Business Maverick

MANOEUVRES IN THE DARK

Pravin Gordhan doubles down on the need for secrecy around the sale of SAA

Pravin Gordhan doubles down on the need for secrecy around the sale of SAA
Illustrative image | Pravin Gordhan; SAA (Photos: Guillem Sartorio / Bloomberg)

Not only has the public been kept in the dark, but Parliament, the National Treasury and the Auditor-General have complained about the lack of consultation or information made available to them regarding SAA’s sale to the private sector.

The sale of a majority shareholding in the state-owned airline, SAA, to private-sector players has been shrouded in secrecy since the privatisation deal was first announced two-and-a-half years ago.

The terms and conditions surrounding the sale of SAA remain unknown to the public, which has funded the airline to the tune of R38.1-billion since 2018 to keep it airborne while burning cash.

Not only has the public been kept in the dark, but Parliament, the National Treasury and the Auditor-General have complained about the lack of consultation or information made available to them regarding SAA’s sale. This is no accident – it is deliberate. 

Public Enterprises Minister Pravin Gordhan has kept the lid on details about the sale of a 51% shareholding in the airline to a consortium called Takatso, which includes Harith General Partners (an infrastructure company that owns Lanseria Airport in Gauteng) – despite SAA being a public asset.

There is little information in the public domain about how the SAA sale will be structured, how much SAA (an asset in distress) is valued by the government or Takatso or how much Takatso will shell out to the government for a 51% shareholding. Takatso has promised to initially inject R3-billion into SAA to keep it going. However, it remains unclear if Takatso has already raised the money, and even its growth strategy for SAA has been kept under wraps. 

On Wednesday, 28 February, Gordhan doubled down on keeping information about the sale of SAA confidential. This time, the minister asked that his appearance at the parliamentary public enterprises committee looking into transaction irregularities claimed in a protected whistleblower declaration be held in camera – away from the public and media.

Non-disclosure request

In an unprecedented move, Gordhan also asked MPs to sign non-disclosure agreements. That’s effectively doubling up on veiling the SAA deal details – like non-disclosure agreements, parliamentary practice is that no information provided in a closed committee meeting can subsequently be disclosed, not even in a committee report. 

On Wednesday, Gordhan seemed to have secured the in-camera meeting, but not the non-disclosure agreements he had requested in his 20 February letter to the committee, which was seen by Daily Maverick

“… [I]n order to abide with the confidentiality undertakings that the department made with third parties, I request that the members of the portfolio committee sign non-disclosure agreements,” Gordhan’s letter read.

Two days later, public enterprises committee chairperson Khaya Magaxa responded to Gordhan, saying: “The committee’s acquiescence to an in-camera meeting with you should not be read as an exaltation of secrecy above accountability, particularly where public funds are involved. The committee can not be expected to keep quiet and walk away where there is evidence of malfeasance in the transaction under review…”

Daily Maverick has confirmed that the public enterprises committee, as required by parliamentary practice, applied to hold Wednesday’s meeting about claims of SAA transaction irregularities behind closed doors. That application, alongside permission to sit while the House was in session, was approved. The Z-list, or record of a day’s committee meetings, should have been amended to reflect “closed meeting”. This was not done.

Confusion over Wednesday’s meeting 

Crucially, while committee meetings may with institutional permission be held behind closed doors – it happens once in a blue moon – all information from these sessions may not be publicly shared. Effectively, this means details learnt in closed meetings may not even appear in a committee report. 

Section 59 of the Constitution requires parliamentary proceedings to be conducted in “an open manner” and in public. “The National Assembly may not exclude the public, including the media, from a sitting of a committee unless it is reasonable and justifiable to do so in an open and democratic society.”

Confusion over the status of Wednesday’s meeting continues with MPs insisting the committee as a whole did not take a decision to close the meeting as rules require — even though media and the public were asked to leave Wednesday’s meeting. Read more here.

This may impact on the committee’s future proceedings. If Wednesday’s committee meeting was indeed closed, the information shared can’t be disclosed.

But after Wednesday’s lengthy, and by all accounts terse to-ing and fro-ing, MPs were each given a folder containing SAA documents, including the shareholder agreement, the national airliner’s valuation and the list of entities shortlisted for the sale. At the end, all folders had to be returned to Public Enterprises, except one left for Parliament’s legal services to study and to advise MPs next week.

DA MP Mimmy Gondwe told Daily Maverick they were able to “peruse” the documents, adding: “We did not get into the merits.” 

United Democratic Movement (UDM) Chief Whip Nqabayomzi Kwankwa said: “We held our ground. We made sure we got the documentation. We were able to peruse them.”

