STANDING COMMITTEE ON FINANCE
State legal opinion: SAA bail-out in auditor-general’s hands
Parliament’s standing committee on finance says the auditor-general should determine whether Finance Minister Malusi Gigaba’s use of emergency provisions in the Public Finance Management Act to bail out South African Airways (SAA) was irregular, after it obtained a legal opinion calling into question his actions.
Gigaba used these provisions to raid the National Revenue Fund to bail out SAA in June and again in September.
The opinion, drafted by Parliament’s senior legal adviser, Frank Jenkins, said his actions might have been unlawful because section 16 of the act was intended to be used in circumstances in which good financial planning and management could not avert the need for exceptional or unusual expenditure. It appeared the expenditure was foreseeable and therefore not unusual, said Jenkins.
"Contrary to what is being claimed by the DA, the legal opinion does not conclude that the minister’s decision was definitely unlawful. It says it may be so, but it is for the office of the auditor-general to decide on this. We will now refer the legal opinion to the appropriations committee to process further," said the committee’s chairman, Yunus Carrim.
"The majority in the committee believes that the allocation to SAA could have been foreseen and should have been done through an appropriation bill but accept that it was necessary to rescue SAA, otherwise there would have been a call on the total R16.4bn guarantee exposure," he said.
The committee also questioned Gigaba’s rationale for requesting a forensic audit into the Public Investment Corporation’s (PIC’s) investment contracts, saying it was not clear why he wanted the probe.
"If he insists he wants such an investigation, he will need to show that it is in the interests of the Government Employees Pension Fund and the public and provide rationale for and the terms of reference for the investigation," said Carrim.
The PIC board is due to meet on Thursday to discuss its response to Gigaba’s letter.