DA warns Gordhan against legal battle over SAA deal

DA MP Mimmy Gondwe has warned Public Enterprises Minister Pravin Gordhan not to use public funds to launch a legal battle against a parliament portfolio committee overseeing his department.
Threat to challenge report

This follows Godhan’s threat to challenge the committee’s report on the failed South African Airways (SAA) and Takatso deal.

Last month, the minister announced the collapse of the deal to sell a 51% stake in SAA to the Takatso consortium.

One of the primary hurdles encountered during the negotiation process was the need to reassess SAA’s assets, he stated at the time. This was due to the significant time elapsed between the initial agreement and the finalisation of the share sale.

Gordhan attributed the termination to the post-Covid-19 market impact, which prompted a re-evaluation of SAA’s value.

The revised valuation fell short of Takatso’s original offer, with the airline’s business valued at approximately R1-billion, and its property at R5-billion.

Gordhan further stressed that external pressures did not influence the decision to terminate the deal. He said it stemmed from a mutual agreement reached due to the lack of a clear path forward.

However, subsequent developments have fueled further scrutiny into the collapsed deal. The Portfolio Committee on Public Enterprises unanimously recommended an investigation by the Special Investigating Unit or other law enforcement agencies. The recommendation was due to allegations of irregularities surrounding the deal.

Confidential letter

A confidential letter dated March 27, which Sunday World has seen, reveals a scathing critique from Minister Gordhan purportedly lambasting the committee’s draft report as “irrational, legally flawed, and replete with factual inaccuracies and mendacity.”

The letter accuses the committee of bias and a predetermined outcome, despite evidence presented by the Department of Public Enterprises.

Among the points of contention raised in the letter are accusations of misclassification of documents, failure to acknowledge legal advice, and disregarding evidence provided by the department.

In the letter, Gordhan vehemently denies claims of lack of transparency and undervaluation of SAA, asserting that all requested documents were submitted and valuations were based on thorough assessments.

Furthermore, the letter challenges the committee’s commendation of the former Director-General, citing misconduct allegations against him and accusing him of discrediting himself with dishonesty.
Attempt to damage SAA prospects

Gordhan issued a stern warning that should the committee adopt and publish the report, the department will seek legal recourse, alleging an attempt to undermine Parliament and damage the prospects of SAA.

“The points we raise are but a selection from the Draft Report of the Portfolio Committee which is full of factual inaccuracies (lies).

“Should the Portfolio Committee adopt and publish the report, the Department will take the matter to court for review.

“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. One wonders who will benefit by damaging the prospects of SAA,” the letter reads.

“What the committee recommends amounts to conflation of executive and legislative responsibilities. It is indeed an overreach by a portfolio 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.”

Disrespecting parliament’s oversight role

In response, Gondwe criticised Gordhan for disrespecting Parliament’s oversight role and undermining the authority of the committee. She questioned the timing and legitimacy of any legal action Gordhan may pursue, emphasising the committee’s duty to exercise legislative oversight over the Department of Public Enterprises.

Gondwe also called for caution in future dealings of state-owned enterprises (SOEs). She advocated for openness and transparency in transactions involving public assets.

“The DA strongly suggests that going forward SOEs be cautioned by Parliament and other key government institutions such as the Office of the Auditor General and National Treasury from entering into secretive negotiations or transactions (especially in instances where the subject matter of such negotiations or transactions is a state or public-owned asset), as this goes against the principles of openness and transparency espoused in our Constitution.

“The SAA/Takasto transaction was so secretive that not only was Parliament prevented from exercising its full oversight role over the transaction. But National Treasury together with the Office of the Auditor General also did not have sight of the documents pertaining to the transaction (such as the Share Sale and Purchase Agreement and the Evaluation of SAA by RMB) despite the fact that the subject matter of the transaction concerned a public owned or state owned asset that had benefited considerably or extensively from tax payer funded bailouts,” Gondwe told Sunday World.
Secretive nature of SAA/Takatso transaction

She highlighted the secretive nature of the SAA/Takatso transaction. She claimed this hindered Parliament, National Treasury, and the Office of the Auditor General from exercising full oversight.

“The SIU investigation that the Committee has requested should proceed irrespective of Minister Gordhan’s resignation as we need to get to the bottom of this deal and whether there were any irregularities in relation to its negotiation. As such, we really hope the report will become a report of Parliament once it is tabled in the NA.

“We also maintain that Minister Gordhan should not use taxpayer money to mount any ill advised legal action against the Committee because he chose to keep the details of this doomed deal secret from the public as well as Parliament, National Treasury and the Office of the AG,” she said.

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