Business News 18.10.2017 06:12 pm

Finance committee maintains R3bn SAA bailout was necessary

Parliamentary legal advisor found that the bailout approved by finance minister Malusi Gigaba in September may have been unlawful.

Parliament’s standing committee on finance on Wednesday said it believed Finance Minister Malusi Gigaba should have used another route to provide financial rescue to South African Airways (SAA) but was correct overall in acting to prevent the national carrier from defaulting on its Citibank loan.

The committee issued a statement after a parliamentary legal advisor found that the R3 billion bailout Gigaba gave SAA in September may have been unlawful.

It had requested a legal opinion after the Democratic Alliance (DA) accused Gigaba of trying to sidestep parliamentary scrutiny by invoking section 16 of the Public Finance Management Act to help SAA meet its debt payments.

DA deputy finance spokesman said the minister should have submitted a special appropriations bill instead of extending an 11th-hour bailout, as it was foreseeable that SAA would not have the R1.8 billion needed to honour its loan agreement with Citibank.

The committee agreed that a special appropriations bill would have been the correct option but said ultimately it was up to the Auditor-General to rule on the legality of the Gigaba’s use of section 16.

It stressed that the legal opinion noted that the section could be invoked where “good financial planning and management could not avert the need for exceptional or unusual expenditure”.

And it added that there had been a clear need to come to SAA’s rescue as a default would have had dire consequences.

“Clearly there was a need to authorise the expenditure as a default on the debt obligations of SAA would have serious prejudice to public interest. However, this should have been done by way of a special appropriation Bill. Whether the use of Section 16 was irregular or unlawful in this instance must be considered by the Auditor-General.”

The chairman of the committee, Yunus Carrim, said: “Contrary to what is being claimed by the Democratic Alliance (DA), the legal opinion does not conclude that the Minister’s decision was definitely unlawful. It says it may be so, but it is for the Auditor-General’s Office to decide on this.

“We will now refer to the legal opinion to the Appropriations Committee to process further.”

poll

today in print