Treasury played role in disposal of state shares in SAA — Gordhan
Public enterprises minister Pravin Gordhan disputes the Treasury’s assertion that it played no role in the process of disposing of the 51% of the government’s shareholding in SAA to a strategic equity partner last year.
He insists that the Treasury was part of the process, and that due process was followed in the selection of Takatso consortium as a preferred equity partner.
“When completed, this transaction will be an imminent example of a partnership between the public and private sector in an important industry in SA,” said Gordhan.
“For years to come, the fiscus and South Africans will benefit from the dividends that will flow from the new SAA once it reaches full commercial viability. Government is unanimous in this regard.”
Gordhan said this in a letter dated April 7 to Mkhuleko Hlengwa, chair of parliament’s standing committee on public account (Scopa). Gordhan said that consultations with Treasury internal legal advisers indicated that the transaction did not fall within the provisions of section 54 of the Public Finance Management Act (PFMA) as the shareholder and not SAA was disposing of the shares.
“However, the department [of public enterprises] informed the National Treasury of the transaction, seeking the minister of finance’s concurrence,” said Gordhan. He said this was not because of a requirement of the PFMA but was an attempt to keep the minister of finance informed of the transaction.
Gordhan said he wrote to finance minister Enoch Godongwana on August 27 2021, advising him formally of the transaction and requesting his concurrence. This was not an application in terms of section 54 of the PFMA but a courtesy to inform the minister.
Intensive consultations on the matter of section 54 had taken place between public enterprises officials and the Treasury.
He said Godongwana indicated in a letter dated February 4 2022 that “section 54(2) of the PFMA does not find application in this instance as it is the government, as the shareholder, selling its stake in SAA”.
Section 54(2) of the act applies only where a public entity concludes any of the transactions mentioned under the section, he said. In other words, section 54(2)(c) would apply in an event whereby SAA was seeking to dispose a significant shareholding in any of its subsidiaries or was seeking to acquire significant shareholding in another company.
“The disposal of a majority shareholding in SAA has already been approved by cabinet and thus no approval, concurrence or noting is required from the minister of finance in terms of the PFMA,” said the letter.
Gordhan said Godongwana’s letter clearly contradicts the view that the Treasury played no role in the selection of the preferred strategic equity partner (SEP).
“In any event, there have been numerous meetings pertaining to the SAA transaction which the National Treasury was part of. The transaction milestones were considered by cabinet and the interministerial committee on SAA, which are forums the minister of finance is a member of,” said Gordhan.
Treasury director-general Dondo Mogajane told Scopa in March that the Treasury never gave consent for the transaction, nor could it vouch for the compliance of the process followed by the department.
“It is important that the committee notes that National Treasury has played no role in the selection process of the preferred SEP, including the conceptualisation, negotiation and finalisation of the terms and conditions relating to the transaction,” Mogajane said in a letter to Hlengwa.
Mogajane said the Treasury raised concern in relation to some of the terms and conditions agreed to between the preferred partner and the department of public enterprises.
DA MP Alf Lees wants Godongwana, Gordhan, Mogajane and public enterprises director-general Kgathatso Tlhakudi to appear before Scopa to clarify contradictions.