Cyril Ramaphosa. Picture: GCIS
Cyril Ramaphosa. Picture: GCIS

Government had little choice but to bail out South African Airways (SAA) to avoid a catastrophe that would have affected the entire country, Deputy President Cyril Ramaphosa said on Thursday.

Speaking in Parliament during a question and answer session, Ramaphosa said there was nothing illegal about the use of the National Revenue Fund to assist the embattled national carrier.

According to a legal opinion drafted by Parliament’s senior legal adviser, Frank Jenkins, Finance Minister Malusi Gigaba’s use of emergency provisions in the Public Finance Management Act might have been unlawful because section 16 of the act was intended to be used in situations in which good financial planning and management could not prevent the need for exceptional or unusual expenditure.

It appeared the expenditure was foreseeable and therefore not unusual, the legal opinion stated.

SAA has been in the throes of a serious financial crisis in recent years which posed a serious risk to the fiscus because the airline holds R19bn in government guarantees.

Gigaba used section 16 to raid the National Revenue Fund to bail out SAA at the end of June and again at the end of September, when it received R3bn. The airline used part of the money to settle a R1.761bn debt obligation to Citibank and R1.2bn as working capital.

This week Parliament’s standing committee on finance said the auditor-general should determine whether Gigaba’s use of emergency provisions in the Public Finance Management Act to assist SAA was irregular.

Responding to a question from EFF chief Floyd Shivambu, Ramaphosa said the finance minister would give clarity on the use of section 16 at his medium-term budget policy statement next week.

"There was nothing in my view that was illegal … it was all done openly because we were trying to avoid something that could have had a much more catastrophic and bigger impact on the country as a whole … clearly utilisation of section 16 or the National Revenue Fund is a matter that will be addressed. Some view it as illegal, some view it as something of an exceptional nature, and in the end this matter will be properly clarified by the minister of finance," said Ramaphosa.

"SAA, being a state-owned enterprise, was facing serious difficulties and part of the money had to go towards serving debt because if that had not been done it would have resulted in the lenders of SAA all coming in a rush in a most catastrophic way to demand payment for the debt owed to them," he said.

Responding to a question from DA leader Mmusi Maimane, Ramaphosa ruled out the possibility of selling off SAA.

"You [Maimane] have been saying SAA should be sold, that is a policy platform on your party’s side … you are saying sell it off now because you are subsidising the rich at the expense of the poor … on this side [ANC government] this is a state resource and what we are committed to doing is to address the challenges in SAA," said Ramaphosa.

Ramaphosa also fielded question on state capture, the latest Cabinet reshuffle, and rumours that President Jacob Zuma wants to fire him using a dodgy intelligence report which alleges that the deputy president "is a spy of Western capitalists".

Ramaphosa said the frequent Cabinet reshuffles have added to the narrative of instability in government. He said that even if he was removed as deputy president he would "continue serving the people of South Africa in one shape and form or another."

"When I was appointed deputy president, I accepted it … it is the president’s prerogative to appoint or remove anyone to the executive.… The president will be exercising his prerogative, and he must have his own reasons why he decides to remove people," said Ramaphosa.

He said government should act decisively to root out corruption and the Gupta’s should welcome the state capture inquiry as it would offer them an opportunity to clear their names.

phakathib@businesslive.co.za

Please sign in or register to comment.