DPE insists on DG’s involvement in SAA transaction

The Department of Public Enterprises (DPE) insists that suspended Director-General Kgathatso Tlhakudi, was involved in the selection process of a strategic equity partner (SEP) for South African Airways (SAA).

This follows reports that the transaction was carried out without Treasury’s involvement.

“The Director-General was involved in the process. Only the sale and purchase agreement was signed by the acting DG on 22 February 2022 as the DG was on sick leave, but he was privy to the sale and purchase agreement and its contents or terms and conditions,” the department said in a statement on Monday, emphasising Tlhakudi’s involvement and condemning “deliberate misinformation” around the transaction.

Explaining the process to of acquiring SEPs for SAA, the DPE says:

• RMB was appointed as transaction advisor and undertook the first phase of the evaluation process (initial evaluations of expressions of interest);
• In August 2020, Harith General Partners made a formal expression of interest with the DPE to become a bidder and was contacted by RMB to formally join the process;
• The DPE conducted the second and third processes (selecting shortlisted parties to enter into strategic discussions on the potential fit and commencement of due diligence, negotiation and signing of transaction agreements). It entered into a non-disclosure agreement (NDA) prohibiting disclosure of offer details made by interested parties. (It did state however that all interested parties made it clear that government was responsible for all historic costs); and
• Harith General Partners was willing to provide the funding for the new airline and partnered with Global Aviation to form Takatso Consortium. 

The DPE says the DG was intimately involved in the process, engaging potential SEPs when the NDA was signed and communicating the outcome of the expression interest to the parties. Further, Tlhakudi had signed Harith General Partners’ letter of acceptance as the preferred bidder for SAA.

“The DG was actively involved in engaging with local and international parties wishing to invest in SAA. He was intimately involved in the SAA transaction and further engaged with the media in the process.“

The department says it is seeking legal advice on action to be taken on the leaking of official information and subsequent misinformation relating to the process.

Tlhakudi was reportedly suspended pending the completion of a disciplinary process, after a complaint was laid against him at the Public Service Commission.

Nondumiso Lehutso is a Moneyweb intern.