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DA to stop SAA funding

Date: Jul 17, 2020

DA files urgent application to stop Tito Mboweni funding SAA rescue

The DA has filed an application to interdict finance minister Tito Mboweni from bailing out SAA.

The application was filed at the high court in Pretoria on Friday.

“Our application seeks to interdict the use of Section 16 of the Public Finance Management Act (PFMA), which gives finance minister Tito Mboweni 'emergency' powers to spend money not budgeted for in 'exceptional' and 'unforeseen' circumstances,” said DA shadow minister of finance Geordin Hill-Lewis.

In its application, which the opposition party has set down for hearing on Tuesday, it seeks to interdict Mboweni and the director-general of the National Treasury from appropriating or withdrawing, disbursing or transferring any funds relating to the business rescue plan for SAA.

The DA also seeks an order interdicting SAA and its two business rescue practitioners, Siviwe Dongwana and Les Matuson, from using any business rescue funds that have been transferred to SAA.

The application by the DA followed a letter written by the ministries of public enterprises and finance to the business rescue practitioners on Wednesday, in which they committed “to mobilise funding for the short, medium and long term requirements to create a national airline”.

Hill-Lewis said he asked Mboweni on Thursday to confirm in writing that he would not invoke Section 16 by releasing money for SAA's business rescue.

“He did not reply, so now we are approaching the court,” Hill-Lewis said. He said Mboweni has until 5pm on Sunday to file an answering affidavit.

“If Mboweni has already transferred funds to SAA, on the basis of his letter of support, the DA’s application seeks to interdict use of those funds pending the outcome of the court application.

“Conversely, if funds have not been disbursed, the DA seeks to interdict any disbursement,” Hill-Lewis said.

The DA said that in 2017, a legal opinion obtained by parliament with regards to a R3bn bailout that then finance minister Malusi Gigaba had extended to SAA, found that the use of Section 16 of the act was likely illegal.

In its founding affidavit, the DA said the business rescue plan proposed that the government “fund or raise funding for” a number of items, including capital injection (R2.8bn), voluntary severance packages for SAA employees (R2.2bn), and payment of lenders (R16.4bn).

Hill-Lewis said to the best of his knowledge, the government was sourcing or planning to source the necessary funds from the National Revenue Fund pursuant to an authorisation by Mboweni under Section 16 of the PFMA.

He said the section allowed for the finance minister to authorise the use of funds from the National Revenue Fund in emergency situations. He said the purpose was to provide stopgap funding for emergency or unforeseen expenditure that has not been provided for during the ordinary budgetary process.

“Using this section of the PFMA to fund SAA in the present circumstances for the purposes of facilitating its business rescue is unlawful.

“The government's funding obligations under SAA's business rescue plan do not amount to 'expenditure of an exceptional nature' which is currently not provided for and which cannot, without serious prejudice to the public interest, be postponed to a future parliamentary appropriation of funds'," Lewis-Hill said.

Cred: live

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