Fired Director General of the Department of Public Enterprises (DPE) Kgathatso Tlhakudi told MPs the undervaluation of SAA was in the region of R7 billion to R15bn. Photo: Karen Sandison African News Agency (ANA)
Fired Director General of the Department of Public Enterprises (DPE) Kgathatso Tlhakudi yesterday asked that Parliament halt the Takatso Consortium’s 51% takeover of South African Airways (SAA), while calling for an independent investigation.
He alleged there was “irrefutable evidence of corruption through state capture“ and said the Special Investigating Unit (SIU) proclamation on SAA should be extended to cover the Takatso transaction, DPE Minister and officials roles.
In a submission before Parliament's Portfolio on Public Enterprises, Tlhakudi said the restructuring of the airline, which had thus far cost R37.5 billion, with R243 million in consultancy costs alone, was fraught with fault-lines: from the DPE not performing the due diligence on Takatso by May 22 when he was suspended, to the prospective partner not having sufficient financial and technical capacity.
“I had ordered the DPE negotiating team to extend the scope of the contract with Norton Rose Fulbright to enable this critical task to be undertaken. There was no evidence that Takatso has the financial and technical capacity to consummate the transaction,” he said, adding that the regulatory process to enable the transaction had not had much attention paid to them.
“The proposed compensation to the government for SAA assets (R3 billion) through a preferential share scheme is unlikely to result in the payments being realised,” he said.
The deal has obtained the approval and recommendation to the Competition Commission, leaving the Competition Tribunal as the final stop.
Tlhakudi submitted that depending on the findings of the SIU, and that allegations of criminal behaviour were proven, the matter should be handed over to the National Prosecuting Authority (NPA) with the Public Protector directed to investigate the conduct of the Minister of Public Enterprises.
He said the Competition Commission’s handling of the Takatso transaction should be looked at including the processes that informed a positive recommendation to the Tribunal
“The Takatso transaction should at the least be halted to ensure fair compensation to the national fiscus – Chairperson (Derek) Hanekom - has conceded to the undervaluation of the property portfolio,” Tlhakudi said.
He said the valuation to peg the airline at R3 billion was done by Broll Consulting, which listed that amount in assets and Letsema Consulting, which found no value in business operations.
“It is my assessment that the undervaluation of SAA is in the region of R7bn to R15bn,” Tlhakudi said.
He said one of the major property groups in South Africa had made an unsolicited proposal to SAA to develop its head office, Airways Park, into a multipurpose facility, including a conference facility and valued the opportunity at R4bn. SAA also had aircraft spares to the value of R3bn, which were factored into the valuation and there was R1bn of cash that was stranded in the regional markets.
“Recently I have come to know that SAA local properties have been valued at roughly R6bn against the R1.2bn valuation by Takatso. Chairperson Hanekom has conceded on this point and said the assets will be revaluated,” he said.
Further, Tlhakudi said there were foreign bank accounts and properties that were still to be accounted for. The London Heathrow slots with rand depreciation should be worth more that the R400 million attributed to them.
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