The Economic Freedom Fighters has slammed the “deliberate collapse” of South African Airways (SAA), allegedly by Public Enterprises Pravin Gordhan.
In response to business rescue practitioners Les Matuson and Siviwe Dongwana’s request for more money, Gordhan said that their request for R10 billion had to be denied.
He wrote to them: “Government will not support the extension of the foreign currency borrowing limit to permit foreign financing of the business rescue plan, nor for a care and maintenance budget, as you have proposed. There is therefore no funding available from foreign sources.”
He added that government itself could not help them any more.
“Government is unable to provide additional funding to sustain the business rescue process beyond the funding that has already been provided to the airline in the form of post commencement finance. Further to this please note that neither will lending guarantees be provided in respect of the business rescue process.”
Gordhan said that the advent of the Covid-19 pandemic had “further stretched national resources in government’s effort to mitigate the impact on the health of our people and on economic activity”.
In February, SAA’s creditors and lenders gave the airline’s business rescuers another extension to 31 March to submit their proposed business rescue plan – far more time than is stipulated in the Companies Act.
SAA was placed in “urgent” voluntary business rescue at the start of December and the company then cancelled numerous local and international routes to save cash.
In a statement, the EFF blamed the collapse on Gordhan, who it accused of creating an environment of fiscal uncertainty and “arrogantly” dismissing advisory measures provided by appointed business rescue practitioners.
“Pravin Gordhan has, in typical style, undermined these efforts by not being cooperative and abiding to the very guidelines provided by government through him as the majority shareholder representative.
“After having committed R4 billion to SAA to assist in its business rescue process, only R2 billion was availed to SAA, with R3.5 billion being loaned from the Developmental Bank of Southern Africa. All of this funding was intended to support the entity through February 2020 until such a point where government had resolved on its preferred restructuring option.
“Due to the unnecessary lack of oversight by the ministry of finance and general incoherence in governance, the budget speech which was supposed to allocate a budget to effect measures advised by business rescue practitioners for SAA was silent. Instead, the budget availed R16.4 billion to repay legacy debt accrued by SAA as a result of poor management and inconsistency of fund allocation by government.”
The party has reiterated its call for multi-ministerial oversight of state-owned enterprises.
Read its full statement below:
EFF Statements on Deliberate Collapse of SAA by Minister of Public Enterprises Pravin Gordhan. pic.twitter.com/Mm48fhhvdy
— Economic Freedom Fighters (@EFFSouthAfrica) April 15, 2020
(Background reporting, Charles Cilliers)