.

“You can’t have bailout where looting is taking place. We support the PIC investing in SOEs, but you must have clean governance. SAA is in a precarious state at the moment,” said Parks.

He said for SAA to be turned around a forensic audit was needed.

Strategic expert in SOEs Thabang Motsohi of Lenomo Advisory told Parliament SAA needed to be put into business rescue to survive. He said SAA was back to where it was 15 years ago when it suffered huge financial losses and struggled to survive.

“I see the following options for SAA: put it into business rescue and restructure it aggressively. This provides a legally unchallengeable environment to do what is necessary. Under this option, all legacy agreements (including employment) are up for revision within the limited affordability,” said Motsohi.

He said the second option would be to restructure the airline as had been proposed, but this should be done within a tight schedule.