SOUTH AFRICAN AIRWAYS CANCELS CONTROVERSIAL DEAL FOR DEBT RESTRUCTURING ADVICE

South African Airways (SAA) has called off its controversial 256 million Rand (about 17,76 million US dollars) deal with unlicensed boutique financier BnP Capital following an outcry over its failure to follow proper tender procedures.

The board of directors of the national flag carrier allegedly went against the advice of its own Treasury department by agreeing to pay BnP Capital a R256 million success fee to advise SAA on 15 billion Rand in debt restructuring and fundraising without putting the contract out to tender.

The Organization Undoing Tax Abuse (Outa) has been vehemently criticizing the deal and calling for it to be cancelled, even taking the airline to court. Under enormous public pressure, SAA caved in.

“South African Airways has taken a decision to terminate the services of BnP Capital as a financial services provider to the airline,” SAA said in a statement Thursday.

“The effect of this decision means that SAA has terminated both its appointment of BnP Capital as Transaction Advisor and the appointment to source funds on behalf of the airline.”

SAA said the decision was communicated to BnP Capital on Wednesday. The national carrier said it had initially taken a decision to arrange debt consolidation as part of management decisions taken to introduce interventions aimed at managing the airline’s revenue and/or financial resources more efficiently.

The airline denied that it had breached any procurement procedures, saying that management followed a process provided for in the Supply Chain Management (SCM) Policy, to deviate from open tender and go on a confinement process.

“The process, which is also recognized by (the South African) National Treasury as one of the justified methods under specified circumstances, was duly approved,” SAA said.

One of the claims against BnP Capital was that it had failed to disclose the suspension of its licence by the Financial Services Board (FSB). This came after Webber Wentzel, the legal representatives appointed by Outa, contacted SAA raising concerns on a range of issues including the licence standing of BnP Capital.

SAA on Thursday said it contacted BnP Capital to enquire specifically about claims that had been made involving the FSB licence and BnP Capital duly responded to enquiries.

“After considering all relevant information received from BnP Capital, SAA management took a decision to terminate all BnP services to the airline as a prospective financial service provider in relation to SAA’s initiative on debt consolidation,” SAA said.

“No payment had been made to BNP Capital. The decision to terminate the service was arrived at after a review of the award to BnP Capital.”

SAA went on to warn its employees about leaking information to the media. –

Source: NAM NEWS NETWORK