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Cape Town - The basics of good corporate governance are formed by a company's reputation and SAA's is basically "shot", Professor Matthew Lester, an expert who was part of the Davis Tax Committee, told Fin24.
"We have now had two ministers of finance in a battle about SAA. There are a lot of allegations going around. Whatever the allegations are, they are still only mere allegations. However, where there are allegations of this magnitude, it is up to the board to allay suspicions and take action to restore the confidence of the public in the airline and so far I do not think they have done it," said Lester.
"Basically, SAA's reputation is shot. Everyone is still in the dark as to what the issue is at SAA. The crux of the matter is what the airline will do to restore its reputation."
He added that it certainly is always possible to mend a company's reputation, even it is highly toxic - as he considers SAA's to be like at the moment.
"But you have to take concrete measures to restore it. And those measures are for the board to decide. If the directors cannot restore the reputation, the board has to do something," said Lester.
"The board should be answering these questions to the public. Everybody is in the dark and there is rumour-mongering everywhere. That is for the board to sort out."
More warnings
The much-delayed tabling of South African Airways' (SAA's) annual financial statements has now dragged on for an unacceptably long time and all concerned must urgently get the matter resolved, Parliament's Standing Committee on Finance said on Wednesday.
The committee asked Treasury to ensure that SAA’s 2014/15 annual report and annual financial statements are tabled in Parliament by the September 15 deadline. It also urged the airline to appoint a new board, and for management to be strengthened considerably as soon as possible.
Treasury - which is SAA's shareholder representative - told Fin24 on Wednesday that the airline's financial position requires extensive and careful consideration, because of the potential implication for the South African as well as for country's sovereign standing.
Finance Minister Pravin Gordhan indicated last week that a “good announcement” regarding SAA could be expected “shortly”.
He also said SAA requires a whole new board an an experienced management team. He added, however, that a new board and management team could include existing members as well as “new blood”.
“We must do political homework to get credible people on board. People with the right skills balance can take the airline’s development upward," he said.
The minister of finance has the power to appoint and remove board members since executive authority over SAA was transferred to the Treasury in December 2014.
READ: SAA rejects allegations of business rescue, liquidation
Cash-strapped SAA published a funding request over the weekend, hoping to raise R16bn from banking and non-banking financial institutions to meet its working and capital expenditure requirement, as well as consolidate its current debt portfolio.
Government has given SAA a total of about R14.4bn in guarantees to date.
SAA is still rejecting allegations that it should be placed under business rescue or even liquidation. SAA spokesperson Tlali Tlali pointed out that a going concern government guarantee is needed to finalise the annual financial statements and that there are extensive, ongoing engagements with Treasury to try to find a solution and provide certainty.
ALSO READ: BEE clause in SAA funding notice raises red flag
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