DA urges Mboweni to investigate how SA Express used R1.2bn in bailouts

The Democratic Alliance (DA) called for Minister of Finance Tito Mboweni to probe South African Express Airways on how it used R1.2 billion in bailouts before liquidation.

This comes after the High Court in Johannesburg reportedly granted an order for SA Express to be placed under provisional liquidation.

The airline, who is also a creditor of South African Airways (SAA), was placed under business rescue in February, just two months after SAA was placed under business rescue.

“SA Express did not report on key compliance requirements for taxpayer-funded bailouts to the value of R1.2 billion over the last year and the additional R164 million allocated in the medium term. This information was tabled in a report provided to Parliament’s Appropriations Committee this week,” DA MP Ashor Sarupen said in a statement on Wednesday.

As a condition of its bailout, SA Express was required to “report to the minister of finance, the auditor-general of South Africa and parliament on the utilization of the R1.2 billion which was allocated to SA Express Airways in 2018/19”.

Sarupen said however, this was not complied with according to the report, and the status of how the money was used remains unclear.

“It remains unclear if the R164 million was paid to SA Express before it was placed into liquidation,” he said.

The MP said SA Express was required by National Treasury to ensure that no incentive bonus pay-outs were made to executives in years where bailouts were received.

He added that the airline was also required to become tax compliant by ensuring that where taxes have been deducted from employees, that these deductions be paid over to the South African Revenue Service (Sars) within the required time-frames and not withheld for other purposes.

“The report indicates that no information was provided to Treasury as to whether or not these conditions were complied with, while the status of SA Express’ finances remains murky, employees were told to fend for themselves and not paid for their final month of work at the entity,” he said.

Sarupen said SA Express’s status as placed under provisional liquidation recently should not deter the government from holding individuals entrusted with taxpayers’ money to be held to account.

He further said the DA will table questions to finance minister regarding how bailouts were paid without ensuring conditions were met, and further will write to the minister to request an investigation into this non-compliance and who was responsible.

“As South Africa faces an increasingly constrained fiscal future, taxpayers cannot afford government expenditure that does not produce value for money,” he concluded.

Moneyweb reported last month that the business rescue practitioners at the SA Express were expected to file an application to liquidate SA Express after failing to secure post-commencement funding from the state.

It was reported by eNCA that SA Express would not be able to pay staff in March and for the most of April.

(Compiled by Molefe Seeletsa. Background reporting, Makhosandile Zulu)

For more news your way, download The Citizen’s app for iOS and Android.