Minister of Finance, Tito Mboweni (Photo by Gallo Images/Ziyaad Douglas)
Gallo Images/Ziyaad Douglas
The Democratic Alliance has filed an urgent interdict application at the North Gauteng Division of the High Court to prevent any money for SAA coming from “emergency” funding.
The Public Finance Management Act (PFMA) gives Finance Minister Tito Mboweni “emergency” powers to spend money not budgeted for in “exceptional” and “unforeseen” circumstances.
On Thursday the Department of Public Enterprises and National Treasury provided a requested letter of commitment requested by the SAA rescue practitioners, undertaking to “mobilise” funding needed to implement the rescue plan and to get a restructured SAA going again. The letter of commitment by the DPE and Treasury did not stipulate what the source of the funding will be.
Derek Mans, Solidarity’s organiser in the aviation industry, feels creditors who voted on the rescue plan were “misled”.
In his view, the letter of commitment supplied by the DPE and Treasury only refers to a commitment to “mobilise” funding and, therefore, does not fulfill the requirement stipulated in the plan for the requisite funding to be “provided”.
The rescue plan was approved at a creditors’ meeting earlier this week.
In terms of the rescue plan, about R10.3 billion in additional funding would be needed. This is apart from government guaranteed loans totaling about R16.4 billion held by four private banks. Money for the guaranteed loans have been allocated in prior budgets and intended to be paid over a 3-year period.
SAA has been bailed out to the tune of about R30 billion over the past ten years.
“Yet another public bailout of SAA does not meet the definition of an unforeseen emergency. To use this as a pretext to bail out SAA again would be unlawful,” the DA said in a statement on Friday.
“We asked the Minister [on Thursday] to confirm in writing that he would not invoke [these powers of emergency funding]. He did not reply, and so now we are approaching the court.”
Furthermore, if Mboweni has already transferred funds to SAA, on the basis of the letter of commitment provided to the rescue practitioners, the DA’s application seeks to interdict use of those funds pending the outcome of the court application. If no funds have as yet been disbursed, the DA seeks to interdict any disbursement.
Although a proposed business rescue plan for South African Airways (SAA) was approved by creditors on 14 July, some conditions still have to be met before it can be implemented, the practitioners informed affected parties in a letter on Friday.
Meanwhile, the rescue practitioners informed affected parties on Friday that, if all conditions to be able to implement the rescue plan are not fulfilled by 22 July, the plan will be deemed “unimplementable”. Then a meeting of creditors will be convened on 24 July 2020 for creditors to consider amending the plan.
If all the conditions are not met and the creditors do not accept amending the plan, the rescue practitioners might have no other option than to “discharge” the business rescue, which could mean no alternative remains than SAA going into liquidation.
