PHUTI MOSOMANE
THE National Union of Metalworkers of South Africa (NUMSA) has urged Parliament to halt the takeover of South African Airways (SAA) by the Takatso consortium.
The union has also criticized the Competition Commission for endorsing the proposed merger between Takatso Aviation and SAA, despite what it perceives as significant governance deficiencies.
Takatso aims to secure a 51% ownership stake in SAA, and this agreement has received the backing of Pravin Gordhan, the Minister of Public Enterprises.
“We have been saying that the SAA deal which Gordhan engineered, stinks of corruption and we are disappointed that the Competition Commission has decided to legitimize a process which was illegitimate to begin with. We are raising the alarm once again, on this dodgy deal because there is no accountability from the DPE and parliament is failing to protect this national asset,” spokesperson Phakamile Hlubi-Majola said.
According to Majola, Parliament has not fulfilled its responsibility to hold Pravin Gordhan accountable for his actions.
The union believes that Parliament has neglected to ensure that the South African public receives adequate information regarding the specifics of the deal.
“It seems this deal will go through without any intervention from oversight bodies, even though the law clearly states that this airline cannot be sold outside of a parliamentary process. Minister Gordhan is allowed to do as he pleases, including engineering the sale of the airline to friends and former senior leaders of the governing party.”
“Jabu Moleketi is the former Deputy Minister of Finance and also, the former MEC of Finance in Gauteng. He also served in the ANC NEC, and he just happens to be director of Harith General Partners, which owns a majority shareholding in the Takatso consortium. This deal is corrupt,” she said.
NUMSA General Secretary, Irvin Jim, emphasized that SAA owes its existence to an act of parliament.
However, the selection process for appointing Takatso as the equity partner remains unclear, as Pravin Gordhan has refused to disclose the details of how this decision was reached to the public or to parliament.
This lack of transparency has raised concerns and questions about the rationale behind choosing Takatso as the preferred organization for the partnership.
“Gordhan has not disclosed the ‘due diligence’ process on how Takatso was chosen, we are simply expected to take his word for it that proper processes were followed, when they were clearly not followed,” Jim said.
Jim further expressed his concerns, saying that it is highly unusual for a consortium, especially of the magnitude of SAA, to be sold based solely on its potential to raise capital.
He said in typical bidding scenarios, proof of capital is required, usually in the form of bank guarantees, bonds, or cash deposited into an escrow account.
The lack of clarity regarding Takatso’s proof of capital, which would have been a crucial factor in awarding them the airline, raises suspicions.
NUMSA asserts that Takatso lacks a solid financial track record, leading to the conclusion that this deal may be tainted by corruption.
Jim emphasized that the workers at SAA have borne the brunt of the airline’s restructuring, with the loss of thousands of jobs.
Those who have remained employed are suffering from deteriorating benefits and working conditions.
Notably, according to Jim, Takatso has not contributed any funds toward acquiring the airline, which adds to the union’s concerns.
“If the sale goes ahead, they are effectively being gifted with a complete company for nothing,” he said, adding that the Department of Public Enterprises is more concerned about spin doctoring this corrupt deal than it is about accounting to the public.
NUMSA has accused the Department of Public Enterprises of acting as a de facto spokesperson for Takatso and attempting to conceal any wrongdoing associated with the deal.
The union argues that the DPE has failed to provide the public with information regarding the due process followed in selecting Takatso over other potential bidders.
Transparency is essential, and the public has a right to know who the other contenders were and why their bids were dismissed in favour of Takatso.
NUMSA emphasized the importance of disclosing this information to ensure accountability and to address any suspicions of favouritism or impropriety in the selection process.
“Prior to the business rescue SAA was valued at R14 billion. We found out later that Takatso, conducted its own valuation which valued the airline at R 3 billion and this was confirmed by Derek Hanekom, the board chairperson of the interim SAA board.
“Whereas we see nothing wrong with any potential buyer of an asset making its own valuation of the asset they want to buy, what is troubling is the fact that DPE has accepted the zero valuation of SAA by Takatso and is giving them the airline for free,” Jim said.
The 2017 financial statement put land owned by SAA at the value of R1.3 billion.
He said land does not depreciate, its value increases instead. SAA should have had external, independent parties conduct the valuation to get a real sense of the value of the SOE.
“SAA was deliberately undervalued by Takatso. We suspect that Takatso will sell SAA’s assets in order to raise the capital it does not have, to fund the airline. It is in their interest to buy it very cheaply so that they do not have to pay the full value of the airline,” he said.
The underlying assets of SAA have not changed, and the valuations were done post-business rescue process and therefore the debt position would have been determined already at the time of concluding the Takatso transaction.
“We do not support the sale of SAA at all. Even if we were to concede to partial sale of the airline, which is unlikely, a new and legitimate and transparent process would have to be undertaken, not this sham of a process.”
“If the President allows this process to proceed unchecked, NUMSA will demand a commission of an enquiry into the sale of SAA because we see this entire process as another form of state capture, which has been officially sanctioned by Pravin Gordhan. And sadly, parliament is folding its arms doing nothing to stop this heist,” he added.
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