Gigaba must spill the beans on MANGO -
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Gigaba must spill the beans on MANGO -
Business Day 8 November 2012
By Davis Gleason
I SEE Public Enterprises Minister Malusi Gigaba had a full go at Comair CE Erik Venter on Tuesday. I’m not here to defend Venter — he’s quite capable of looking after himself — but the minister’s statement opens up plenty of room for debate, an opportunity I find too tempting to miss.
First on my list is that Mango, while a subsidiary of South African Airways (SAA), is a separate company and a national public entity. As such, it is obliged to report (section 2 of the Public Finance Management Act) to the government and the public. It is funded by taxpayers and is owned by the public.
Mango is in breach of this requirement. It has never published its annual financial statements. Assuming it has produced financials, the minister has never tabled these in Parliament. Why not? Who has permitted this? How was it possible for the Department of Public Enterprises to have permitted this deliberate effort to hide financial information relating to a state-owned enterprise? Is it culpable of flouting of a solemn statute? Where is the auditor-general in this? Why isn’t the parliamentary oversight committee asking questions? Why has the Treasury not intervened?
Second, Gigaba’s revelation of the airline’s unaudited cash flow statement reveals little of value. Financial statements are comprehensive and include profit and loss accounts, a balance sheet, together with the cash flow with an opening and closing balance. Without these, the released extract from the Mango cash flow tells us nothing — though it is worth noting that the sums are so minute that it might easily be for the corner bottle store. I am prepared to bet a bottle of good Champagne that when Mango’s financial statements are finally revealed there will be plenty of evidence of exceptionally creative accounting around the sub-lease of its aircraft, à la SA Express.
Third is the case of Mango’s disappearing startup loan. This was originally R69m. As at March 2007, SAA reported its investment value as nil. A year later, SAA’s investment in Mango was suddenly R336m and the debt of R69m had gone. Where to, in both SAA and Mango’s books?
On the face of it, and since Mango has no assets to speak of, did it make a loss of R336m in the period to March 2008? Add that to the R90m loss CEO Nico Bezuidenhout admits to for 2011, plus another R100m for 2009 and 2010 (no reason to presume the trend would be different) and it’s fair to guess, as Venter has, that Mango’s total loss since it took to the skies is about R500m, give or take 10%. If I’m wrong, bring on Mango’s accounts and let us see.
The minister claims, however, that Mango broke even in 2008, made a profit of R10.9m in 2009, another profit of R13.7m in 2010 and a profit of R300,000 last year. According to Gigaba, Mango has been profitable to the tune of R24.9m since 2008. In that case, why has SAA, according to its financial statements, found it necessary to invest a further R336m?
This is the crux of the matter. We cannot make any judgment about Mango if its accounts are withheld. The minister must insist the provisions of the act are followed with proper rigour. He is new in the job and we can forgive him much as he explores and cleans up the portfolio. But he shouldn’t be defensive or attempt to defend the indefensible.
Properly run airlines are critical to the country’s economy. The minister knows that very well, and says so. But taxpayers are being required to pick up too many rotten apples without knowing why. We can take bad news so long as we get the whole story. So tell us the truth.
By Davis Gleason
I SEE Public Enterprises Minister Malusi Gigaba had a full go at Comair CE Erik Venter on Tuesday. I’m not here to defend Venter — he’s quite capable of looking after himself — but the minister’s statement opens up plenty of room for debate, an opportunity I find too tempting to miss.
First on my list is that Mango, while a subsidiary of South African Airways (SAA), is a separate company and a national public entity. As such, it is obliged to report (section 2 of the Public Finance Management Act) to the government and the public. It is funded by taxpayers and is owned by the public.
Mango is in breach of this requirement. It has never published its annual financial statements. Assuming it has produced financials, the minister has never tabled these in Parliament. Why not? Who has permitted this? How was it possible for the Department of Public Enterprises to have permitted this deliberate effort to hide financial information relating to a state-owned enterprise? Is it culpable of flouting of a solemn statute? Where is the auditor-general in this? Why isn’t the parliamentary oversight committee asking questions? Why has the Treasury not intervened?
Second, Gigaba’s revelation of the airline’s unaudited cash flow statement reveals little of value. Financial statements are comprehensive and include profit and loss accounts, a balance sheet, together with the cash flow with an opening and closing balance. Without these, the released extract from the Mango cash flow tells us nothing — though it is worth noting that the sums are so minute that it might easily be for the corner bottle store. I am prepared to bet a bottle of good Champagne that when Mango’s financial statements are finally revealed there will be plenty of evidence of exceptionally creative accounting around the sub-lease of its aircraft, à la SA Express.
Third is the case of Mango’s disappearing startup loan. This was originally R69m. As at March 2007, SAA reported its investment value as nil. A year later, SAA’s investment in Mango was suddenly R336m and the debt of R69m had gone. Where to, in both SAA and Mango’s books?
On the face of it, and since Mango has no assets to speak of, did it make a loss of R336m in the period to March 2008? Add that to the R90m loss CEO Nico Bezuidenhout admits to for 2011, plus another R100m for 2009 and 2010 (no reason to presume the trend would be different) and it’s fair to guess, as Venter has, that Mango’s total loss since it took to the skies is about R500m, give or take 10%. If I’m wrong, bring on Mango’s accounts and let us see.
The minister claims, however, that Mango broke even in 2008, made a profit of R10.9m in 2009, another profit of R13.7m in 2010 and a profit of R300,000 last year. According to Gigaba, Mango has been profitable to the tune of R24.9m since 2008. In that case, why has SAA, according to its financial statements, found it necessary to invest a further R336m?
This is the crux of the matter. We cannot make any judgment about Mango if its accounts are withheld. The minister must insist the provisions of the act are followed with proper rigour. He is new in the job and we can forgive him much as he explores and cleans up the portfolio. But he shouldn’t be defensive or attempt to defend the indefensible.
Properly run airlines are critical to the country’s economy. The minister knows that very well, and says so. But taxpayers are being required to pick up too many rotten apples without knowing why. We can take bad news so long as we get the whole story. So tell us the truth.
