SOUTH AFRICA: Some Sanity Prevails At South Africa Airways

The national carrier pulled the plug on the controversial R256 million deal with unlicensed boutique financier BnP Capital. The abandonment of the deal, which was heavily pursued by SAA’s chairwomen and Zuma confidant Dudu Myeni, comes after a massive outcry over the airline’s failure to follow proper tender procedures.

The board of SAA allegedly went against the advice of its own treasury by agreeing to pay BnP Capital a R256 million success fee to advise the airline on R15 billion debt restructuring and fundraising without putting the contract out to tender.

The Organisation Undoing Tax Abuse (Outa) has been against the deal calling for it to be cancelled. There were even threats of taking SAA to court.

Earlier this week SAA said in a statement: “South African Airways has taken a decision to terminate the services of BnP Capital as a financial services provider to the airline… The effect of this decision means that SAA has terminated both its appointment of BnP Capital as transaction adviser and the appointment to source funds on behalf of the airline.”

SAA said the decision was communicated to BnP Capital on Wednesday.

The airline said it had initially taken a decision to arrange debt consolidation as part of management decisions taken to introduce interventions aimed at managing the airline’s revenue and/or financial resources more efficiently.

It denied that it had breached any procurement procedures, saying that management followed a process provided for in the Supply Chain Management (SCM) Policy, to deviate from open tender and go on a confinement process.

“The process, which is also recognised by National Treasury as one of the justified methods under specified circumstances, was duly approved,” SAA said.

One of the claims against BnP Capital was that it had failed to disclose the suspension of its licence by the Financial Services Board (FSB).

This came after Webber Wentzel, the legal representatives appointed by Outa, contacted SAA raising concerns on a range of issues including the licence standing of BnP Capital.

SAA on Thursday said it contacted BnP Capital to enquire specifically about claims that had been made involving the FSB licence, and BnP Capital duly responded to enquiries.

“After considering all relevant information received from BnP Capital, SAA management took a decision to terminate all BnP services to the airline as a prospective financial service provider in relation to SAA’s initiative on debt consolidation,” SAA said.

“No payments had been made to BNP Capital. The decision to terminate the service was arrived at after a review of the award to BnP Capital.”