The world is changing fast and to keep up you need local knowledge with global context.
by Liezel Hill
(Bloomberg) — South African Airways dropped BnP Capital as financial services provider, reversing an earlier decision to hire the company to source funding on its behalf.
“SAA management took a decision to terminate all BnP services to the airline as a prospective financial services provider in relation to SAA’s initiative on debt consolidation,” the unprofitable state-owned carrier said in an e-mailed statement on Thursday. “No payments had been made to BnP Capital.”
SAA appointed Johannesburg-based BnP as transaction adviser in March to assist with plans to consolidate the airline’s debt, SAA said. After a potential lender withdrew from the process in April, and with 7.2 billion rand ($506 million) of debt maturing at the end of June, SAA asked BnP in May to seek funding on its behalf, the airline said.
The deal was criticized by the Organization Undoing Tax Abuse, a lobby group, which described BnP as “a small and relatively unknown financial advisory firm,” which has had its Financial Services Board license suspended.” OUTA argued that the agreement was illegal because SAA didn’t follow a competitive bidding process.
The carrier suspended Treasurer Cynthia Stimpel earlier this month pending an investigation into a misconduct charge. The disciplinary action was unrelated to a report in Business Day newspaper that she had objected to the decision to hire BnP Capital, spokesman Tlali Tlali said at the time.
The airline is dependent on government-guaranteed loans and is awaiting a decision by the Treasury on whether to grant additional support. SAA may have less than 100 million rand left from its most recent state guarantees, Johannesburg-based weekly magazine Financial Mail reported.
South African Airways says ends contract with financial adviser
South African Airways (SAA) on Thursday ended its contract with BnP Capital, a financial advisory firm hired for the company’s restructuring of 15 billion rand ($1 billion) of debt.
Earlier this month, SAA said it had put that deal on hold to review the award of the contract to BnP Capital.
“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 in a statement.
No-one at BnP Capital was immediately available to comment.
SAA did not elaborate on the information received from BnP Capital following the state airline’s enquiries.
“No payments 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 said.
Local media reported this month the SAA board went against the advice of its own treasury by agreeing to pay BnP Capital a 256 million rand success fee to advise it on debt restructuring and fund raising without putting the contract out to tender.
The contract was awarded without tender due to urgent loan repayments due at the end of June, SAA said.
SAA appointed BnP Capital as transactional advisor in March, SAA said, adding that it issued a letter of award to the financial provider to source funds on behalf of the airline in May in light of a sudden withdrawal by a potential lender.
SAA has been sustained by state guarantees of around 14.4 billion rand and has asked for an additional 5 billion rand from the Treasury.
OUTA media release
Following the exposure and legal challenge by the Organisation Undoing Tax Abuse (OUTA) of South African Airways (SAA) Board members being complicit in behaviour that would have enabled a virtually unknown middleman (Daniel Muhlangu of BnP Capital) to score over R250 Million in a dodgy and highly irregular financing tender deal, SAA has announced their decision to cancel the transaction.
OUTA served court papers on SAA at 13h50 on the 21st of July 2016, causing SAA to capitulate to its demands two hours later, forcing SAA to confirm publicly that they would not be proceeding with the unlawful deal with little known financier BnP Capital. The matter was scheduled to be heard in the South Gauteng High Court on Tuesday the 26th of July 2016.
The investigation has also revealed that the joint venture partner of SAA, Inline Trading 10, had fraudulently used the Financial Services Board (FSB) number of another company in the bid documents. This follows an additional revelation by OUTA which exposed the suspension of BnP Capital’s FSB licence.
Halting SAA's dodgy BnP deal is a victory to whistleblowers, great team work and collaboration. Thanks to a great team at OUTA
— Wayne Duvenage (@wayneduv) July 21, 2016
“We will be reporting the interim CFO (Phumeza Nhantsi) and Yahke Kwinana, the head of SAA’s Audit and Risk committee to SAICA, and furthermore we will lay criminal charges for fraud against Daniel Mahlangu of BnP Capital and the directors of Inline Trading 10,” says Ivan Herselman, Director of Legal Affairs at OUTA.
The Organisation has stated that this is the first part of a longer term strategy to hold the board members and directors of SAA (and other entities) to account for breaches of their fiduciary duties and responsibilities.
This is a victory for whistleblowers and OUTA’s members who believe in standing up and challenging abuse of authority. OUTA will fight to protect the rights of each whistleblower who came forward to provide OUTA with the information it required to expose this and other unlawful activities within SAA.
OUTA will use all avenues within its means to save SAA from abuse of authority and will be intensifying its investigations and legal actions as new information comes to light.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.