Once parliamentary legal advisers brief the committee next week, Kwankwa added, “there is an expectation of MPs to get the documents again”. 

Magaxa did not respond to requests for comment on Wednesday and Thursday.

On Thursday, 29 February, the public enterprises department issued a statement defending Gordhan’s secrecy.

“The transaction is at a sensitive stage,” the department said. “The DPE [Department of Public Enterprises] has previously undertaken to endeavour to transparently disclose all documents and information related to this transaction once it has been concluded. It is important for government to comply with the undertakings it makes in its efforts to leverage private investment, as well as maintain the integrity of its processes.”

In its usual finger-wagging and scornful tone, the department added: “The DPE is aware that the country is in electioneering season where distortions, lies and outright propaganda abound in a competition for votes. The DPE will not allow anyone to besmirch its work, and falsely imply any intent by the department to not be transparent about any issue involving public trust.”

Auditor-General also in the dark about SAA sale

Even the Auditor-General’s office is none the wiser about the ongoing privatisation of SAA. In a 22-page report of SAA’s financial and governance affairs, the Auditor-General said it asked Gordhan and his department to conduct an independent valuation of SAA and its assets and determine whether the purchase price offered by Takatso was fair. 

The department has completed the valuation of SAA but has not been forthcoming with information to the Auditor-General, which was “waiting for access to the revised valuation report”.

“[The] department has recently express [sic] discomfort in sharing [the] revised report with AGSA [Auditor-General South Africa]. However, [the department] has an open window for viewing it.”

The Auditor-General’s report also shows that SAA remains in a financial mess. From 1 April 2018 to 3 April 2023, the government has thrown R38.1-billion at SAA, of which R27.6-billion was paid to the airline after it entered business rescue in December 2019. Over this period, SAA racked up losses of R28.9-billion, four sets of the airline’s financial statements going back to 2018 have shown. 

Read more in Daily Maverick: SAA’s historical mess of financial losses, broken airline operations finally revealed

The Auditor-General has painted a picture of SAA still depending on future bailouts from the government. The government will be on the hook for more bailouts because Takatso wants to take over an SAA that does not carry historical debt. From disclosures at the Competition Tribunal and previous Daily Maverick interviews with Takatso, SAA still carries a historical debt of at least R1.5-billion, which the government has to settle before the deal can be finalised.

Round two of the stand-off between Gordhan and the parliamentary public enterprises committee is set to unfold on 6 March.

A decision must be made on the next steps in the committee’s probe into irregularities in the June 2021 SAA 51% sale as claimed by ex-director-general Kgathatso Tlhakudi’s protected whistleblower disclosure to Parliament. Rule 167 allows a committee to “summon any person to appear before it to give evidence before it… or to produce documents”. DM

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Comments - Please in order to comment.

  • Steve Daniel says:

    saa will NEVER see my money EVER !!!

    • Middle aged Mike says:

      Same here. I will pay more to fly with a commercial carrier than give a buck to this cadre money funnel.

    • Iam Fedup says:

      Besides which, with the arrogance of front line staff clearly evident, the customer experience is really terrible. I had the vast-arsed trolley dolly’s bum in my face for a long time while she tried to calm down an upset passenger near me. And nobody wants to talk about how a previous CEO needed to get to Madrid urgently because another “waiter” kicked a passenger in business class full on in the chest. Shut the damn airline down and sell the routes and assets – without the employees – to the highest bidder.

  • Jon Quirk says:

    This is an extraordinary state of affairs; does Takatso even exist in any meaningful form or way, and does it have the skillsets to manage SAA? Even these most basic questions cannot be answered with certainty, which given the vague generalities, superficial analyses, and secrecy from Gordhan, ought to put everyone on edge.

  • Rae Earl says:

    This whole deal stinks. The ANC is so polluted with corruption that even that aspect is beginning to rear its ugly head in the SAA sale. Either that or they have screwed the whole deal up and have so much dirty linen regarding SAA’s actual status that they dare not make it public in an election year. This is in keeping with how the ANC runs South Africa.

  • Ravi Pillay says:

    Classic PG intrigue. To appoint a politician as as Chairperson of an airline in turnaround situation does not demonstrate strategic thinking all. Perhaps Govt needs to test a commercial partnership model? Safair will instantly turnaround SAA…govt has nothing to lose…

  • Libby De Villiers says:

    Pravin was too happy to be in Zuma’s state capture government and too comfortable with Cyril’s corrupt hand in glove with Putin to be trusted with anything. He is as sneaky and corrupt as all the rest.
    Rather not fly with SAA until all the cards are on the table.

  • Barry Messenger says:

    This need for secrecy does not bode well – what is it that is being held back?

