State capture: how BNP Capital stood to make R227m out of SAA
The director of a boutique financier which scored a multimillion-rand deal with SAA in 2016 has admitted that his company did not properly disclose its relationship with senior members of the airline before it landed the contract.
The company also failed to provide a pricing schedule as per the contract requirements.
Daniel Mahlangu, whose company, BNP Capital, has for the past few weeks found itself in the state capture inquiry’s spotlight, testified before the commission on Thursday.
Mahlangu said all his company’s dealings with SAA were done through Masotsha Mngadi, who is understood to be former SAA board chairperson Dudu Myeni’s personal adviser.
BNP’s contract with SAA was for transaction advisory services relating to the airline’s sourcing of R15bn it needed for a capital restructuring project. However, BNP’s mandate was later extended, providing that the company also source the funds for SAA.
According to former SAA treasurer Cynthia Stimpel, this extension was done without following proper processes.
Describing how BNP Capital entered into the deal with SAA, Mahlangu said he was approached by Mngadi, who ran a company called Inline Trading, while also working at Nedbank. Mngadi is said to have proposed a partnership, where the two companies would enter a joint venture to apply for the transaction advisory tender.
Mahlangu understood that his company was chosen because it had the corresponding BEE certification and because of its experience in the financial advisory sector.
Mahlangu told the commission that he had no interaction with SAA in the lead-up to the application for the contract and that everything was done via Mngadi. Even after BNP was awarded the contract in April 2016, Mngadi allegedly remained the point of contact with SAA.
A month later, another letter of award was issued to the BNP consortium, appointing it to source the R15bn capital.
The commission’s evidence leader, advocate Kate Hofmeyr, showed that in the tender documents there was no information on Inline Trading’s staff and their credentials.
“That is true,” Mahlangu said.
Hofmeyr also showed that although BNP Capital signed that it did not know or have any relations with anyone at SAA on the tender documents, Mngadi’s relationship with Myeni and other staff at the airline put them in a conflict of interest.
“In our discussion he didn’t indicate to us whether he has any relationships, any family friend or other, who was involved in the adjudication of this tender ... In hindsight it was a question that should have been asked,” Mahlangu said in response.
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He also agreed, after being pushed by Hofmeyr, that BNP did not submit a pricing schedule as per the requirements of the tender; but instead submitted its standard rates, with the omission of some details.
BNP stood to earn R2.6m for its advisory services and R225m to arrange the R15bn capital SAA needed. But the deal was scrapped after media reports and subsequent legal action taken by civil organisation Outa.
The commission will continue to hear aviation-related evidence on Friday.