Pravin Gordhan doubles down on the need for secrecy around the sale of SAA

29 Feb 2024

Not only has the public been kept in the dark, but Parliament, the National Treasury and the Auditor-General have complained about the lack of consultation or information made available to them regarding SAA’s sale to the private sector.

The sale of a majority shareholding in the state-owned airline, SAA, to private-sector players has been shrouded in secrecy since the privatisation deal was first announced two-and-a-half years ago.

The terms and conditions surrounding the sale of SAA remain unknown to the public, which has funded the airline to the tune of R38.1-billion since 2018 to keep it airborne while burning cash.

Not only has the public been kept in the dark, but Parliament, the National Treasury and the Auditor-General have complained about the lack of consultation or information made available to them regarding SAA’s sale. This is no accident – it is deliberate.

Public Enterprises Minister Pravin Gordhan has kept the lid on details about the sale of a 51% shareholding in the airline to a consortium called Takatso, which includes Harith General Partners (an infrastructure company that owns Lanseria Airport in Gauteng) – despite SAA being a public asset.

There is little information in the public domain about how the SAA sale will be structured, how much SAA (an asset in distress) is valued by the government or Takatso or how much Takatso will shell out to the government for a 51% shareholding. Takatso has promised to initially inject R3-billion into SAA to keep it going. However, it remains unclear if Takatso has already raised the money, and even its growth strategy for SAA has been kept under wraps.

On Wednesday, 28 February, Gordhan doubled down on keeping information about the sale of SAA confidential. This time, the minister asked that his appearance at the parliamentary public enterprises committee looking into transaction irregularities claimed in a protected whistleblower declaration be held in camera – away from the public and media.

Non-disclosure request

In an unprecedented move, Gordhan also asked MPs to sign non-disclosure agreements. That’s effectively doubling up on veiling the SAA deal details – like non-disclosure agreements, parliamentary practice is that no information provided in a closed committee meeting can subsequently be disclosed, not even in a committee report.

On Wednesday, Gordhan seemed to have secured the in-camera meeting, but not the non-disclosure agreements he had requested in his 20 February letter to the committee, which was seen by Daily Maverick.

“... [I]n order to abide with the confidentiality undertakings that the department made with third parties, I request that the members of the portfolio committee sign non-disclosure agreements,” Gordhan’s letter read.

Two days later, public enterprises committee chairperson Khaya Magaxa responded to Gordhan, saying: “The committee’s acquiescence to an in-camera meeting with you should not be read as an exaltation of secrecy above accountability, particularly where public funds are involved. The committee can not be expected to keep quiet and walk away where there is evidence of malfeasance in the transaction under review…”

Daily Maverick has confirmed that the public enterprises committee, as required by parliamentary practice, applied to hold Wednesday’s meeting about claims of SAA transaction irregularities behind closed doors. That application, alongside permission to sit while the House was in session, was approved. The Z-list, or record of a day’s committee meetings, should have been amended to reflect “closed meeting”. This was not done.

Confusion over Wednesday’s meeting

Crucially, while committee meetings may with institutional permission be held behind closed doors – it happens once in a blue moon – all information from these sessions may not be publicly shared. Effectively, this means details learnt in closed meetings may not even appear in a committee report.

Section 59 of the Constitution requires parliamentary proceedings to be conducted in “an open manner” and in public. “The National Assembly may not exclude the public, including the media, from a sitting of a committee unless it is reasonable and justifiable to do so in an open and democratic society.”

Confusion over the status of Wednesday’s meeting continues with MPs insisting the committee as a whole did not take a decision to close the meeting as rules require — even though media and the public were asked to leave Wednesday’s meeting. Read more here.

This may impact on the committee’s future proceedings. If Wednesday’s committee meeting was indeed closed, the information shared can’t be disclosed.

But after Wednesday’s lengthy, and by all accounts terse to-ing and fro-ing, MPs were each given a folder containing SAA documents, including the shareholder agreement, the national airliner’s valuation and the list of entities shortlisted for the sale. At the end, all folders had to be returned to Public Enterprises, except one left for Parliament’s legal services to study and to advise MPs next week.

DA MP Mimmy Gondwe told Daily Maverick they were able to “peruse” the documents, adding: “We did not get into the merits.”

United Democratic Movement (UDM) Chief Whip Nqabayomzi Kwankwa said: “We held our ground. We made sure we got the documentation. We were able to peruse them.”

Once parliamentary legal advisers brief the committee next week, Kwankwa added, “there is an expectation of MPs to get the documents again”.

Magaxa did not respond to requests for comment on Wednesday and Thursday.

On Thursday, 29 February, the public enterprises department issued a statement defending Gordhan’s secrecy.

“The transaction is at a sensitive stage,” the department said. “The DPE [Department of Public Enterprises] has previously undertaken to endeavour to transparently disclose all documents and information related to this transaction once it has been concluded. It is important for government to comply with the undertakings it makes in its efforts to leverage private investment, as well as maintain the integrity of its processes.”

In its usual finger-wagging and scornful tone, the department added: “The DPE is aware that the country is in electioneering season where distortions, lies and outright propaganda abound in a competition for votes. The DPE will not allow anyone to besmirch its work, and falsely imply any intent by the department to not be transparent about any issue involving public trust.”

Auditor-General also in the dark about SAA sale

Even the Auditor-General’s office is none the wiser about the ongoing privatisation of SAA. In a 22-page report of SAA’s financial and governance affairs, the Auditor-General said it asked Gordhan and his department to conduct an independent valuation of SAA and its assets and determine whether the purchase price offered by Takatso was fair.

The department has completed the valuation of SAA but has not been forthcoming with information to the Auditor-General, which was “waiting for access to the revised valuation report”.

“[The] department has recently express [sic] discomfort in sharing [the] revised report with AGSA [Auditor-General South Africa]. However, [the department] has an open window for viewing it.”

The Auditor-General’s report also shows that SAA remains in a financial mess. From 1 April 2018 to 3 April 2023, the government has thrown R38.1-billion at SAA, of which R27.6-billion was paid to the airline after it entered business rescue in December 2019. Over this period, SAA racked up losses of R28.9-billion, four sets of the airline’s financial statements going back to 2018 have shown.

Read more in Daily Maverick: SAA’s historical mess of financial losses, broken airline operations finally revealed

The Auditor-General has painted a picture of SAA still depending on future bailouts from the government. The government will be on the hook for more bailouts because Takatso wants to take over an SAA that does not carry historical debt. From disclosures at the Competition Tribunal and previous Daily Maverick interviews with Takatso, SAA still carries a historical debt of at least R1.5-billion, which the government has to settle before the deal can be finalised.

Round two of the stand-off between Gordhan and the parliamentary public enterprises committee is set to unfold on 6 March.

A decision must be made on the next steps in the committee’s probe into irregularities in the June 2021 SAA 51% sale as claimed by ex-director-general Kgathatso Tlhakudi’s protected whistleblower disclosure to Parliament. Rule 167 allows a committee to “summon any person to appear before it to give evidence before it... or to produce documents”. DM

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Non-disclosure request

Confusion over Wednesday’s meeting

Auditor-General also in the dark about SAA sale