Outa is taking on government for its attempt to divert R2,7bn of SAA’s business rescue funds away from the rescue of SAA. The organisation announced that it would file a submission to halt the new Appropriation Bill this week.
The Bill aims to shift the funds from SAA to its subsidiaries (which were excluded from the business rescue process), i.e. Mango, SAAT and Air Chefs, as reported in Travel News on May 7, read here.
Speaking to Travel News, Outa ceo, Wayne Duvenage, said Outa believed that government’s newly drafted Special Appropriation Bill, which was tabled earlier this month, transgressed the Companies Act in its attempt to divert funds away from SAA’s approved business rescue plan (BRP) without the agreement of the SAA creditors committee.
Wayne explained that the Bill purported to re-channel funds earmarked for SAA directly to the subsidiaries, without the subsidiaries following due process as required under the Public Finance Management Act, No 1 of 1999. “The diversion of the R2,7bn is unjustified as the recapitalising of these three subsidiaries was not contemplated as part of the allocation of the R10,5bn allocation to SAA in the BRP, other than to make mention thereof after the implementation of the BRP,” said Wayne.
“Government needs to be challenged about this as it is flagrant abuse of taxpayers’ money. We want these funds to be withheld until submissions made to Parliament and the Standing Committee of Appropriations (SCOA) have been heard, considered and decided on in Parliament,” said Wayne.
Outa has written to the Minister of Public Enterprises, the Treasury Director General, the receivers of SAA and the chairperson of the SAA interim board with a formal request and to raise its concerns in this regard. The organisation will also be submitting its objections to SCOA this week.
Consequences for boards
“We also believe that SAA’s subsidiaries have sailed into areas of reckless trading and there should be serious consequences for their boards for these actions. One must ask if the boards of Mango and SAA Technical contemplated their respective organisations’ solvency and acted in the best interests of these companies whilst they were making losses prior to and during the pandemic,” said Wayne.
“These boards should have taken action and gone into business rescue when COVID initially broke out. Globally, businesses have had to downscale, particularly in the aviation industry, where companies across the world have renegotiated their leases, rentals and staff numbers. SAA subsidiaries took no actions and are now turning to the taxpayers saying that we must bail them out.”
