South African Airways has suspended a deal to restructure R15 billion of debt, after questions were raised about the processes followed in hiring BnP Capital to provide the service.
Last week BDLive reported that SAA agreed to pay a R256 million award to “boutique financier” BnP without going through the appropriate tender processes.
According to the report, the SAA board waived tender procedures for the contract – against advice from its own treasury – and ended up paying three times what it had to for services.
BnP was initially appointed to advise SAA on the restructuring of the debt. The company then advised that it be hired, urgently, to raise the financing itself, securing a 1.5% success fee in the process.
Civil group, Outa, then exposed the holes in the deal further by providing evidence that BnP had its financial services licence suspended by the Financial Services Board, which should have made the company ineligible for the SAA contract in the first place.
Outa gave SAA until Monday (18 July) to show its intent to cancel the deal, or face further legal action.
SAA has now put the deal on hold following all the revelations, to give BnP time to respond to the claims mounted against it.
“We have given BnP Capital an opportunity to respond to matters we raised with them and expect them to revert during the course of next week. Until we have received a response from them and have considered same, contracting between the parties will be stayed,” SAA spokesman Tlali Tlali said.
However, Outa says this is not enough – it requires the deal to be cancelled, not to be put on ice.
“Our urgent application to interdict the contract is still ready to be launched if need be. SAA cannot simply put the deal ‘on ice’ as we maintain their appointment is completely unlawful, even if BnP manage get the suspension of their FSB licence lifted,” said Ivan Herselman, OUTA director of legal affairs.
“Therefore, we still require an undertaking in writing from SAA or their lawyers that they will not proceed with the transaction at all.”