The Western Cape High Court dismissed with costs on Monday an urgent application from Toto Investment Holdings to stall the sale of a controlling stake in SAA pending a review application.
Bongani Gigaba, founder of Toto Investment Holdings, was an unsuccessful bidder for a 51% controlling stake in the national carrier. He instituted the first legal challenge to SAA’s sale three months ago.
However, Toto secured a court directive compelling public enterprises minister Pravin Gordhan to share confidential information on the SAA deal within 20 days with certain parties, on strict conditions. Gordhan must now file a confidential and non-confidential record.
“The transaction is governed by confidentiality undertakings and the department is not at liberty to disclose to third parties certain documents related to the transaction unless under a confidentiality regime,” Gordhan said on Monday.
The decision paves the way for the government to continue its disposal of the state-owned airline to Takatso Consortium, comprising Global Aviation Operations, owner of new low-cost carrier Lift, and pan-African infrastructure investor Harith General Partners.
Takatso welcomed the judgment.
The government announced the sale in June 2021. Takatso agreed to invest R3bn in SAA over three years. Subject to approval from the Competition Commission, Competition Tribunal and Air Services Licensing Council, the deal is set to close in March 2023.
Monday’s court directive allows limited parties access to confidential information on signing what amounts to a non-disclosure agreement (NDA), with the Western Cape High Court acting as referee.
Little-known investor Toto took Gordhan, parliamentary speaker Nosiviwe Mapisa-Nqakula, finance minister Enoch Godongwana, SAA and the consortium partners to task over the deal, arguing it was “a direct victim of the [alleged] unlawful and secretive process”.
Gordhan said the state attorney had suggested there should be confidentially about the airline’s sale before the matter went to court. “However, Toto rejected this confidentiality regime and required that all documents be disclosed on a non-confidential basis,” he said.
Access to confidential information belonging to other parties is now contingent on agreeing to strict controls on what can be shared with whom. Parties may now have sight of certain bid documents.
But lawyer Ulrich Roux said this would neither strengthen nor weaken parties’ arguments in the appeal. “They must simply adhere to the confidentiality directives, failing which they could be held to be in contempt of court,” he said.
However, he said non-compliance with Monday’s directive could lead to pleadings being struck from the record, which would weaken a party’s case.
“The majority of the information would most likely be the financial position of SAA and the numbers associated with the case [...] confidential information will not be made public,” said Roux.
In a submission to the Western Cape High Court, Gigaba contended the sale was “unlawful and constitutionally invalid” with the deal “shrouded in secrecy” and “not fair, equitable, competitive or cost effective”.
Parties permitted access to the confidential information include judges presiding over review and court personnel bound to keep the material under wraps. Monday’s directive also grants experts, consultants, lawyers, the state attorney and any intervening parties joined to the litigation sight of the confidential records, provided they sign NDAs.
“No person other than a permitted party shall have access to the confidential record and the confidential pleadings,” wrote Erasmus.
In the upcoming review and any possible appeal thereafter, Toto and the respondents — including Gordhan — must ensure where their arguments hinge on confidential information only those permitted to access it are present in court.
“Nothing in this directive should be construed as altering the onus or burden of proof (if any) borne by any party in relation to the production of documentation and confidentiality,” reads the directive.
A confidentiality form Erasmus attached requires signees to agree to protect other parties’ confidential information which is proprietary, has economic value and is publicly available.
Signees “unconditionally and irrevocably” agree to treat records as “strictly confidential” and “not (in any manner or form, or to any extent whatsoever) divulge” to anyone not authorised. They undertake to “not copy” the material and keep it confidential after the review case is closed.
Per court documents, Toto filed interest in SAA’s sale but was rejected within days. The government often said it had several interested buyers in the months leading up to the Takatso sale but never identified them.
batese@busineslive.co.za
maekot@businesslive.co.za
With additional reporting by Bloomberg