Govt to oppose lawsuit over SAA sale
Updated | By Cliff Shiko
The Department of Public Enterprises has confirmed that it will oppose a Western Cape High Court application brought by a local investment firm.
The ministry’s spokesperson Richard Mantu said Minister Pravin Gordhan is studying court papers and is set to oppose the application.
Bloomberg is reporting that government and the South African Airways (SAA) are being sued by Toto Investment Holdings, which wants the sale of a majority stake in the carrier scrapped and re-run.
It believes the transaction lacked transparency.
The acquisition of 51% of SAA by the Takatso Consortium -- made up of a local jet-leasing company and a private-equity firm -- for just $3 was “unlawful and constitutionally invalid,” according to documents filed at the High Court in Cape Town by Toto Investment Holdings.
The transaction was “shrouded in secrecy” and “not fair, equitable, competitive or cost-effective,” according to the filing by Toto founder Bongani Gigaba, who says his firm was unfairly excluded from the deal.
“Toto was a direct victim of the unlawful and secretive process,” he claims.
The filing is the first legal action against the sale, which has drawn criticism from the National Treasury, opposition parties, and media in part due to the lack of proceeds for the taxpayer. Yet the airline had been a drain on government finances for a decade, receiving numerous state bailouts before entering bankruptcy proceedings in 2019.
After a substantial reorganization that saw staff numbers cut by almost 80%, Gordhan initiated a sale process that eventually led to the agreement with Takatso, made up of Global Airways, which owns domestic airline Lift, and private-equity firm Harith General Partners.
Toto, in which Gigaba is the sole shareholder, filed an expression of interest in SAA that was rejected within days, according to the documents. The government frequently said it had several interested buyers in the months leading up to the announcement of the Takatso sale but has never identified them.
Toto is part of a consortium that controls a 24% stake in Richards Bay Minerals, majority-owned by mining giant Rio Tinto Plc.
The investment is worth as much as R15 billion, Toto said in the court documents.
(Additional reporting by Bloomberg)
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