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Third of SAA contracts deemed 'most problematic' - reports

Jul 31 2017 18:54
Carin Smith

Cape Town - The DA said on Monday that it has now received some of the SAA investigation reports it had been calling for for the last eight months.

According to Alf Lees, DA shadow deputy minister of finance, the reports - which go well over 1 000 pages - could possibly still be incomplete. Already in May Lees said that the DA had tried for six months at that time to ensure that forensic investigation reports into SAA are tabled in Parliament.

"The DA will be going through them with a fine tooth comb, but a preliminary look shows that a full third of SAA contracts, amounting to R5.7bn, may have been irregular," Lees said in a statement.

"A preliminary look at a sample size of 38 contracts investigated by EY, shows 32% of SAA's contracts were in the category deemed most problematic. It is highly likely that this amount may be much higher if all contracts are considered and just goes to show how poorly the airline has been managed."

READ: DA wants Treasury to reveal 'damning' findings against Deputy FinMin

In March SAA said it has revised its budgeted loss forecast for 2016/17 to R3.5bn from an earlier estimate of R1.7bn.

Early in July Finance Minister Malusi Gigaba said the bailout of SAA is fiscally neutral, with no effect on the fiscal framework. He responded to a question about where the funding for the latest R2.2bn for SAA would come from.

This was after Treasury announced at the time that SAA received the bailout to help avoid a default of its loan from Standard Chartered Bank. An extensive report will be provided at the mini budget, said Gigaba, at which further details of the recapitalisation programme for the airline will also be announced.

In September last year the government granted SAA an additional going-concern guarantee of R4.7bn, increasing its total guarantees to R19.1bn.

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