Passengers on a recent Mango flight from Johannesburg to Cape Town were terrified when the aircraft suddenly nosedived, forcing the pilot to make an emergency landing in Johannesburg. A subsequent investigation into the incident has highlighted the extent of South African Airways’ problems.
- A faulty part was fitted to the aircraft by SAA Technical
- SAA admitted that it has been infiltrated by an international criminal syndicate
- The syndicate has supplied the company with suspicious aircraft parts and looted “hundreds of millions of rands”
- Defective parts cause incidents such as the nosedive of the Mango Boeing 737
- Comair, which operates British Airways in South Africa, has ended its relationship with SAA Technical
- Airlines have been grounded for such activities
- The government has pumped almost R50-billion into the airline in the last decade
By Gaye Davis for EWN
Finance Minister Tito Mboweni said cash injections for state-owned entities like the South African Airways, the South African Broadcasting Corporation (SABC) and Denel wouldn’t be handed over all at once but in chunks, as certain conditions are met.
Mboweni was on Tuesday replying to debate on the Appropriations Bill, which was before the National Assembly.
The Appropriations Bill provides for budget allocations to all departments and entities and was tabled by Mboweni along with his February Budget.
It included provision for R3.2 billion for the cash-strapped public broadcaster.
The bailout money for the SABC, Denel and SAA would come from the contingency reserve account but Mboweni said it came with strings attached.
“We would not just make that available tomorrow, it would be a mistake but we will release in chunks as certain conditions precedent are met, to make sure there’s progress in improving the organisation.”
Mboweni said chief restructuring officers for each entity would be announced on Wednesday. They would work with the management of the SABC, SAA and Denel to get them back on track.
The minister has warned that the country’s debt to GDP ratio was at an “unacceptable level”: “Thus providing the basis for a serious crisis in the country.”
He said financial management needed to be improved across government and people needed to accept the principle of paying for the services they use.
By Mia Lindeque for EWN
The South African Broadcasting Corporation (SABC) says that it is urgently dealing with its bank to sort out a technical glitch which resulted in staff not being paid their salaries on time.
Frustrated employees contacted Eyewitness News in a panic on Tuesday, complaining that they were not warned in advance.
This frenzy was partly triggered by concerns raised in Parliament by the SABC management painting a bleak picture of not being able to pay salaries in the future if the financial crisis at the public broadcaster doesn’t change.
The broadcaster’s Neo Momodu says that there was a technical problem on the bank’s side and has assured staff that they will be paid before the end of the day.
She’s also clarified that the SABC made all the necessary payments on time.
“We are handling the matter with the bank and we are sure that it will reflect in their accounts on 29 January. We’ve paid the salaries like we always do to the necessary banks so that they reflect with our staff. We are not in control of the cash. As far we are concerned as management, the salaries should have reflected in the staff’s bank accounts.”
By Luke Daniel for The South African
Embattled state owned enterprises (SOEs) are South Africa’s biggest and most dangerous economic stumbling blocks.
This is according to the international rating agency, Moody’s, which points to Eskom’s major failings as a cause for national concern.
State owned enterprises all performing dismally
While speaking at the Investor Service’s conference on Thursday, the agency’s senior credit officer for infrastructure finance, Helen Francis, outlined the dire position most SOEs find themselves in.
The massive financial drain perpetuated by failing SOEs has been well documented. Eskom, in particular, has reported over R19bn in irregular expenditure and continues to rely on government bailouts to stay afloat.
Worrying, Eskom is undoubtedly the largest and most vital SOE – supplying 90% of South Africa with electricity.
Yet, the embattled national power supplier just can’t seem to get back on its feet, following Gupta interference involving former company boss, Brian Molefe. Recently, the company issued an ominous statement, bemoaning the fact that its coal reserves were dwindling as a result of dodgy tenders.
Looking across the entire SOE spectrum paints a dismal picture. It’s not just Eskom that is dying, and in that way draining the already unsteady economy of vital funds. Transnet, South African Airways (SAA), the South African Broadcasting Corporation, and many more national companies are failing to make ends meet.
Corruption still plaguing SOEs
Speaking to Fin24, Futuregrowth Asset Management’s, Olga Constantatos, said that turning the situation around would not be easy and that much more needs to be done.
Constantatos commented on the disease of corruption and gross mismanagement which afflicts both Eskom and Transnet, saying:
“Much more needs to happen. The latest results at Transnet and Eskom point to the circumventing of controls – with Eskom’s R20 billion in irregular expenditure and Transnet’s R8bn. We need to see prosecutions. We need to see arrests of people who were stealing money essentially from you and me.”
Constantatos added that there needs to be stiffer repercussion for SOEs which flout due process, and as such, essentially, steal from the taxpayer and investors, saying:
“As bond investors, we are custodians of the nation’s pension funds. We should not be allocating capital to institutions where there is malfeasance, or lend blindly to companies that are not responsible.”