Judge rules on sale of Mango; calls Gordhan’s actions irrational

Public Enterprises Minister Pravin Gordhan, who indefinitely delayed approval on the sale of low-cost airline Mango for almost a year, was described as irrational in a court ruling on Wednesday night.

The Gauteng High Court compelled Mango’s shareholding minister to decide on the beleaguered airline’s sale within 30 days and if it fails to do so, the sale will go ahead regardless.

Gordhan’s actions were called unlawful and unconstitutional.

The Public Finance Management Act’s Section 54 makes provision for automatic approval should the executive, in this case Gordhan, fail to respond within the prescribed timeframe.

Until now, Gordhan has not moved on the sale of Mango at all. Instead, since business rescue practitioner Sipho Sono first lodged the application at the end of November last year, the minister demanded additional information about the airline’s potential buyer which, Sono had said was confidential.

Sono filed for relief in February this year.

In his ruling, acting judge AJ Phooko of the Gauteng High Court in Pretoria supported the confidentiality of the information that Sono did not want to share, and compelled Gordhan to base his decision on the set of information in his possession. Furthermore, the judge called the minister’s inaction irrational and also in violation of the Constitution in terms of responsibly of discharging his duties.

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In contemplation, Phooko said Gordhan should have already made his decision within 30 days of Sono’s refusal to provide further information on Mango’s potential buyer. Gordhan didn’t.

The Constitution demands public office bearers exercise power responsibly and rationally. Judge Phooko wrote: “I do not see how a delay in taking a decision could be considered as rational,” and described rationality as the minimum threshold requirement “applicable to the exercise of all public power by members of the executive and other functionaries…”

Gordhan’s inaction delayed the offloading of Mango just short of a year and could have forced the liquidation of the company instead of a resuscitation. Some industry insiders viewed the minister’s actions as deliberate.

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SAA in the past publicly defended Gordhan’s delays in the Mango deal when it told media that the minister had every right to demand further information and previously suggested that there was a material conflict in the transaction. Sono believed that SAA’s concerns were satisfied and last year’s November sale application complied in full with the requirements of the Public Finance Management Act.

The judgment detailed how Gordhan did not discharge his duties under the law and the Constitution. Curiously, he Minister of Finance and Treasury also opposed Sono’s application. It raises serious questions, by implication.  

In the same window of time, the Takatso deal to acquire SAA gained momentum, as well as approval from the Competition Tribunal. It also occurred in roughly the same period where the flag carrier resumed operations and received a further R1 billion from taxpayers.

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Mango has been in business rescue since July 2021 – an extraordinarily long period of time. It caused the loss of 750 direct jobs and impacted the domestic aviation value chain substantially, and negatively. Previously, Sono battled to get promised bailout funds released and had to rely on the courts to compel the Department of Public Enterprises (DPE) to release the money.

“I am relieved the court comprehensively found in favour of Mango. At the same time I am bitterly disappointed that government injected R734m into Mango but then DPE and the minister did everything to frustrate the productive use of these funds to enable Mango to be rescued.

“Seven months have been wasted by the DPE to the detriment of Mango’s unflown ticket holders and former employees that by now could have been re-employed. The cancellation and suspension of Mango’s licenses is a direct result of the frustrating actions of the DPE and the minister.

“At least the court has put an end to the frustrating actions and the minister has no choice but to make a decision within 30 days, failing which we can assume that Mango has the approval it requires,” Sono told The Citizen.

Sono, along with co-applicant National Union of Metalworkers of South Africa (Numsa) also argued that former Mango employees lost out on regaining possible re-employment at a revived Mango during the delay. The judge saw merit in same.

The Minister of Public Enterprises, Minister of Finance, the Department of Public Enterprises and Treasury were ordered to pay costs.

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