FORMER Public Enterprises director-general Kgathatso Tlhakudi has requested the Competition Tribunal to investigate the Competition Commission’s approval of the sale agreement between SA Airways (SAA) and Takatso Consortium.
Tlhakudi, who was fired earlier this month, said the Competition Commission failed to take into account the cumulative facts that are sufficiently reasonable to not approve the sale of SAA to Takatso Consortium.
Tlhakudi made these remarks this week in his submission about the SAA deal with Takatso Consortium.
He also made an oral submission on Tuesday about the deal in which Takatso acquired a 51% stake in SAA.
The Competition Commission recommended the approval of the deal on May 12, 2023.
In his submission, Tlhakudi said the Competition Commission had committed a fundamental error by recommending the approval of the Takatso Transaction to the Competition Tribunal.
He said the Competition Tribunal should be concerned about these developments and conduct an investigation into the Commission’s due diligence process. He said Takatso was seeking to defraud the public through an irregular and illegal strategic equity partner selection process by deliberately undervaluing SAA assets for the benefit of politically connected individuals.
Tlhakudi added that the Competition Tribunal has the responsibility to consider that an important public asset is being swindled from public ownership.
“The Competition Commission accepted claims of Harith General Partners, speaking on behalf of the minority shareholders at Takatso Aviation, Global Aviation and Syranix, without formally confirming this with the minority shareholders, who, on the announcement of the Commission’s decision on May 12, 2023, came out to say they will not be exiting the Takatso Consortium,” read the submission.
“The Competition Tribunal ought to be concerned about these developments and conduct an investigation into the Competition Commission's due diligence process in order to assure South Africans that the ascent of Commissioner Doris Tshepe is not the beginning of re-purposing of the Competition Commission, thus perpetuating the capturing of the state-owned enterprises and enabling politically connected individuals to apportion themselves public assets under the guise of privatisation, private-sector-participation, strategic-equity-partnership.”
Competition Commission spokesperson Siyabulela Makunga said while there is no substance to the claims made, the Commission wishes not to comment on the ongoing proceedings at the Competition Tribunal.
Tlhakudi said this move is likely to result in a substantial lessening and prevention of competition in the domestic passenger airlines market.
“This is because the merger will likely facilitate the exchange of competitively sensitive information between SAA and Lift through Global Aviation and Syranix having shareholding and the ability to appoint directors to Takatso’s board of directors. Takatso will have access to SAA’s competitively sensitive information by virtue of its majority stake in SAA, pursuant to the proposed merger,” he said.
“This case turns out to be what “competition” means. To the parties, competition is enhanced if they join forces to save an airline owned by the citizens and government. The Act, however, has a different focus. Competition law is not concerned with making individual competitors larger or more powerful or saving an ailing government entity. It aims to preserve the free functioning of markets and foster participation by a diverse array of competitors.
“Those principles are generally undermined, rather than promoted, by agreements among horizontal competitors to dispense with competition and cooperate instead. That is precisely what happened here,” Tlhakudi said.
He added high levels of irregularities also occurred in the deal, saying that Minister of Public Enterprises Pravin Gordhan interfered and hand-picked Takatso as a strategic equity partner despite it proverbially being created at midnight.
“The substantive question in this merger hearing approval by the Tribunal, ultimately, turns on whether the award of the shares to Takatso was constitutionally valid. It's invalid because it was done in a manner that offends the Constitution - then the merger cannot be approved.
‘’There is also an ancillary question, even if valid - the next question for disposal is, does the merger offend public interest issues? We submit that the answer to the two is that the partnership is invalid, and the sale of shares for nothing is also constitutionally untenable,” said Tlhakudi.
“In the wake of our submissions, a two-pronged approach should be adopted, firstly, the unconstitutional sustainability of Takatso is at the crossroads of public interests, and secondly, if the answer to the first is that the decision is unconstitutional, unlawful and invalid - then we should not be here or be detained at all by the merger approval hearing. By failing to go through the rigours of a proper procurements process, Takatso is tainted with irredeemable irregularities.”
Tlhakudi was fired earlier this month after he was placed on precautionary suspension last year following allegations that he unlawfully interfered with the recruitment process for the position of director of security and facilities.
However, he has been contesting his suspension after Gordhan realised that he was aware of his alleged motive behind the sale of SAA to Takatso Consortium.
After his suspension last year, Tlhakudi sought its lifting in the Labour Court, where he accused Gordhan of unlawfully removing him from his position because he was an “obstacle” to a programme involving the sale of SAA. Labour Court ruled that his suspension was lawful. He challenged the ruling at the Constitutional Court, and his application for leave to appeal was declined.