Audit of SAA financials ‘far from complete’
PUBLIC Enterprises Minister Pravin Gordhan said yesterday that the auditing of SAA’s financial statements was far from being finalised.
Gordhan told Parliament’s portfolio committee on public enterprises that funding options for the struggling national airline had been explored, and an announcement was expected soon.
He said the Department of Public Enterprises was closer to finalising SAA’s realignment with low-cost airlines SA Express and Mango as part of a major restructuring of state-owned enterprises (SOEs).
“A Cabinet memo was submitted proposing the implementation of an optimal corporate structure for the airlines, which is still being considered by the Cabinet,” Gordhan said.
Gordhan admitted that SAA and SA Express had been crippled by poor leadership and financial management.
He said the government had already issued a R5 billion bailout for SAA and R1.249bn for SA Express.
He said engagements with potential lenders to secure debt financing were under way to meet liquidity requirements.
Gordhan also said that Transnet received a qualified audit as a result of fruitless and wasteful expenditure, and losses due to criminal conduct during the 2018 financial year.
He said the freight, rail and logistics company incurred irregular expenditure of more than R8.2bn, up from R692.7 million in the previous financial year, due to non-compliance with Public Finance Management Act and other regulations.
“Majority of irregular expenditure incurred arises on the items of the previous financial year due to clean-up processes that the board is executing,” he said. “Transnet overpaid by R509m in the purchase of 100 locomotives from China CRRC and Japan Mitsui, of which CRRC returned a part to Transnet. Transnet in the purchase of 1 064 locomotives overpaid by R17.4bn,” said Gordhan.
Gordhan said Denel had massives irregular, fruitless and wasteful expenditure for 2016/17. “Denel wiped out R3bn of revenues through corruption conceived by Denel Asia against the advice of everyone, including their own due diligence report, which advised against doing business with VR Laser in its various incarnations.”
SA Institute of Race Relations chief economist Ian Cruickshanks said SOEs needed professional management more than anything else.
“The government must get private sector managers to do the management of SOEs, and that doesn’t mean they have to give up ownership of SOEs,” said Cruickshanks. “They have to accept that their experience is limited in running those multi-billion-rand organisations.”
Cruickshanks said there was a need for drastic action on SOEs. “That means introducing and adopting new management skills. You have got to get the right people.”