WEBBER WENTZEL snameee wn > Linklaters ‘The South African Airways spre oe anton cee [ohemerurg 207, Soc ea Me Musa Zwane: Acting SAA Group CEO ees 26 oenresteg Musezs a.com veobenantetcom ‘Ms Phumeza Nranisi Interim CFO: SAA PhumezaNnentsi@iiveaa com ce: Mr Pravin Gorchan: Minster of Finance minreg@leasur, gov 28 Me Kenneth Brown: Chiet Procurement Ofcer, Treasury Lingo Mohiabi@trensury.aov.za BNP Capital (Pty) Lid Daniel@ionpeaptaLco 2a ‘Your rterence uerteronce Dato bara Bona aay 2018 Dear Sirs / Mesdames Unlawful conduct In respect of bid number RFP GSMO21/16: Appointment of a ‘Transaction Advisor to Provide Financial Advice to SAA and the Decision to confine and award the contrac: for the sourcing of funds for the SAA Group to BNP Capital (Pty) Led 11 We confirm that we have been instructed by the Organisation Undoing Tax Abuse (OUTA"), a non-profit organisation aimed at serving the promotion, protection and advancement of the Constiution of the Republic of South Africa in mattersWEBBER WENTZEL estan Linklaters 44 az 43 44 45 Page 2 relating to policy, laws or conduct that offend the rights, values and principles enshrined in the Constitution, (On 14 March 2016, South African Airways ("SAA") publisted @ Request for Proposals RFP GSMO21/16 entitled: Appointment of a Transaction Advisor to Provide Financial Advice to SAA (‘the Traneaction Advieor Tender’). Tho RFP sets out in Part 3 the Scope of Work for the Transaction Advisor Tender. The ‘Soope of Work for the Transaction Advisor Tender was limited to the provision of analysis and advice on SAA's loan and lease agreements During April 2016, SAA awarded BNP Capital (Pty) Ltd the Transaction Advisor Tender and appointed BNP Capital (Pty) Ltd as the Transaction Advisor for SAA, ‘The process leading to the decision and the decision to award the Transaction ‘Advisor Tender to BNP Capital (Pty) Ltd was contrary to ‘The Evaluation Criteria for the Request for Proposals: 8NP Capital (Pty) Lta 4id not meet the threshold for the Phase 2, Functionality Criteria, Clause 14 and clause 10.1 of the SAA Supply Chain Management Policy (SCM Policy": SAA did not evaluate the bids based on the content of the ocumentation and the evaluation criteria stipulated. SAA decided to do- business with 2 supplier who did not meet the set evaluation itera The objectives of the SAA SCM Policy: SAA failed to achieve value for ‘money in its Supply Chain Management ("SCM") activitios. Dlause 11.1 of the SAA SCM Policy, SAA failed to satisfy self that the Service requirements could be satisfied through existing contracts, subsidiaries or employees, Clause 11.2.1 of the SAA SCM Policy: SAA procured services in a manner that was notin accordance with authorised policy,‘WEBBER WENTZEL 46 47 48 49 on Lnklaters — Clause 11.3.2 of the SAA SCM Policy: SAA restricted the Request for Proposals to respondent suppliers to the Request for Information on ‘Transaction Advisory Services (RFI-GSM010/16) in ctcumstances where this was not specified in the RFI document, Clause 126.1 of the SAA SCM Policy: The Transaction Advisor Tender was ‘ot advertised for at least 14 days before closing time, Clause 3.2 and 4.4.1. of the SAA SCM Policy read with section 217 of the Constitution: SAA faled to contract for services in accordance with a system that i fir, equitable, transparent, competitive and cost-effective. Clause 34 of the SAA SCM Policy read with the principles of the Treasury Regulations issued in terms of the Public Finance Management Act) The head of Global Supply Management and Board of Directors falled in their ‘duty and obligation to avoid abuse of the SCM system. (On 11 May 2016 SAA’s Global Supply Management Unit made a request to the: Bid Adjudication Committee ("BAC") to increase the scope of the contract under the Transaction Advisor Tender by confining and awarding to BNP Capital (Pty) Lid @ second contract for the sourcing of funds for SAA to settle certain of SAA's loans that were due to mature at the end of June 2016, We are instucted that the BAC approved the recommendation of the Global ‘Supply Management Unit on 13 May 2016. The recommendation was approved by the SAA Eoard of Directors by way of round robin vote on 26 May 2016, BNP Capital (Pty) Ltd was arcoringly anpnintad to source funding of R15 bilion for SAA, at a success fee of 1.5% which equates to an amount of R225 milion (exclusive of VAT) (the funding services")WEBBER WENTZEL roars Linklaters an 82 83 84 85 86 a7 Page + ‘The process and decision to appoint BNP Capital (Pty) Ltd to provide the funding services ~ elther as a new and self-standing contract through a confined process, (oF a8 an extension andior variation of the contract under the Transaction Advisor ‘Tender - was contrary to: Clause 11.10 and 12 of the SAA SCM Policy: SAA was required to use @ competitive tender with an open bidding process for contrac's above the R500 000 threshold Clause 11.19 of the SAA SCM Policy: SAA undertook a process of limited / ‘confined bidding when there were no exceptional circumstances justifying ‘such a process. Clause 11.°8 of the SAA SCM Policy: SAA approved the extension of the: contract awarded under tender RFP GSM 021/16 without the necessary approval, and without justification. Clause 11." of the SAA SCM Policy: SAA falled to satisfy iself that the service requirements could be satisfied through existing contracts, ‘subsidiaries or employees. Clause 11.2.1 of the SAA SCM Policy: SAA procured services in a manner that was nol in accordance with authorised policy. Clause 9.2 and 4.4.1 of the SAA SCM Policy read with section 217 of the: Constitution: SAA failed to contract for services in accordance vith a system that i far, equitable, transparent, competitive and cost-effective, Clause 34 of the SAA SCM Policy read with the principles of the Treasury Regulations issued in terms of the Public Finance Management Act: The head of Glebal Supply Management and Board of Directors failed in their duty and obligation to evuid abuse ofthe SCM systemWEBBER WENTZEL estan Linklaters Pages 9 The award of the Transaction Advisor Tender, and the decision to appoint BNP Capital (Pty) Ltd to provide funding services, constitute administrative action in terms ofthe Promotion of Administrative Justice Act 3 of 2000 (“PAJA™). 410 OUTA\s therfore ofthe view that the process leading to both decisions, and the ‘decisions themselves, were unlawful in that they were contrary to: 10.1 The terms of the Request for Proposals; 102 The SAA SCM Policy; 10.3 Sections 3 and 6 of PAJA; 10.4 The Public Finance Management Act 105 The Preferential Procurement Policy Framework Act § of 2000; 10.6 Sections 93 and 217 of the Constitution; and 10.7 Section 54(2)(d) andlor section 54(2)(e) of the PFMA. 114 Inthe circumstances. OUTA requests an undertaking fram SAA’ 14.4 To suspend the performance of its payment obligations under any contract arising from the Transaction Advisor Tender and the funding services decision; and 11.2 To suspend the conclusion of any contracts arising from the Transaction ‘Advisor Tender and the tunciing services decision, pending a lawful and J or ‘competitive procurement process for the relevant services. 12 We request such an undertaking in writing by the authorised official by close of business on 13 July 2016, fling which we will aunch appropriate proceedings in the High Court‘WEBBER WENTZEL seni Linklaters Yours sincerely thar, WEBBER WENTZEL Moray Hathom Partner Dra t 92158906509 Enal: moray habemgecberarzl om Page 6