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Cape Town – South African Airways (SAA) should cancel the BnP Capital deal and not simply put it on ice, according to the Organisation Undoing Tax Abuse (Outa) on Monday.
BACKGROUND: Outa unveils shocking facts about SAA contractor
SAA said on Sunday it had put on hold a deal to restructure R15bn of debt after questions were raised about the awarding of the work.
The board of SAA went against the advice of its own treasury by agreeing to pay boutique financier BnP Capital a R256m success fee to advise the airline on debt restructuring and fund raising without putting the contract out to tender.
SAA spokesperson Tlali Tlali said the contract was awarded without tender due to urgent loan repayments due at the end of June, but denied that the fee was set at R256m.
"We have given BnP Capital an opportunity to respond to matters we raised with them and expect them to revert during the course of next week. Until we have received a response from them and have considered same, contracting between the parties will be stayed," Tlali said.
'Outa requires the deal to be cancelled, not to be put on ice'
SAA was placed on extended terms by Outa’s lawyers where they had until Monday to provide an undertaking not to continue with the BnP arrangement, failing which legal action will ensue, Outa explained.
“Outa requires the deal to be cancelled, not to be put on ice,” Outa said. “Furthermore, we have requested National Treasury to put BnP Capital on their 'restricted suppliers' list for failing to disclose the suspension of their FSB license, which will bar all government institutions from doing business with BnP Capital.
“Our urgent application to interdict the contract is still ready to be launched if need be,” said Ivan Herselman, Outa director of legal affairs.
“SAA cannot simply put the deal 'on ice' as we maintain their appointment is completely unlawful, even if BnP manages to get the suspension of their FSB licence lifted.
“Therefore, we still require an undertaking in writing from SAA or their lawyers that they will not proceed with the transaction at all."
R14.4bn worth of guarantees
SAA has been sustained by state guarantees of around R14.4bn and has asked for an additional R5bn from the Treasury.
Finance Minister Pravin Gordhan last week asked parliament to postpone the release of SAA's 2015 earnings report until September, the fourth such request as the Treasury mulls whether to extend more guarantees to the company.
The carrier has been marred by controversy and financial mismanagement for years and has been singled out by ratings agencies among other state companies as a risk to the country's investment grade status.
Outa on Monday requested National Treasury to place BnP Capital on its “restricted suppliers” database.
“Outa will also request the FSB to revoke their license for continuing to attempt to transact with SAA, after their license had been suspended,” Herselman said.
Outa wants SAA board brought to book
“The medium to long term strategy is still to bring the SAA board to book for constant breaches of their fiduciary duties over a protracted period," said Herselman.
“The current SAA board and its chairperson should resign, or be removed by the minister or a court order, as we believe they are not fit for office and positions they currently occupy,” Herselman said.
Outa said it will keep a close watch on these transactions at SAA.
“Even if the BnP Capital deal is halted, we would not like to see it replaced with another unlawful or wasteful expenditure decision,” it said.
“This airline does not exist for the enrichment of individuals or companies and all transactions should be conducted at the lowest cost or best outcome for the airline and thereby, the South African public.”
