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Zuma/Gordhan rift over SAA is false - Presidency

Cape Town – President Jacob Zuma’s rift with Finance Minister Pravin Gordhan over a new board for South African Airways (SAA) is false, the Presidency said on Sunday, after a report claimed that Hong Kong is about to ground all flights in the next two weeks due to the crisis at SAA.

The allegation being reported is that Gordhan is withholding a R5bn Treasury guarantee - that will allow SAA to table its annual financial statements - until a new board that excludes controversial chairperson Dudu Myeni is approved by Zuma.

The Presidency said on Sunday that the “rumours and gossip published in today's Sunday Times on the matter are false and regrettably the Presidency was not asked for comment by the newspaper”.

“The Presidency and the National Treasury are working well together on this issue and are seeking solutions together,” it said.

The newspaper reported that Hong Kong’s registrar of companies “has given the airline until September 6 to submit its annual financial statements or face possible deregistration, which would mean SAA would no longer be able to fly there”.  

“Hong Kong is one of our international routes that is profitable and we will suffer a huge loss in revenue,” a source told the Sunday Times. “The International Air Transport Association will also announce this to other airlines, which means that every other company doing business with us will want to work on a cash-upfront basis.”

On 14 July, Gordhan requested Parliament to grant an extension to 15 September for the tabling of the annual financial statements.

“SAA’s annual financial statement cannot be finalised on a going concern basis until a decision has been taken on the guarantee application,” Treasury said on 14 July. “Given the potential implication for the sovereign and for the economy the matter has required extensive and careful consideration.”

The Democratic Alliance challenged this extension, saying there is no provision made in the Public Finance Management Act where Parliament is given the authority to extend the deadline.

“SAA is currently in possession of exorbitant government guarantees, which represent a significant risk to the economy and the fiscus, and is asking for more,” Alf Lees, a DA MP and shadow finance deputy minister, said on 25 July.

“The long-overdue annual financial statements have been outstanding since 15 September 2015, that is 10 months,” said Lees. “Ten months that Parliament has not been able to exercise its oversight role, 10 months of no accountability at SAA and 10 months of open defiance of directives issued by the National Treasury.

“The Minister of Finance has not been able to implement the turnaround plan that he announced in February 2016. This stalemate between Minister Gordhan and SAA board chairperson Dudu Myeni is rapidly driving SAA to total collapse and simply can’t be allowed to happen to the national carrier,” said Lees.  

The SAA board issue is on cabinet’s lekgotla agenda, two senior government sources told the Sunday Times.

“The finance minister and the president can’t agree on the candidates,” one source said. “This is getting urgent, because without a board being appointed we cannot realise the guarantee,” another source told the paper.

Minister Jeff Radebe will update the media at 10:00 on Monday regarding the outcome of the cabinet meeting.

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