Mango’s future still up in the air
Public enterprises minister Pravin Gordhan says he won’t be bullied into making a decision on the future of Mango Airlines, ‘respectfully’ telling the courts that he won’t be cowed or submit to pressure.
The minister issued a statement on Tuesday (11 September) responding to a High Court ruling last week ordering him to make a decision on the sale of the domestic airline within 30 days.
The legal action came after a messy tussle with Mango’s business rescue practitioners.
Mango was placed in voluntary business rescue on 28 July 2021, with the BRPs appointed in August of that year.
As part of the business rescue plan, the government, through the Department of Public Enterprises (DPE), wanted to dispose of its shareholding in the group and have the airline snapped up by private investors.
Near the end of 2022, despite a back-and-forth between SAA and Mango’s BRP over the disposal details, the practitioners provided an optimistic update at the end of November, saying most of the issues were ironed out.
However, this tone changed significantly in January 2023, when the BRPs noted that a sudden turn of events had clouded the airline’s successful turnaround prospects.
In January, the DPE, National Treasury and SAA raised issues around the disposal and the deal. The Mango BRP said he was only informed of these concerns much later than they were originally raised but proceeded to provide the necessary information to the department and Gordhan.
According to the BRP, however, Gordhan rejected his response, and told him he didn’t have the authority to provide the information – delaying any approval of the deal until SAA provided the necessary information, putting the entire plan at risk.
Months later, progress has ground to a halt, forcing the BRPs to take the matter to court to force a response from Gordhan. On 6 September, the High Court ruled in favour of the BRPs, calling Gordhan’s hold-up irrational, giving him 30 days to make a decision.
Won’t be bullied
However, Gordhan says he respectfully disagrees with the court and will not accede to its order.
The minister argues that he has a legal obligation to protect the public interest and insists that he still does not have the information he has been requesting, so he cannot make an informed decision on Mango.
“My duty as the executive authority is to safeguard the interests of South Africans. At no point will I abandon my fiduciary responsibility to ensure that any decision that is taken regarding the future of Mango is consistent with the prescripts of the law and is in the best interest of the public,” he said.
“The issues around this case evolve around my request for further information from the business rescue practitioner. This is what the Public Finance Management Act (PFMA) requires in order to make a judiciously sound decision. I will not be bullied to act in a manner that will compromise the work of government in this regard,” he said.
The minister said he had requested the following information from the business rescue practitioner to enable him to make the decision on the PFMA Section 54 (2) application:
- Detailed business plan to assess the consortium’s viability.
- Comprehensive due diligence.
- Foreign ownership details to comply with South African laws.
Despite several requests, he says this has not been furnished.
“While we respect the decision of the court, the department will ensure that we follow all the prescripts of the law in terms of how we execute on our responsibility to put all our SOCs on a stable footing,” he said.
In the latest BRP update on Mango, the group said that the investor is still waiting in the wings on the transaction, but should the process continue to hit the brick wall, it could pull out.
In this event, the next step would start winding down Mango.
Loading ...