Big payday for SAA business rescue practitioners

The business rescue process for South African Airways (SAA) has cost South African taxpayers a total of R169 million, according to a report by the Sunday Times.

According to documents seen by the publication, R169 million was paid to six consulting firms as part of the failed state airline’s business rescue process.

R22.2 million was reportedly paid to the business rescue practitioners, and R38 million was paid to PricewaterhouseCoopers Advisory Services for liquidation calculations, cash flow projections, and the development of a new sustainability model.

Business rescue practitioners Les Matuson and Siviwe Dongwana were paid R1.2 million and R1.7 million respectively in their personal capacities, the report stated.

Finance Minister Tito Mboweni announced during his medium-term budget speech on Wednesday 28 October that the government will allocate R10.5 billion to SAA to help it implement its business rescue plan.

This announcement drew sharp criticism from many commentators, including Sygnia CEO Magda Wierzycka, who said the government is using money which can be better spent elsewhere on trying to save something completely unsalvageable.

“The ANC just sacrificed the future of South African children and the security of its citizens to try yet again to save something completely unsalvageable,” said Wierzycka.

She said using tax money for education and police is far more sensible than trying to save a bankrupt airline.

DA shadow minister of finance Geordin Hill-Lewis echoed Wierzycka’s comments in a statement regarding Mboweni’s budget.

“The ANC government has chosen to cut essential services to the public, like education and policing, to fund another bailout of SAA,” said Hill-Lewis.

“This is an indefensible, immoral choice. It amounts to throwing South Africans under the plane to pay for SAA.”

“Don’t fly SAA”

Following this announcement, the Organisation Undoing Tax Abuse (Outa) has called on South African businesses and consumers to boycott South African Airways (SAA).

Outa CEO Wayne Duvenage noted that since 2007, SAA has cost the taxpayer more than R72 billion in bailouts – R54 billion in treasury grants and R19 million in government guarantees.

“This money could have been used instead to stimulate the economy by creating real and sustainable jobs,” he said.

Outa raised concerns regarding the need for the state to waste more funds on SAA, saying the latest R10.5-billion injection will not be the last.

“The current aviation industry climate and economic environment is the ideal time for the state to close down this once-successful airline that was ruined through mismanagement and corruption,” said Duvenage.

Outa said keeping unjustifiable SOEs afloat is a waste of the state’s scarce resources and SAA is now nothing more than a vanity project.

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Big payday for SAA business rescue practitioners