Briefing by Auditor-General and South African Airways on outstanding annual reports and financial statements, with Deputy Minister of Public Enterprises

SAA 2019 AFS SAA 2020 AFS SAA 2021 AFS SAA 2022 AFS Minister_of_Public_Enterprises_Eskom_AFS_Annual_Financial_Statements_2022/23 Minister_of_Public_Enterprises_Eskom_IR_Integrated_Report_2022/23 In Parliament, the Auditor-General briefed the Committee on the audit outcomes of South African Airways for the financial periods ended March 31 2019, March 31 2020, March 31 2021, and March 31 2022. South African Airways failed to submit its financial statements for auditing within the prescribed timeframes in 2019, 2020, 2021, and 2022. The company experienced significant financial difficulty and operational challenges in the years up to the 2018 financial year. This necessitated a number of equity injections/recapitalisations from the government. From April 1 2018 to the present, the government has injected R38.1 billion to South African Airways. R10.5 billion was transferred before the company went into business rescue, from December 5 2019 to April 30 2021. R27.6 billion was deposited post-business rescue. Due to the solvency and liquidity challenges that preceded the business rescue process and the lengthy duration of the business rescue process, the accounting authority only prepared and submitted financial statements for auditing more than three years after the legislated deadline. The audit outcome of the public entity regressed from a qualified audit opinion to a disclaimer of audit opinion for the four years under review. South African Airways presented a review of the legacy annual financial statements 2019-2022. The Chairperson of the Interim Board said the audit reports did not paint a pretty picture, but the company was now in the recovery process. The April 2022 to March 2023 report was currently with the auditors and they expected to have the annual report by the end of March 2024. He expressed his gratitude to the Auditor-General, for all their hard work and for helping the company. Airways officials briefly discussed each year in context from 2019 to 2022, highlighting pertinent issues for each year. Members’ questions and comments were wide-ranging. The main repeated query was how the R10.5 billion paid by government before business rescue had been applied. A frequent comment was on whether a Strategic Equity Partner was really needed, now that the airline had stabilised following business rescue and the huge challenges of the Covid-19 lockdowns. Selling the entity to the private sector was not the only available solution even if the airline was going to take years to recover fully. Overall, how would the airline deal with all the issues highlighted during the meeting to prohibit a similar situation from arising in the future? The Committee said the report from the Auditor-General highlighted the lack of preparedness for the ongoing strategic equity partner transaction. Was there an element of fraud concerning the financial statements that were submitted for the four years? How did the airline intend to address the current lack of skills and capacity identified in the Auditor-General report? According to the financial statements, how much money was lost due to criminal conduct? Why did the airline fail to implement consequence management? How much did other countries owe the airline? What is the exact number owed by each country and why were they unable to collect the money? What was the consequence management for the Department that failed to ensure that its entities obeyed their rules and regulations? There was not sufficient time for receiving and discussing responses to many of the issues raised by Members during the meeting. The Chairperson asked that these be sent to the Committee in writing.