Funding model at SOE’s was never resolved: Hogan

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Former Public Enterprise Minister Barbara Hogan says the funding model of State Owned Enterprises  (SOE’s) was never properly resolved during her tenure and that she was persecuted by senior members of the ruling party for publicly stating the dire financial situation of South African Airways (SAA).

She was testifying at the State Capture Commission of Inquiry which resumed in Johannesburg on Monday. Hogan says she realised two days after her appointment as Public Enterprise Minister in May 2008 that SAA was facing financial difficulties and that the airline needed a strategic partner to succeed.

She said to her surprise she was summoned to Luthuli House about this, when in fact this was the prerogative of the President to do so and not the ruling party.

Hogan says SAA was on the brink of collapse when she asked for a guarantee from the National Treasury. “At that meeting I explained that SAA was in severe problems and it was not easy to see a funding model but my concern was that if it is seen to be going outside government policy it should have been the president and not the party.”

Hogan says Cabinet asked herself and former Minister of Finance Pravin Gordhan to set up an inter- ministerial committee to look at the funding model of SOE’s. But then this was shut down when Former President Jacob Zuma appointed an independent commission to investigate State Owned Enterprises.

“So you can imagine that the financial health of those two institutions is watched closely by the national treasury and the ratings agencies and if it’ fails the consequences are huge and the funding model was never properly resolved.”

SAA was brought under the administration of the National Treasury in December 2014 due to poor governance and financial instability and the airline was only able to raise funding with the help of government guarantees. Click below for more on the story: