GAAL struggles at SCOPA hearing
Gateway Airport Authority Limited (GAAL) had to explain to the Standing Committee on Public Accounts (Scopa) last week that the entity is in financial trouble and they did not have a plan to save the institution.
POLOKWANE – After this revelation, Scopa asked if the entity should not consider being put under business rescue to which GAAL Chairperson of the Board, Tom Nkoana, said they would work on a turnaround plan.
GAAL asked the Department of Transport to intervene, who in turn went to Treasury to ask for funds. During the Scopa meeting, Nkoana acknowledged the entity is supposed to pay its own way according to the Public Finance Management Act, and not receive money from the state.
The entity did not have money to pay their workers at the end of last month (February) and had to get additional money through Treasury from the Department of Transport to pay salaries.
Some salaries were paid late, especially those paid from other banks, of which processing took longer.
Nkoana explained the entity is in a financial crisis due to accruals amounting to R11 million. He added the way the entity had done their budgeting was also unrealistic.
Hanlie du Plessis, HOD for Transport, said GAAL’s budgeting and allocating the budget was done wrongly as they worked on projected income, as if this was “a real budget”. GAAL gets money from the department in the form of a grant, but they already received their last tranche in November/December.
A major debtor, SA Airlink, has never paid apron fees as they said the airport’s instrument landing system is not fully operational and they dispute the fees charged.
“They were warned that their budget was running into red lights, and their accruals, run over year to year, were escalating. When GAAL asked for a virement in Legislature, the money was sourced from the next year’s budget,” Du Plessis said. Gaal will start the new financial year with a shortfall of at least R11 million.
She said the department was only willing to top up what the entity did not have in their bank, but Treasury authorised more funds. Another transfer was made last week for officials to be paid this month.
Nkoana was accused of lying under oath when he explained that salaries were paid and he was told they should already have received it on 23 February. Nkoana apologised, saying he had the dates wrong.
He was also told that GAAL purchased services that were not budgeted for and had accruals originating from previous years. He was asked what kind of administrator he was, doing nothing, waiting for the problem to appear, knowing he did not have money to pay staff.
Scopa member Rudolph Phala, asked why accruals are a problem in this small entity. He asked again why the entity procured services if there was no money, as it was a criminal offense and financial misconduct.
Nkoana said the board did not know they did not have funds. “We trusted in a system that was not true. Our cash flow system was flawed.”
GAAL was warned that they risked losing their international licence and that Scopa could recommend to the legislature that the board be resolved.
Nkoana said he believed the entity was “rescuable” but couldn’t give a timeline. He said the new board made sufficient progress to know what their problems were and said they were not there yet to dissolve the board. “We don’t have a plan. But we will have a plan.”
