SA Express to fight service provider’s liquidation application
Mothebe Shuttle Services is seeking R1.2m from state-owned airline for unpaid services
SA Express is fending off a liquidation application by a service provider who is seeking R1.2m from the ailing state-owned airline for unpaid services.
Mothebe Shuttle Services has turned to the high court in Johannesburg to recover the money after terminating its contract with SA Express earlier in 2019. The contract was to provide transport services to SA Express staff between Cape Town, Johannesburg, Port Elizabeth and East London.
The airline has called the liquidation application an “abuse of the court process” and has asked the court to set it aside as the contract with Mothebe is one of several under investigation for irregular and/or fruitless and wasteful expenditure.
SA Express filed its opposing papers, which Business Day has seen, late on Friday night.
This comes amid the airline’s debt woes. It is among a list of state-owned companies who have requested a bailout. In September the Treasury approved a R300m lifeline, on top of the R1.2bn it got in the February budget.
In August, Airports Company SA grounded SA Express but later lifted this after partial payment of its R71m debt. The government has also proposed merging SA Express with battling airline SA Airways (SAA) and low-cost carrier Mango. Finance minister Tito Mboweni previously refused to give SA Express the guarantee, believing it should be merged with SAA and both sold.
Responding to the Mothebe liquidation, SA Express legal adviser Siphiwe Madondo says in his affidavit that the airline, in the course of ironing out the dispute over unpaid services, discovered that only R289,855.42 was owed to Mothebe and requested to repay this in instalments. This was allegedly rejected by Mothebe.
Audit reveals irregularities
A subsequent investigation by SA Express’s internal auditors into the contract had also revealed irregularities.
“The respondent’s investigations revealed a variance between the scope of work on the business case submitted and the scope of work as per the tender documentation,” Madondo said.
This was allegedly done by the former divisional manager for procurement without the necessary mandate from SA Express representatives.
The manager also failed to disclose her personal relationship with the sole shareholder and director of Mothebe.
The bid document submitted by Mothebe also did not comply with the pricing specifications in the tender document as the manager deliberately flouted procurement rules to ensure the tender was awarded to the shuttle service provider.
But Ian Small-Smith, the attorney for the shuttle company, said: “SA Express [is] grasping at the proverbial straws. [There was] no unlawful behaviour from my client. We invite SA Express to raise all the issues in court.”
The manager implicated in the tender irregularity was issued with a notice of suspension on June 8 2018 but resigned before her disciplinary hearing.
Madondo also argues that SA Express “cannot be deemed to be unable to pay its debts as there is no bona fide and valid letter of demand in terms of section 345 of the Companies Act before this court. Winding up will only serve the selfish, self-interest agenda of the applicant to enforce a disputed debt.”
In September an SA Express spokesperson said the contract was also among those reported as irregular contracts to the commission of inquiry into state capture.
The spokesperson said the contract was for R1.3m a year but the airline was charged R1.1m for four months from December 2017 to April 2018, translating to R3.3m annually, according to reports.
On Sunday, City Press also reported that law firm Matlala Von Metzinger served papers on SA Express for unpaid services.
SA Airlink is also expected to take legal action after an earlier attempt to reverse a decision by the International Air Service Council to award rights to SA Express to fly lucrative routes to Botswana, Angola and Zimbabwe in September. It says the rival does not have the capital to service the new routes. These routes are reportedly critical to SA Express’s turnaround strategy.
SA Express spokesperson Mpho Majatladi told Business Day the airline remained solvent.
She added that the airline was verifying work undertaken by the law firm and a meeting was being organised to review documentation.