Parliament’s legal advisor Andile Tetyana has revealed that former director-general Kgathatso Tlhakudi allegedly led the evaluation committee in the deal between SAA and Takatso Consortium.
Tetyana told the Public Enterprises Committee in his briefing note this week that this is because Tlhakudi has been signing letters to the Strategic Equity Partners (SEPs) advising on the stage of the process.
Tetyana said this happened in 2021.
He said Tlhakudi led the committee after the Rand Merchant Bank (RMB), which was appointed as transaction advisor to help the Department of Public Enterprises (DPE) in identifying equity funders for SAA, requested to be released from the contract.
The DPE, according to the note, set up an evaluation committee of officials led by the Tlhakudi, which evaluated four potential SEPs - ASL/Blue Sky, Air-A/Lufhansa Consulting, Global and Harith.
Tetyana said the evaluation committee made use of criteria such as strategic fit, funding capacity, operating capacity, national interest, executability and certainty.
“We say the Department of Public Enterprises Committee was led by the former DG because in a memorandum dated April 7, 2021, addressed to the former DG by Ms Jacky Molisane, who was the deputy director general for financial assessment and investment services (FAIS), and whose purpose was to request the former DG to note the progress in concluding the strategic equity partner process and to sign letters to the SEPs advising on the stage of the process.
“It is evident that the former DG signed on the said memorandum on April 8 2021. We shall, for the purpose of convenience, refer to the said memorandum as the Molisane memorandum,” Tetyana said.
However, Tlhakudi said this was all whitewash, adding that he did not recall such a memorandum from Molisane. He also said that he would write to the Speaker of Parliament to point out the fraud.
“The legal advisor is a sharp oke. The report does not reflect that. The analysis is shoddy, unlike him. I have been trying to get to reach him without success. The Molisane memorandum is a forgery. I do not recall such a memorandum, and I think they got their dates wrong, as I recall being off with Covid-19 around that time, April 2021,” Tlhakudi said.
Tetyana was asked to go through the confidential documents to brief the committee, after the MPs wanted clarity on the status of the briefly seen confidential documents and how this would affect the probe into the maladministration claims made by Tlhakudi last year.
Tetyana said ASL/Blue Sky was disqualified as it did not have the funding. He said this is evident from the letter addressed by Tlhakudi to ASL/Blue Sky Consortium dated April 7 2021. He said this stated that “after due consideration, we regret to inform you that the DPE has decided not to progress with your expression of interest as your consortium cannot meet the funding requirements for the restructured SAA”.
Tetyana said AIR-A/Lufthansa Consulting was also disqualified as they had a prerequisite that Airports Company SA (ACSA) must be included in the transaction. Tetyana said this was evident from the letter addressed by the former DG to Air-A/Lufhnsa Consulting dated April 7 2021, in which he stated that “after due consideration, we regret to inform you that the DPE has decided not to progress with your expression of interest as the proposed transaction mandate is on SAA Group only and its requirements”.
He said Harith and Global proposals received a favourable consideration from the DPE’s evaluation committee, adding that this was evident from the letters addressed by Tlhakudi to both entities dated April 8, 2021, in which he stated that “after due consideration, we are pleased to inform you that DPE has progressed with your expression of interest in SAA Group to the next round being the due diligence phase.
“Furthermore, in terms of the Molisane memorandum which the former DG signed on April 8, 2021, mention is made of the fact that from the 4-shortlisted SEPs, Global and Harith have been shortlisted as they have indicated a significant airline interest. In addition, it is stated that an option that would need to be tested is for Global and Harith to combine as the two bidders can complement each other in the airline’s long-term strategy,” Tetyana said.
He added that subsequently, a proposal by Harith and Global which later became the Takatso Consortium, was made to the DPE.
“And we are informed that this offer satisfied the DPE’s requirements, including the ability to provide the funding needed to restart operations. Takatso was then appointed as the preferred SEP. The preferred SEP was thereafter approved by Cabinet.”
The committee, which received documents through subpoena after an extended face-off with Minister of Enterprises Pravin Gordhan, is scheduled to deliberate Tetyana’s advice next week and reach its determination on whether it would hold a partial or complete in-camera hearing with Gordhan.
Earlier on Wednesday, Gordhan told the portfolio committee’s chairperson Khaya Magaxa that disclosure of the documents affected the state’s privilege in conducting the transaction in the public interest.
He said documents such as an internal decision memorandum (appointment of RMB as a transaction advisor) and the internal decision on the update on SEP process for SAA and advising potential SEPs on the next stage.
He also said that the value contained in the Sale of Shares Agreement could be used by minorities to determine the amounts to be paid.
“Whilst I respect that the committee is well within its right to decide on the matter I wish to advise that should the committee decide that the documents should be released to the public without agreeing on a confidentiality regime and that the meeting considering the documents should be made public, we are advised that there is a risk of legal action being taken against the department and Parliament.”