Public Enterprises Minister Pravin Gordhan said at a hastily convened press conference in Cape Town on Wednesday that the controversial 51% sale of South African Airways (SAA) to the Takatso consortium for R51 signed in 2021 will be revived. It has been revealed that negotiations are underway.
According to Gordhan, this, and the commercial sensitivity of the information, is why some documents related to the agreement must be kept secret.
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Read: SAA secrets could be revealed this week
The documents are as follows.
- Takatso was selected from a shortlist of stakeholders.
- Expression of interest from Harith General Partners (Harith is a funding partner of Takatso).and
- Stock Sale Agreement and Additional Terms.
Parliament's Portfolio Committee on Public Enterprises has been trying for a long time to understand the details of the deal, but it was the first time Mr Gordhan had succumbed to the threat of a subpoena – although it was unable to discuss the matter. A committee meeting was held behind closed doors, with the condition that the committee members sign the following: -Disclosure Agreement.
Read: Mr Gordhan summoned over SAA-Takatso deal
The committee, which is investigating allegations by the former public enterprises chief that Mr Gordhan manipulated deals to benefit favored people, has asked parliament's legal advisers to discuss whether the contents are confidential. It called for guidance, and the panel of advisors supported it on Wednesday. .
Gordan insists on secrecy
In a letter to committee chairman Kayaretu Elvis Magaksa on Wednesday morning, Mr Gordhan insisted that the document and its contents cannot be made public, recorded or photographed.
“Negotiations regarding this transaction… [are] “We remain cognizant of current market conditions and valuation reviews,” Gordhan wrote.
“There is no certainty as to the outcome of this process. However, in the absence of an agreed amended share sale agreement, the terms of the original share sale agreement will remain legally binding.
He also warned the committee: The Commission, not the Department, is responsible for any claims or liability that may arise. ”
The Committee decided to proceed on the basis that the documents would be treated as confidential.
DA makes decision on 'highly irregular' request
This led to the Democratic Alliance (DA) withdrawing from this issue and any future in-camera discussions on the issue.
“The DA is disappointed by the decision of the Parliamentary Legal Service (PLS) to recommend that parts of the SAA-Takatso agreement should be protected from public scrutiny,” the party said in a statement.
“This is a serious blow to parliamentary transparency and accountability and further obscures Pravin Gordhan’s sinister attempts to keep the SAA-Takatso agreement under a veil of secrecy.”
“In light of this new development, the DA will not participate in further consideration of the SAA/Takatso transaction until Congress makes such deliberations available to the public and announces the SAA/Takatso stock purchase agreement.”
The DA claims the Parliamentary Legal Service ignored the fact that Mr Gordhan's request was highly irregular and infringed on parliamentary powers.
“From the outset, the Crown Prosecution Service has refused to accede to Mr. Gordhan's repeated attempts to coax Congress into his long-developed plan to maintain a veil of secrecy over SAA's dealings with Takatso.
“His unwavering determination to shield the terms of the transaction from public scrutiny on grounds of third-party confidentiality violates his legal obligations as SAA's government shareholder representative,” it said.
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“By refusing to disclose the SAA/Takatso share purchase agreement, Gordhan is violating the provisions of the PFMA.” [Public Finance Management Act] Corporations Law on statutory disclosure requirements.
“After spending R38.1 billion of taxpayers’ money on bailing out SAA, even though billions more are needed for recapitalization, South Africans will find out the terms of the deal SAA has struck with the Takatso consortium. It is completely unconscionable that Mr. Gordhan thinks he is not qualified.”
scapegoat
In a hastily convened press conference after the committee meeting, Gordhan strongly denied any corruption in the deal.
He said Parliamentary Standing Committee on Public Accounts (Scopa) chairman Mkhuleko Hlenwa had confirmed that the ministry could not be expected to provide details until the transaction was completed.
When Moneyweb asked Hrenwa about this comment, he said it was wrong and added that Gordhan should not use him as a scapegoat when he has to give an explanation to the portfolio committee.
He said Mr Gordhan's statement on Wednesday did reflect his (Mr Hrenwa's) position at the early stages of the transaction more than 18 months ago, but that circumstances had changed.
Listen: Holomisa: Gordhan saves money with the truth about SAA sales
Gordhan said Takatso was selected from a shortlist of four candidates at the time, but the situation was very different then due to the coronavirus pandemic. Buyers were unable to obtain financing, and even those who initially expressed interest had to back out.
However, due to changing market conditions, the deal is being renegotiated. “The numbers will change,” he said.
Scopa public prosecutor Alf Rees said SAA was still worth far more than the R100 valuation indicated by the sale price in 2021. It had valuable assets, including subsidiaries and billions of dollars worth of real estate.
“They screwed up the deal and now they're trying to cover it up and renegotiate it,” Leeds said.
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