National carrier South African Airways (SAA) has announced it is terminating the services of BnP Capital as a financial services provider, both as a transaction adviser and as a fund sourcing middleman, to the State-owned airline.

It also took a decision to arrange debt consolidation, debt review and the restructuring of its balance sheet, as well as the sourcing of funds on the markets.

BnP Capital was awarded a tender in March as a transactional adviser after scoring the highest on both pricing and black economic-empowerment requirements.

The firm was also, rather urgently, tasked with sourcing funds on behalf of the airliner after a prior, undisclosed bidding lender, withdrew.

“SAA management followed a process provided for in the supply chain management policy, to deviate from an open tender and go on a confinement process.

“The process, which is also recognised by the National Treasury as one of the justified methods under specified circumstances, was duly approved,” SAA explained in a statement on Thursday.

However, prior to SAA’s due diligence and formalising of the contract between the parties, the Organisation for Undoing Tax Abuse, through its legal representative Webber Wentzel, raised concerns about the deal.

“The concerns were individually considered fully, including whether or not BnP Capital was in possession of a valid Financial Services Board licence as a financial service provider,” SAA said, adding that it had requested more information from BnP.

“After considering all relevant information received from BnP Capital, SAA management took a decision to terminate all BnP services to the airline as a prospective financial service provider in relation to SAA’s initiative on debt consolidation.”

“The decision to terminate the service was arrived at after a review of the award to BnP.”

No payments had been made to BNP, SAA assured.