Nhlanhla Nene questioned over lawfulness of SAA ‘commitment letter’
‘The contents of this letter remain a mystery except that the SAA CEO informed the media that it included a Treasury commitment to inject capital into SAA’
Finance Minister Nhlanhla Nene has been questioned about the legality of a "commitment letter" provided to South African Airways (SAA) that enabled it to raise R5bn in bridging finance from banks. The banks 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 Tuesday by DA deputy finance spokesman Alf Lees. Business Day recently reported that SAA needs R21.6bn 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...
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