South Africa's government and national airline are being sued by a little-known investment firm, which wants the sale of a majority stake in the carrier scrapped and re-run due to a lack of transparency.
This year's acquisition of 51% of South African Airways by the Takatso Consortium -- made up of a local jet-leasing company and a private-equity firm -- for just $3 (R51 at the time) 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."
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%, Public Enterprises Minister Pravin 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.
SAA then resumed flying to nine domestic and international destinations with a fleet of six Airbus SE jets.
The Department of Public Enterprises is studying the court papers and will oppose the application, a spokesperson said. SAA and Takatso referred questions to the DPE. The National Treasury declined to comment.
SAA was one of the key subjects of a lengthy South African judicial inquiry into state corruption under the presidency of Jacob Zuma, who was ousted by Cyril Ramaphosa in 2018. Under Chairwoman Dudu Myeni -- the head of Zuma's foundation -- the airline regressed into an "entity racked by corruption and fraud," according to findings released late Wednesday. Myeni and Zuma deny wrongdoing.
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. The investment is worth as much as 15 billion rand ($938 million), Toto said in the court documents.
Bloomberg