9 July 2019
State-owned airline SA Express breaks the law in refusing to answer FMF PAIA request
State-owned airline South African Express (SAX) is in breach of the law and has shown itself to be unwilling to be a productive part of our constitutional democracy by failing to respond to a PAIA request made under the Promotion of Access to Information Act 2000 by the Free Market Foundation (FMF). Under the Act, an entity cannot ignore a PAIA request. The FMF seek answers to the true financial state of SAX and South African Airways (SAA) before any further public money is diverted from the poor to support the rich who fly.
The PAIA legislation was an important development in democratic South Africa to end the secrecy of the Apartheid regime. It was intended to break down the walls between the governors and the governed. Yet SAX is receiving a taxpayer-funded bailout of R1.24bn from Treasury while being in headlines for state capture and corruption dating back to 2009, as unfolding in the Zondo enquiry.
FMF Head of Legal Policy and -Research, Martin van Staden, said, “The FMF submitted a PAIA request to South African Express (SAX) on 31 May 2019, seeking information relating to its financial accounts. Section 25(1) of PAIA says that the information officer of an entity must ‘as soon as reasonably possible, but in any event within 30 days’ decide whether to grant or reject the PAIA request, or seek a time extension from the requester.” He continued, “No answer was received by 19 June and the FMF tried to make direct contact. Despite numerous attempts, SAX failed to answer either their switchboard or customer care phones. We pity the poor customers who try to contact this publicly-funded airline.”
Van Staden said, “Every entity must have a PAIA manual that contains request procedures and contact details. Requests sent to the SAX PAIA email address produced bounce-backs, meaning it is no longer active. SAX is showing contempt for the law.”
The FMF PAIA application requests the following:
1. Full SAX annual financial statements for FY 2016/17 and FY 2017/18.
2. Management accounts for FY ended 31 March 2019.
3. Detailed summary of all related party payables at 31 March 2017, 2018, and 2019, including but not limited to SAA, ACSA, Air Traffic Navigation Services, SA Weather Services, and SA Civil Aviation Authority.
4. The going concern assessment performed by the directors at 31 March 2017, 2018 and 2019.
5. Any record, including studies, assessments, business plans, or other records, used to determine the statement of CEO Siza Mzimela* that SAX would be profitable by March 2019 without further state support.
The FMF will now consider the possibility of taking further legal action against SAX to enforce compliance with the text and spirit of the Constitution and national legislation.
The FMF believes the taxpaying public has the right to know the true extent of the financial chaos that exists within SAA and SAX. Up to date financial statements are not available for either airline. “PAIA is an application under the Promotion of Access to Information Act for access to records of public and private bodies. As a rights policy institute, the FMF seeks to exercise and protect the section 32(1)(a) right to access to information,” said Van Staden.
The last SAX audited financial statements appeared in 2015/6. In a report from the Standing Committee on Appropriations on 27 November 2018, Treasury said that SAX was technically insolvent as liabilities exceeded assets and R1.24bn to settle government guaranteed debt had been allocated.
The FMF is particularly concerned about suggestions dating from 2012 that the SAX asset register and balance sheet had been fraudulently overstated. Questions whether SAX is a going concern remain unanswered.
In a recent media interview and article in SA Flyer by editor Guy Leitch, republished in Daily Maverick, SAX CEO Siza Mzimela stated that SAX would be profitable by April 2019. On what basis?
SAX planes were grounded by SACAA between May and August 2018 on safety grounds.