Nhlanhla Nene under fire for helping SAA raise R5bn

Finance minister Nhlanhla Nene has been questioned about the legality of a "commitment letter" provided to South African Airways (SAA)‚ which enabled it to raise R5 billion in bridging finance from banks which were otherwise reluctant to sink further funds into the loss-making state-owned airline despite government guarantees.

Questions were put to Nene during the budget vote debate on Treasury Tuesday by Democratic Alliance deputy finance spokesman Alf Lees.

Business Day recently reported that SAA needs R21.6 billion over the next three years to ensure its long-term sustainability.

Lees said the commitment letter seemed to be a "guarantee of the guarantees already given to SAA" by the state‚ which the banks apparently no longer regarded as sufficient. Banks apparently refused to lend any more money to SAA‚ even on the back of government guarantees.

"Was the “commitment letter” a scheme in order to avoid using section 16 of the PFMA (Public Finance Management Act) to pay SAA unbudgeted funding for the third time in 10 months? Was this “commitment letter” even lawful?" Lees asked the minister.

"The contents of this “commitment letter” remain a mystery except that the SAA CEO (Vuyani Janara) informed the media that the letter included a National Treasury commitment to inject capital into SAA. There is no provision to provide capital for SAA included in the budget we debate here today‚ so where is the funding for this capital injection to come from?"

Lees asked Nene about the contents of the commitment letter‚ whether he had signed it and whether it had been agreed to by cabinet.

He noted that over the last six years SAA had lost a "staggering" R21.4-billion.

- BusinessLIVE