Public Enterprises Minister Pravin Gordhan. Photo: Leon Lestrade / Independent Newspapers
Parliament's Portfolio Committee on Public Enterprises has insisted in its report to the Speaker that there had been a sleight of hand in the department's handling of the 51% takeover of South African Airways (SAA) by the Takatso Consortium as the transaction was fraught with red flags.
In a report released on Tuesday, the committee said it was concerned by the overall lack of transparency, inadequate documentary evidence, an unknown and ambiguous new evaluation of SAA, and no formal report on the terms and conditions of the termination of the defunct deal.
Last month, the Department of Public Enterprises (DPE) terminated the sale of SAA to Takatso after new valuations from reputable professional firms following three years of negotiations.
The business valuation came out at R1 billion and the property valuation at R5.5bn, meaning that there was a net increase in the property by R3.1bn in the value of SAA while the equity value had increased from 0 to R1bn.
The portfolio committee report, which may still be considered in a special sitting or be kicked down the road to the next Cabinet, said there was still outstanding information on the defunct transaction including determining the exact valuation of the SAA-Takatso transaction as the new valuation details had still not been submitted to it.
The Khaya Magaxa-led committee firmly resolved that the minister of police should consider referring this matter to the (SIU) for further investigation into the now defunct transaction, including forensic analysis of disputed signatures.
“As we now know, the former director-general [Kgathatso Tlhakudi] has emphatically disputed the authenticity of his signature on the memorandum signed on the 8 April 2021, and this presents a very serious dispute of facts which can only be resolved by an entity which has forensic capability,“ read the report.
“The committee cannot say the transaction was above board and will be recommending that law enforcement agencies must do their work in unravelling the truth about this transaction, particularly the alleged forgery of the former DG’s signature in the SEP appointment process.”
It also noted that there was much to be desired in the “worlds apart” difference between the initial evaluation figure of SAA and the later one, which it said appeared from media reports that government “buckled” under pressure and walked away from the transaction because the exposure of this under-evaluation and the concomitant media exposure.
It said it had difficulty going through the documents to form their own opinions and analysis of the transaction as the documents were presented late after a series of postponements, and also coming with the condition for Non-Disclosure Agreements and for the meeting to be held in-camera.
In direct communication with Magaxa, the latest two weeks ago, Minister Pravin Gordhan stressed the need for the committee, and consequently Parliament, not to overstep its bounds in commercial transactions executed by the executive.
“Should the Portfolio Committee adopt and publish the report, the department will take the matter to court for review,” Gordhan cautioned.
“What the Chair is asking of the Committee is to undermine Parliament, a democratic institution by promoting and enhancing dishonesty of a former employee. Furthermore, this approach is undermining the future sustainability of SAA and its ability to raise future investments of SAA.”
Gordhan also warned of the overreach by the committee on the functions of the executive.
”Lastly, be reminded that the principle of separation of powers should be adhered to and Parliament should be careful not to enter the realm of the executive, especially in commercial transactions. One wonders who will benefit by damaging the prospects of SAA,” he said.
“What the Committee recommends amounts to conflation of executive and legislative responsibilities.”
In its report, the committee also cited observations made in 2022 by the Auditor-General (AG) Tsakani Maluleke who noted that the purchase and sale agreement required more than R3bn to be paid by DPE to complete implementation of the business rescue plan.
The AG report noted that funds to cover this liability have not been appropriated in the budget and that the DPE did not follow a formal process for the invitation, evaluation and adjudication of proposals from interested parties to identify the success/preferred strategic equity partner with neither public invite for bids or expressions of interests nor evidence that proposals were fairly evaluated based on a predetermined criterion.
BUSINESS REPORT