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Ex-SAA official: Why I blew the whistle on BnP Capital contract

Jun 14 2019 06:00
Sibongile Khumalo

The appointment of BnP Capital to advise SAA on a R15bn debt restructuring loan formed part of evidence heard Thursday at the Commission of Inquiry into State Capture.

The national carrier had in 2015 approached the market for funding.

Evidence presented by Cynthia Stimpel, a former Group Treasurer at the airline, spoke of board interference in the process of acquiring the loan.

Stimpel said she had objected to SAA’s decision to award BnP Capital a contract to advise the airline on the debt consolidation loan, in a process which contributed to her suspension in July 2016 and being charged with misconduct.

She told the inquiry that hiring the firm amounted to letting it conduct work which had already been done by SAA’s Treasury Department.

The appointment of advisory service was driven by former acting Chief Financial Officer Phumeza Nhantsi, who made the recommendation to the board.

The process attracted numerous bidders, but BnP Capital was appointed. Stimpel testified that the contract included that they were to claim a success fee of between 2-3% of the funds sourced.

The rate was subsequently negotiated down to 1.5% in the event of a successful acquisition of the R15bn required.

The total liability of the fee would have cost SAA R225m, or R256m including VAT at 14%, according to Stimpel.

'Immediately upset'

She further stated that she was away on leave when the contract for BnP services was concluded, and her deputy signed on it, noting that the fee was "recommended on the basis that the company is under pressure to find funding".

She added that while away, she received a WhastApp message from her deputy informing her, "I was put under pressure to sign. I did sign the document."

The agreement was signed on May 11, 2016.

"I was immediately upset [...] how could he sign without me being there? He had promised that he wasn’t going to sign it, and that we were going to discuss it," she said.

Stimpel said she then informed her contacts at the National Treasury about the contract, stating her reservations about the high fees SAA would have to pay.

"All this time we have been delaying funding, why now must we take this client that we know nothing about, and why do we need to pay them this phenomenal fee?”

Stimpel will conclude her testimony on Friday. 

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