LETTER: R1.5bn paid to SAA may not be lawful
A responsible shareholder would have taken care of employees first and foremost and R1.5bn would have gone a long way in doing just that
The SAA business rescue practitioners allowed the department of public enterprises to interfere and ultimately undermine a process that should have been independent and clinical. It has become a downright mess.
I understand that the R1.5bn paid to SAA may not be lawful in terms of the parliamentary processes. There are, however, other complications: the conditions of the payment that it must be paid to SAA’s bankrupt subsidiaries faces at least two hurdles. The first is that the department’s condition is unlawful in terms of chapter 6 of the Companies Act (business rescue and compromise with creditors).
Secondly, it would also be unlawful in terms of section 45 (financial assistance) of the Companies Act, which places fairly onerous conditions on the board of directors and shareholders before a company may extend financial assistance to related parties, including a notification to trade unions before providing said assistance.
It is safe to say that SAA will fail all of these conditions spectacularly. What makes section 45 particularly interesting is that, if contravened, affected parties (creditors and employees) may hold the prescribed officers personally liable for losses suffered. Creditors are obviously watching this closely, as the practitioners have much to lose should they allow this ostensibly unlawful appropriation to fund SAA’s bankrupt subsidiaries.
Those subsidiaries should be placed in business rescue as opposed to hijacking the SAA rescue process.
This appropriation also puts paid to minister Pravin Gordhan’s feigned concern for SAA’s employees. A responsible shareholder would have taken care of employees first and foremost and R1.5bn would have gone a long way in doing just that. The department and Gordhan have undermined the purported SAA business rescue process and played cat and mouse with trade unions. The trade unions should no longer be fooled and claim what is rightfully theirs.
SAA employees only have to see where the SA Express employees find themselves — destitute, unpaid for most of 2020 and with no prospects. The department is playing petty politics with people’s livelihoods and that must stop.
JOIN THE DISCUSSION: Send us an e-mail with your comments. Letters of more than 300 words may be edited for length. Send your letter by e-mail to firstname.lastname@example.org. Anonymous correspondence will not be published. Writers should include a daytime phone number.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.