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2 minute read
3 Oct 2017
9:13 pm

Parliament looks into legality of bailout to SAA


Finance minister last week announced that government had taken money from the National Revenue Fund to prevent a default by SAA.

Parliament’s standing committee on finance on Tuesday asked for advice on the legality of National Treasury’s R3 billion bailout to South African Airways (SAA) after the opposition submitted a letter claiming it was in breach of public finance rules.

Alf Lees, the deputy finance spokesman for the Democratic Alliance, wrote that it was patently clear to Finance Minister Malusi Gigaba as early as August 24, that the loss-making airline would need R1.8 billion by the end of September to repay its loan to Citibank. Therefore, he had ample time to approach Parliament with a special appropriation bill but opted not to do so.

“I believe that they had enough time to use the normal appropriation process. By not acting timeously they either deliberately or delinquently by-passed Parliament,” he said.

Gigaba last week announced that government had taken money from the National Revenue Fund to prevent a default by SAA.

Lees argued that under the circumstances, it was not regular to resort to section 16 of the Public Finance Management Act (PFMA).

“It is our contention that section 16 of the PFMA may not have been intended to be used under circumstances where the requirement for funds was foreseen and where the normal provisions for the appropriation of funds could be used in order to seek the approval of parliament in advance of the payment to SAA”.

The chairman of the standing committee on finance, Yunus Carrim, asked parliamentary legal advisor Frank Jenkins to report to the committee on Thursday as to whether his office considered the lifeline legal.

Jenkins on Tuesday told the committee that Gigaba’s decision to extend the term of SAA chairwoman Dudu Myeni was legal but only for six months beyond August, when the airline’s annual general meeting was supposed to take place.

“The AGM is the critical moment,” he said.

Lees said Myeni had said in a radio interview that she believed her term had been extended until August 2018. The extension of her contract has become an increasingly fraught subject as SAA’s debtors as it is reported to have contributed to debtors’ reluctance to extend the terms of their loans to the airline.