Tito Mboweni slapped with legal notice over ‘bailout billions’ for SAA

South African Airways (SAA) looks set to fight another day, even if it emerges from its latest omni-crisis with fewer workers and a brand new identity. The airline saw its creditors agree to adopt the Business Rescue Plan earlier this week – but that will require a R16 billion bailout from the government, and it’s a thorny issue that has put Tito Mboweni right in the firing line.

Tito Mboweni threatened with legal action

The finance minister is said to be considering using ’emergency funding’ to breathe life into the ailing SOE, which is set to shed about 2 500 jobs. Mboweni had previously stated that there would be no more money for SAA, and instead claimed a ‘new airline’ would be formed to replace the much-maligned national carrier.

However, should these plans get the go-ahead to secure the multi-billion rand bailout, any ‘rejuvenated airline’ would simply be SAA in all but name. That’s why the DA is livid with the government…

SAA to receive multi-billion rand bailout

Geordin Hill-Lewis, the Shadow Minister of Finance, confirmed that the party has served a legal notice to Mboweni, advising him against raiding the state’s emergency funds to essentially raise SAA from the dead. The DA representative says that Tito ‘would have to reconsider his position’ if he yields to the airline’s demands.

“We have served Finance Minister Tito Mboweni with legal notice of our intention to challenge any disbursement of public funds to SAA using his ’emergency’ powers under the Public Finance Management Act. It remains to be seen where they will find the money. Mboweni’s credibility and authority are on the line.”

“If Mboweni does not confirm that no public funds will be dispersed using section 16, we will approach the courts on an urgent basis to stop him from doing so. It would be totally unacceptable to inject yet another bailout into SAA using public money, or to offer government guarantees for new loans.”

“Even this commitment shows Minister Mboweni has backtracked on his previous stance not to countenance any further support for the bankrupt airline.  If he is forced by the ANC and Cabinet to disburse public funds to SAA again, then he will have to carefully reconsider his position in the government.”

Geordin Hill-Lewis

SAA, Tito Mboweni, and the threat of litigation

In the letter to Mboweni – which has been seen by thesouthafrican – legal firm Minde Schapiro and Smith comprehensively lay down their terms. They have given the minister until the close of business on Thursday to address three key issues, or face the prospect of litigation inside a courtroom:

“We request confirmation, by no later than 17:00 on Thursday, 16 July 2020, on the following issues:”

• “Whether you have authorised the use of funds from the National Revenue Fund for any purpose relating to SAA’s business rescue plan in terms of section 16 of the PFMA and if so, we request that you provide us with full details of your decision and all documents that served before you when you made your decision.“

• “Whether any authorised funds have been disbursed to SAA or any other person for the aforesaid purpose.“

• “Please indicate whether, in light of the urgency of the contemplated litigation, your office will accept service of court processes by email.“