Development Bank: We were under no pressure to bail out SAA
MPs wanted to know whether the DBSA had caved in to political pressure to make the R3.5 billion loan to SAA, but DBSA chief investment officer and acting CEO Paul Currie’s response was an emphatic no.
CAPE TOWN – The Development Bank of Southern Africa (DBSA) said it was put under no pressure at all to throw a lifeline to the ailing national carrier, South African Airways (SAA), in the form of a R3.5 billion bridging loan.
The DBSA briefed Parliament’s select committee on finance on its annual report on Tuesday – but Members of Parliament wanted to know about the loan and why the bank agreed to it when its role is to provide funding for infrastructure development.
DBSA chief investment officer and acting CEO Paul Currie told MPs if it had not stepped in, SAA’s business rescue process would have collapsed, forcing the airline into possible liquidation and destabilising the transport sector.
MPs wanted to know whether the DBSA had caved in to political pressure to make the R3.5 billion loan to SAA, but Currie’s response was an emphatic no.
“In the 10 years I’ve been in [this] organisation, I started off as chief risk officer, now the chief investment officer… at no stage in that space have I been requested to do any form of directed lending.”
Currie said board chairperson Enoch Godongwana, who also heads the ANC’s economic transformation committee, recused himself from discussions about the loan to avoid any conflict of interest.
“There was no directed lending required associated with this. This was a request – ‘Can you help, can you afford it?’”
Currie told MPs the money was raised on the markets, with its repayment guaranteed by the government. It was not money earmarked for development projects.
He also acknowledged the backlash over that state entity’s decision to come to SAA’s aid, with critics questioning whether the move isn’t at odds with its mandate to fund infrastructure development.
“This was a very difficult decision for the DBSA to make - and difficult, not in the context of whether we should or shouldn’t lend the money from a credit point of view, but because of the noise we were going to attract in the market. Because we were either going to be heroes... or we were going to be cast as villains in this process. And a lot of the time we’ve been cast as villains, often because people haven’t heard the full story as to why we’ve done this.”
He told MPs ensuring stability in the transport sector falls squarely within the bank’s mandate.
“SAA is part of an eco-system of transport, which has suppliers, it obviously has staff… we’re also not in any way suggesting what SAA should look like and whether it should exist. That’s not our intention or purpose. It was merely to provide the space for a professional process to be completed so that what value could be salvaged, can be salvaged.”