With government committing to obtain the requisite R10.3 billion needed to restructure South African Airways (SAA), the Democratic Alliance (DA) says it will legally challenge the use of emergency public funds to do so.
Minister of Public Enterprises Pravin Gordhan and Finance Minister Tito Mboweni signed a letter confirming that government will commit to “mobilise funding for the short-, medium- and long-term requirements, to create a viable and sustainable new South African national airline”.
The letter was sent to the airline’s rescue practitioners on Wednesday.
In a legal notice sent to Mboweni on Thursday, the DA asked that he confirm that he won’t invoke Section 16 of the Public Finance Management Act (PFMA) to meet this expense.
Section 16 allows the finance minister to disburse state funds for an “exceptional nature which is currently not provided for and which cannot, without serious prejudice to the public interest, be postponed to a future parliamentary appropriation of funds”.
The DA says the SAA case does not meet any of the provisions of Section 16, as there is no emergency; there is nothing exceptional about the proposed expenditure; and postponing the funding will not seriously prejudice the public interest.
Read the full notice here.
“It remains to be seen where they will find the money. It would be totally unacceptable to inject yet another bailout into SAA using public money, or to offer government guarantees for new loans,” said the DA’s Geordin Hill-Lewis in a statement.
“Even this commitment shows Minister Mboweni has backtracked on his previous stance not to countenance any further support for the bankrupt airline.”
The party says it will “have no choice but to approach the high court for urgent interdictory relief pending a review of your decision” should Section 16 of the PFMA be used to release any money for the purpose of SAA’s restructure.
Hill-Lewis said that in a similar matter in 2017, parliament obtained a legal decision which found that a R3 billion bailout to SAA authorised by then-finance minister Malusi Gigaba under Section 16 “was likely illegal”.
Mboweni has been given until close of business today (Thursday) to respond.