Gordhan says controversial SAA sale to Takatso being renegotiated

The government’s controversial sale of 51% of South African Airways (SAA) to the Takatso Consortium concluded in 2021 for R51 is being renegotiated, Public Enterprises Minister Pravin Gordhan disclosed at a hastily convened media briefing in Cape Town on Wednesday.

That, and the commercial sensitivity of the information, is why several documents relating to the agreement must, according to Gordhan, be kept secret.

The documents are:

• The shortlist of interested parties from which Takatso was selected;
• The Harith General Partners’ expression of interest (Harith is the funding partner in Takatso); and
• The sale-of-shares agreement and addenda.

The parliamentary portfolio committee on public enterprises has been trying for an extended period to get details about the transaction, and it was only under threat of subpoena that Gordhan relented – provided that the committee meeting to discuss it be held behind closed doors and members sign non-disclosure agreements. 

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The committee – which is investigating allegations by the former director-general of the Department of Public Enterprises that Gordhan manipulated the transaction to benefit people he favoured – requested guidance from parliament’s legal advisors on whether the content warrants secrecy, and the advisors backed it on Wednesday. 

Gordhan insists on SAA secrecy

In a letter to committee chair Khayalethu Elvis Magaxa on Wednesday morning, Gordhan insisted that the documents and their contents can neither be made public nor recorded or photographed.

“Please note that negotiations on this transaction [are] continuing to take cognisance of current market conditions and revised valuations,” Gordhan wrote. 

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“There is no certainty as to the outcome of this process. However, in the absence of an agreed, amended Sale of Shares Agreement, the conditions of the original Sales of Shares Agreement remain legally binding.

He also warned the committee: “I have been advised that should the committee release the documents; the committee will be liable for any possible claim or liability and not the department.” 

The committee decided to proceed on the basis that the documents are to be treated confidentially.

DA decries decision on ‘highly irregular’ request

This prompted the Democratic Alliance (DA) to withdraw from this and future in-camera discussions on the matter.

“The DA is disappointed by the decision taken by Parliament’s Legal Services (PLS) wherein they advised that parts of the SAA/Takatso deal should be shielded from public scrutiny,” the party said in a statement.

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“This a significant blow to parliamentary transparency and accountability, further providing cover to Pravin Gordhan’s nefarious attempts to keep a veil of secrecy over the SAA/Takatso deal.”

“In light of this new development, the DA will not be participating in any further consideration of the SAA/Takatso deal until Parliament opens up such deliberations to the public and releases the SAA/Takatso Share Sale and Purchase Agreement.”

The DA says the parliamentary legal service ignored the fact that Gordhan’s request was highly irregular and infringed on parliamentary authority.

“From the onset, the DA has refused to accede to repeated attempts by Gordhan to co-opt Parliament into his long drawn-out plan to maintain a veil of secrecy on the SAA/Takatso deal.

“His dogged determination to shield the terms of the deal from public scrutiny, citing third party confidentiality, is at variance with his legal obligations as a shareholder representative for government at SAA,” it said.

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“By refusing to disclose the SAA/Takatso Share Sale and Purchase Agreement, Gordhan is violating the provisions of the PFMA [Public Finance Management Act] and the Companies Act with regards to legislated disclosure requirements.

“It is simply unconscionable that after spending R38,1 billion of taxpayers’ money bailing out SAA, with billions more still needed for recapitalisation, Gordhan thinks South Africans do not deserve to know the terms of the deal that SAA entered into with the Takatso Consortium.”

Scapegoat

In the hastily convened media briefing after the committee meeting, Gordhan vehemently denied any corruption in the transaction. 

He said Mkhuleko Hlengwa, chair of parliament’s standing committee on public accounts (Scopa), acknowledged that the department could not be expected to provide details on the transaction before it has been finalised. 

When Moneyweb asked Hlengwa about this statement, he said it was incorrect, adding that Gordhan shouldn’t use him as a scapegoat when he must account to the portfolio committee.

He said the statement made by Gordhan on Wednesday did reflect his (Hlengwa’s) position more than 18 months ago in the initial stages of the transaction, but that circumstances have changed.

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Gordhan said Takatso was selected from a shortlist of four at the time, and circumstances were very different then due to the Covid pandemic. Buyers did not have access to funding, and even those who showed interest initially had to withdraw.

Market conditions have, however, changed, which is why the transaction is being renegotiated. “The numbers will change,” he said. 

Alf Lees, a DA member of Scopa, said even in 2021, SAA was worth much more than the R100 valuation that the sales price implies. It had valuable assets, including subsidiaries and property worth billions.

“They messed up the transaction and are now trying to hide that while trying to renegotiate,” Lees said. 

This article was republished from Moneyweb. Read the original here