SAA bailout is not a done deal yet
Finance minister says no action has taken on SAA funding as DA insists it would be illegal to use Finance Act to release funds.
DA insists it would be illegal for govt to use Finance Act to release funding for beleaguered airline.
Finance Minister Tito Mboweni says no definitive action has been taken regarding the funding of the South African Airways (SAA) – especially not the use of his “emergency” powers in the Public Finance Management Act (PFMA) to release the bailout from the government.
Mboweni has stated categorically that he has not used Section 16 of the PFMA, which allows him to bypass normal budgetary processes for cases of an “exceptional nature which is currently not provided for and which cannot, without serious prejudice to the public interest, be postponed to a future parliamentary appropriation of funds”.
The government recently committed to mobilising the funding required for SAA’s restructuring requirements.
This was in fulfilment of one of the preconditions that needs to be met for the business rescue plan to be considered “implementable” by rescue practitioners Les Matuson and Siviwe Dongwana.
“No decision has been taken and neither is such a decision imminent,” said Mboweni in a responding affidavit to urgent court application by the the Democratic Alliance (DA) to interdict him from invoking Section 16 of the PFMA.
DA’s court application
The DA’s application was launched after Mboweni failed to respond to a legal notice asking him to clarify if government’s commitment to “mobilise” the over R10 billion funding needed for SAA meant that he would authorise the use of the section to release it from the National Revenue Fund.
The move, they said, would be “unlawful” since the airline did not meet the provisions of exceptionalism, public interest and urgency.
“The assumption is plainly incorrect” said Mboweni.
“I have not decided to authorise the use of funds under Section 16. Furthermore, the applicants have failed to provide any factual basis for the mistaken assumption.”
Mboweni points out that “the wording of the letter is significant”.
He said: “Government has not committed to funding the requirements of the business rescue plan, but instead committed to mobilising funding for the short-, medium- and long-term requirements, to create a viable sustainable new South African national airline.”
Mboweni listed five options government is considering to “mobilise the requisite funding”:
Government may retain a portion of the issued share capital Private equity partners Strategic partners
Institutions may be approached for investment of pension funds
Local private investment institutions and global investment institutions.
Unreasonable deadline
The minister goes on to say he was given an “unreasonable deadline” to respond to the DA’s legal notice asking for clarification on how Treasury would handle the SAA bailout.
He explains that he was “seized with other matters” and the fact that the party instituted legal proceedings on the same day without allowing a proper opportunity to respond was evidence that “there was never a genuine intention to engage”.
The opposition party withdrew the urgent application which would have been heard yesterday.
Geordin Hill-Lewis of the DA said the party has, however, retained its application on the normal court roll “should the need arise in future to prevent the minister using Section 16 of the PFMA for the same purpose”.