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Numsa loses ConCourt bid to force Parliament to halt liquidation of SA Express, Denel

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Numsa loses ConCourt bid to force Parliament to halt liquidation of SA Express, Denel

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Photo by Reuters

20th October 2021

By: News24Wire

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In a blow for the National Metalworkers Union of South Africa (Numsa), the Constitutional Court ruled on Wednesday that it cannot hear the union's application seeking to have Parliament decide whether State-owned enterprises can be allowed to go insolvent. 

According to the apex court, the matter is not within its jurisdiction and mandate to hear directly. 

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In May this year Numsa applied directly to the Constitutional Court, asking for a ruling that the National Assembly's Portfolio Committee on Public Enterprises and Standing Committee on Public Accounts (Scopa) should play a more active role overseeing insolvency and liquidation processes in struggling State-owned enterprises.

There are some 700 State-owned entities in SA. But in the supporting affidavit, Numsa general secretary Irvin Jim referred extensively to the troubles at State-owned arms company Denel, as well as airline SA Express. 

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Numsa wanted the Constitutional Court to rule that Scopa – or any parliamentary committee serving a similar purpose – hold public hearings and entertain submissions on whether any major state-owned companies in distress should be allowed to go insolvent or be liquidated by a court. The union wanted Parliament to be ordered to pass a resolution on this question.

The Constitutional Court has, however, now denied Numsa's application for leave to appeal directly to it and also decided to award no costs in the matter.

SA Express was placed under provisional liquidation in April 2020, after its business rescue process failed. Its provisional liquidators are still trying to see if a suitable buyer can be found for the airline.

Numsa believes the current state of SA Express "boils down to abandonment" by the state and is an "impermissible deviation not from policy, but from legislation".

In the supporting affidavit, Jim also argued that Parliament has an obligation of oversight and accountability that is set out in the Constitution. 

As for Denel, Jim argued that it is "critical that Denel must not be liquidated" and that it must remain a "strategic partner to the defence force". 

Numsa was approached for comment and should it be received this article will be updated.

Fin24 reported earlier this month that Denel has reached a settlement agreement with SAAB Grintek Defence, saving it from the brink of liquidation. At the heart of SAAB Grintek Defence’s gripe with Denel was the fact that it had failed to repay its debts to the aerospace and defence company. 

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