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Solidarity takes its Denel problems to Gordhan as Brown goes

Solidarity takes Denel issues up with GordhanLynne Brown this week resigned as a Member of Parliament, days after she lost her Cabinet position of Public Enterprises Minister in President Cyril Ramaphosa’s first Cabinet reshuffle.

During her tenure as the elected official responsible for major state-owned enterprises, including Denel, Eskom and SA Airways, she found herself on the receiving end of questions about state capture, pliant boards and financial mismanagement, amongst others.

Government control of the stuttering national airline was handed to National Treasury and it has yet to produce annual financial statements for the previous financial year in spite of a new board being appointed.

She also came under fire from Centurion headquartered trade union Solidarity. It wanted her to immediately suspend senior personnel, including chief executive Zwelakhe Ntshepe, chief financial officer Odwa Mhlwana and board chairman Daniel Mantsha. The trade union wanted this action taken ahead of a Denel board meeting at which restructuring of the state-owned defence and technology conglomerate was to be discussed.

Solidarity deputy general secretary Deon Reyneke said the restructuring could see up to 700 employees retrenched if it went ahead.

The union has now re-directed all its Denel-related correspondence to Pravin Gordhan, newly appointed Minister of Public Enterprises. The Solidarity letter to Gordhan states: “At the outset Solidarity wants to apologise for approaching you to deal with governance issues so soon after taking office” with a confirmation that “the matter (of gross financial mismanagement) we bring to you is of extreme importance”.

Brown’s departure from public life has earned a nod of approval from OUTA (Organisation Undoing Tax Abuse).

Its chief executive Wayne Duvenhage said: “Brown failed in her duties as Minister of Public Enterprises and compromised government by not scrutinising information provided to her and for violating the executive ethics code”.

“The damage caused by her inefficiency has had significant impact on state-owned enterprises which will be felt for some time,” he said.

With regard to Denel, Brown oversaw the ‘rotation’ of the board in July 2015. The new board, headed by Dan Mantsha, in September 2015 suspended the then chief executive Riaz Saloojee along with chief financial officer, Fikile Mhlonto, and company secretary Elizabeth Africa. It subsequently pushed for the establishment of the disastrous Denel Asia joint venture with the politically connected Gupta family, via VR Laser.

Although this did not go ahead in the end, the dealings with VR Laser tarnished the company’s image as it was alleged contracts for the Badger infantry fighting vehicle for the SA Army were diverted from Denel subsidiary LMT to VR Laser. The matter ended up in court, and many LMT personnel left the company, along with other resignations across Denel. defenceWeb understand that the actions of the board appointed by Brown have caused reputational damage to Denel, which it is struggling to overcome.