The National Union of Metalworkers of South Africa (Numsa) on Friday added its voice to a call for an investigation into Public Enterprises Minister Pravin Gordhan (pictured) and the South African Airways (SAA) by the Takatso Consortium deal. Photo: Reuters
The National Union of Metalworkers of South Africa (Numsa) has added its voice to the calls for an investigation into Public Enterprises Minister Pravin Gordhan and the aborted SAA/Takatso Consortium deal.
The union called for the Special Investigating Unit (AFU) to launch a probe, after the long-running planned take-over of the ailing state-owned airline abruptly came to an end earlier this week.
Gordhan said on Wednesday that the deal was off after it was decided to cut their losses with Takatso after new valuations from reputable professional firms.
The minister has repeatedly defended the limited information on the Takatso Consortium deal.
On Friday, in response to the Numsa statement, the Department of Public Enterprises (DPE) had failed to provide comment by the agreed upon publishing deadline.
Irvin Jim, the Numsa General Secretary said in a statement on Friday that the labour union had noted Gordhan’s announcement that the deal to sell a 51% stake of SAA to the Takatso consortium, had been terminated.
“We welcome this announcement because we have succeeded in achieving this major milestone, which was to prevent SAA from being privatised,” Jim said.
He said Numsa had consistently raised the alarm over the secrecy surrounding this deal and felt vindicated by the development. Numsa had worked with the South African Cabin Crew Association as a progressive labour block, to oppose the deal and the privatisation of SAA.
Jim said, “However, we are not satisfied with the explanation given by Minister Pravin Gordhan on the SAA deal. It is very clear to us that there are a lot of unanswered questions, which require an in depth investigation. This is why Numsa is demanding that the Special Investigating Unit (SIU) must investigate the deal.”
Numsa alleged that the deal was terminated because Gordhan was about to be exposed for not following procedures.
Thousands of jobs were lost to justify the privatisation of SAA, it said, adding that the union wanted accountability for the decisions taken by Gordhan.
Jim alleged that Gordhan had abused his power in the deal, adding that Numsa had a duty to protect state-owned enterprises (SOE) from malfeasance.
Areas Numsa wants a SIU probe:
1. Gidon Novick’s insights:
Novick the founder of Lift, a rival airline to SAA had confirmed in an interview on Newzroom Afrika with Xoli Mngambi that they, as a consortium, did not initiate the engagement with the DPE. He confirmed that they were approached by an official of the DPE and invited to bid. This official instructed him to get together with Harith and form a consortium.
Jim said, “This is a major red flag because it suggests the deal was dubious from the start. The DPE as the custodian of SAA cannot be the one to approach potential bidders and encourage them to bid. From the remarks made by Novic, it is clear that the DPE engineered the creation of the Takatso consortium by bringing these parties together, and as the public, we deserve to know why. Whose interests are being advanced?”
2. Proof of funding:
Numsa said it had also noted that the Business Times published an article this week where the Finance Minister Enoch Godongwane confirmed that Takatso did not have ‘proof of funding’.
Godongwane had said in the article, “We have said thus far, we would need proof of funds. That’s our condition to release further funding to SAA, proof of funds from the equity partner. If they provide that, it may well be that there’s nothing Treasury can do. However, they have got to cross another hurdle because the SAA Act has got to be passed by parliament”.
Jim said,“This is a major red flag. SAA is a major airline that in 2017/2018 was valued at over R14 billion. How can an airline that size be given away to a consortium that has no money? How can negotiations even take place with people who do not even have a red cent to their name? This suggests that there was something very underhanded about this transaction.”
3. Other bidders and rejection:
Numsa said it had noted that the names of the entities which were shortlisted, remained confidential. It wanted to know who the other bidders were and why they were rejected in favour of the Takatso consortium. It also wanted to see the rationale from the DPE for why these bidders were rejected and Takatso was chosen.
“We reject Gordhan’s claim that they ‘had no money’.... He actually tried to bully parliament into keeping the documents of the deal a secret, and we are once again demanding that the Parliament’s Portfolio Committee on Public Enterprises must disclose all of these documents to the public. There is no reason to keep the information a secret because the deal has fallen through. They have a duty to disclose,” Jim said.
Noting that that Gordhan had refused to allow workers to use their pensions to buy a stake in SAA, Jim said: “Surely if an SOE is to be sold, it makes sense to allow workers to own a share in the company? This would have made sense in terms of the government's obligations to boost economic development and create an inclusive economy. A transaction for the sale of SAA where workers are shareholders would have been far more beneficial to the public.”
Numsa alleged that due to the concerns raised, it appeared as if Gordhan had gotten personally involved and handpicked people to buy a majority share of SAA.
The union further alleged that the deal smacked of corruption: “People who have nothing to hide, hide nothing. Gordhan has been hiding the truth from the public on SAA and now that his attempts to ram this shady deal through have failed, he chooses to retire. He is running away from accountability.”
The union also raised concern about the fact that the Takatso deal was supposed to fund the airline to the tune of R3 billion. After the deal collapsed, the Department of Public Enterprises (DPE) would have to find that money because without it, SAA would collapse, the union said.
Other calls for probe:
Khaya Magaxa, the chairperson of the Portfolio Committee on Public Enterprises, told Business Report on Wednesday night: "We appreciate and are thankful to Cabinet for the termination of the deal, but we are not going to put our hands in our pockets.“
As reported on in the article, SAA/Takatso deal is still subject to regulatory and criminal scrutiny, say industry insiders.
"Our investigations are to get to the bottom of the allegations and processes of the deal, we do not have forensic capacity," Magaxa said.
“The committee still has to finalise our investigations and report to the Speaker on the allegations brought by the former DG (Former Director General in the Department of Public Enterprises Kgathatso Tlhakudi) on matters to do with impropriety and corruption in the transaction."
Tlhakudi told Business Report that he hoped all the appropriate entities would scrupulously fulfil their mandate in their investigations, as thousands of people lost their families' livelihoods when they lost jobs through SAA's restructuring.
Dr Mimmy Gondwe MP, DA Shadow Minister of Public Enterprises, also wants answers.
He said in a statement that, “following the inevitable cancellation of the controversial SAA/Takatso deal by Gordhan, the DA had written to Magaxa, to request that Gordhan appear before Parliament, prior to its rising towards the end of this month, and account on the cancelled deal.”
Questions Gordhan must provide to Parliament:
Gondwe said Gordhan must provide a detailed account, including supporting documents, of the due diligence conducted by the DPE on:
– The valuation of SAA, especially its projected future earnings – indications are that SAA was sold using an undervalued valuation;
– The viability of the Takatso Consortium as a potential equity partner, especially its ability to raise the required capital to meet the purchase agreements.
Gondwe said, “Gordhan cannot hide behind ‘changed circumstances’ as an excuse for cancelling the SAA/Takatso deal.
“He knew it was a bad deal from the beginning hence his insistence on hiding the details of the sale and purchase agreements from the public, including the nefarious attempts to muzzle Parliament through non-disclosure agreements.
“In addition to holding him accountable over this dud SAA/Takatso deal, Gordhan must explain how SAA will sustain itself after the 18 month period, through which he says SAA will be able to cover its operating costs. The DA will fight against any attempt to raid the Treasury for another multi-billion rand bailout, those freeloading days are over,” he said.
Gondwe added that there was no strategic need for a state run airline that diverted limited state funding away from the desperate need to stimulate economic growth. He said that SAA must be cut loose and be sold.
BUSINESS REPORT