  • Prav Tulsi says:

    I sweat blood and tears to pay tax and some brainless willy goes cand spends on some stoopid whim and not on the needs of the people.
    Prasa : Screwed
    Transnet: Stuffed
    Denel : Chonchaed
    Post Office : ????
    Telkom : Confused
    Municipalities : MR100 for councillors funerals
    RSA : Chinese luck

    • Rob Glenister says:

      Can’t believe you forgot the worst – Eskom.

    • Iam Fedup says:

      I just don’t pay tax Prav. If you know you are funding criminals, isn’t it immoral to hand over money? In any event they have impoverished our country to worthlessness. Not even prostitutes take our money because the Rand is not worth a f##k anymore.

  • Geoff Coles says:

    I have read somewhere that a travel company wants to buy it….based in KZN?

  • Bob Fraser says:

    Bob – March 1st 2024 at 09:36
    I have only ever flow once with SAA and and never on an overseas journey. My attitude has always been that over the years Gordhan has constantly used tax payers money to SAA in the air with no consultation at all, so why should I, or any South African be required to pay an airfair

  • Willem Joubert says:

    If there is a change of guard in future, could the new Government go back to all these crooked deals and nullify them and try to claim some money back?
    If any of the presidential hopefulls will only start to voice their concerns about the frantic looting that goes on, and state that they will nullify all corrupt contracts, I think the private sector will make sure their contracts is above board.

  • Bob Fraser says:

    Bob F – March 1st 2024 at 10.09
    I flew SAA in 1970 from Johannesburg to Durban and return. For the past 40 years I have travelled to UK, new Zealand and Australia at least 28 times, but never on SAA and it will always be like that. Never again fly SAA

  • Johann Fourie says:

    One of the safest airlines with some of the worlds best trained pilots since the mid sixties I have been on board vertualy most airways to fly out of Jan Smuts/O R Tambo. Then a better airways than SA was hard to find. Boeing must have seen the writing on the wall when they pulled out of the intended factory they wanted to have just outside Pretoria some 20 plus years ago. Today I would not fly with South African Airways as the workmanship in the maintenance hangars today is nowhere near the standard it was then. A perfect example is the Airlink flight returning to O.R. in 2019 from Zim that lost two engines. No matter how they try to twist the story, this was due to poor maintenance. My personal opinion, a fatality was avoided only due to the experience of the captain with more than 8000 hours flying time in that type of aircraft.

  • J C says:

    Incredible – just incredible – as others have mentioned, I will rather walk than pay any money to SAA, I dont trust the personnel they have hired anyhow, I suspect all the proper talent has left for greener pastures…

  • Rob Glenister says:

    Pravin Gordhan is long past his sell-by date. He is demonstrating a level of corruption as bad as all the others.
    Time to fire him.

  • Pieter van de Venter says:

    Me thinks Pravin is showing the results of years of late night cooking and usage of his own chemical mixtures. He has obviously lost the plot and only reacts to Loothuli house instructions.

  • Thinker and Doer says:

    This lack of transparency is completely unacceptable, after all of the billions that have been poured into this vanity project to keep SAA “alive”. The plug must be pulled, and this unconscionable burden must be removed from taxpayers, especially when we are so overburdened with funding all of the other crises that the government has plunged the country into. All SAA can do is run ads on the radio about its 90th anniversary and thanking everyone for supporting the “dream” which is a neverending nightmare for taxpayers.

  • Flapster Karos says:

    Please let them eat.

  • Steve Daniel says:

    …connect the dots I once heard – from a seemingly upright citizen.
    Now, once connected, the dots lead me to believe that the once paragon of seeming virtue is cut from the same cloth he then referred to – corrupt, dishonest, untrustable – another snouting at the trough despicable parasite.
    Case closed – Verdict delivered.
    Another cadre envious those who eat more than he.
    So simple really, join the dots…

  • Citizen X says:

    Then National Treasury should now step into the fray, being a lame duck after all years of bailing out SAA must be severed using taxpayers money that could have been spent elsewhere. Just like the etolls saga. Let PG sort out his mess. What another disappointment! Lost all my respect. Maybe its seriously time to stop paying taxes. There seems to be no other way anymore. Not something I would have encouraged ever, but no choices left anymore!!

  • Roelf Pretorius says:

    What should happen is that the government should sell the remaining 49% of SAA also, because there is no reason why it must be involved in an enterprise like that. If it was critical infrastructure such as Eskom’s grid, or the railway lines, it would have been different. But it is not.

  • Mary Doe says:

    This all has to do with MPs (and retired MPs) retaining travel perks in some way.

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