Why the UDM is taking Gordhan to court over SAA deal

On Tuesday, the United Democratic Movement (UDM) instructed its legal representatives to send lawyers’ letters to two cabinet ministers and the Public Investment Corporation (PIC) regarding the proposed deal to allow the Takatso Consortium to acquire a 51% stake in South African Airways (SAA).

Speaking to Moneyweb on Tuesday, UDM leader General Bantu Holomisa said the UDM had just formally instructed its lawyers to write to Finance Minister Tito Mboweni, Public Enterprises Minister Pravin Gordhan and the PIC demanding to see the proposed shareholder agreement, valuation report, partnership agreement and management agreement for the proposed deal.

“We have also asked the PIC and the minister of finance how the proposed agreement tallies with the implementation of the findings of the Mpati Commission of Inquiry into the affairs of the PIC.

“We are particularly interested in how Harith [General] Partners gets fingered in the Mpati Report and then resurfaces as a potential stakeholder in SAA,” said Holomisa.

“We would like to know, from minister Gordhan in particular, why government would spend millions of rands on a commission and then reward some of those implicated in the findings with running SAA,” said Holomisa.

Earlier, the UDM said in a statement that the entire SAA deal is nebulous, and that it is unclear how government prioritised Harith as a partner after the negative things the Mpati Commission had to say about it.

The UDM has therefore decided to challenge Gordhan’s decision in court.

DA has ‘grave reservations’

The Democratic Alliance (DA) has also raised its objections to the proposed deal. According to DA MP Alf Lees, while Gordhan announced the deal with great fanfare 11 days ago, he failed to provide any real substance of what it would entail.

“There are a host of unanswered questions that must be dealt with in order to ensure that the proposed deal is not just another form of SAA bailout disguised as a deal via the PIC, or other development finance institutions, or yet another enrichment exercise for connected ANC cadres,” Lees maintained.

“Whilst the DA welcomed the fact that on the surface the state is finally apparently giving up control over SAA, we have grave reservations given the lack of transparency regarding the details of the process followed to identify a beneficiary for the 51% shareholding as well as the details of the memorandum of understanding or agreement negotiated but apparently not yet entered into with Takatso,” he added.

Constitutional obligation

The DA believes that in the interest of the constitutionally enshrined obligation for transparent governance and in terms of the rules of parliament that require that members of parliament be provided with information requested from the executive, Gordhan and Mboweni must provide all South Africans with full, detailed and unequivocal answers to a list of questions as well as to provide the full details of the information requested.

But Lees has reservations on whether this will be done.

“Unfortunately, experience has taught us that both ministers Gordhan and Mboweni have, on occasion, failed to give detailed or clear replies to requests for information.

“This is particularly true of minister Gordhan who after some 12 weeks has still not provided Parliament’s Standing Committee on Public Accounts [Scopa] with information on SAA that was requested during a Scopa meeting on 25 March 2021 and in writing on the same day immediately after the meeting.

“The DA has also written to President Cyril Ramaphosa and the Speaker of Parliament, Thandi Modise, to appeal that they use all the authority vested in them to guarantee that ministers Gordhan and Mboweni swiftly provide the information requested and to bring all South Africans into their confidence,” Lees said.

Listen to Ryk van Niekerk’s interview with SAA CEO-designate Gidon Novick (or read the transcript here):