SAA investigations top R21m in 4-year period

Cape Town – Between the period 2013 and 2016 SA Airways have spent more than R21m on forensic and internal investigations, Finance Minister Pravin Gordhan said in a parliamentary response. 

Alf Lees, the DA’s spokesperson on finance, asked Gordhan to supply full details of the entities conducting altogether 16 investigations into SAA. 

READ: Call for competition probe into SAA, Mango 'collusion' 

The investigations are among other things into the irregular awarding of tenders, the leasing back of aircrafts, procurement transactions and allegations by whistle-blowers. 

Some of the investigations include: 

- a forensic investigation into “various allegations” at SAA at a total cost of R11.7m 

- an investigation into a payment for baggage claims amounting to R1.2m

- an investigation into the scrapping and sale of redundant material and procurement transactions, totalling R1.9m

- an investigation into the reasons for SAA’s financial losses and the national carrier’s dependence on shareholder “bailouts”

- an investigation into the commercial and operational association between SAA and Mango resulting in a cost of R1.8m and

- an investigation into the procurement and contract management at SAA and its subsidiaries costing R856 107. 

In September last year, Gordhan approved a R5bn for SAA on condition that the airline implement more aggressive cost-cutting initiatives in areas of fuel; aircraft ownership; labour; maintenance, repair and overhaul and procurement. 

The airline, however, will need further cash injections in the current financial year, Gordhan said a ahead of his 2017 Budget Speech. The exact amount would be determined by October and it will have to be in instalments over time.

Treasury said it would have to make sure that the “amount is financed in a deficit neutral way”.

READ: SAA set to receive another cash injection

Ratings agency Moody’s has recently flagged government’s debt guarantees to state-owned entities relative to GDP as a risk to the country’s fiscal position. 

In the 2017 Budget government guarantee exposure rose from R255.8bn at the end of February last year to R308.3bn.

The government has issued total guarantees of almost R478bn, so state guarantee exposure could rise by up to another R170bn.

SAA upped its use of guarantees by R3.5bn, Eskom increased its state guarantee exposure by R43.6bn, Sanral’s use increased by R2.9bn and the SA Post Office’s (Sapo’s) use climbed by R2.6bn. 

During a parliamentary question and answer session recently, Deputy President Cyril Ramaphosa told MPs in the National Assembly that South Africans should wish the SAA board the “greatest of luck” as they are operating in a very difficult industry which is dependent on a number of variables, such as fuel costs.