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Gordhan will recapture and restore SOCs, including Denel

Gordhan budget voteDelivering his budget vote address in Parliament, Public Enterprises Minister Pravin Gordhan set out an agenda for the “recapture and restoration” of state-owned companies (SOCs) under his authority, including defence and technology conglomerate, Denel.

He told the National Assembly that, notwithstanding their potential role in growing the national economy, the last few years saw a progressive weakening and capture of SOCs.

His department will work to recapture SOCs putting in place strong and ethical boards and re-establishing good governance.

“We will ensure the companies function in line with their mandates and halt the vicious looting and theft. We will work swiftly to stabilise these entities and return them to financial sustainability through the appointment of capable executive teams, refocusing on their core mandates and ensuring viable business and operating models. Improvements in operational performance and engendering confidence among lenders and the bond market is critical.”

On Denel he said the conglomerate is one of the institutions where evidence of state capture emerged.

“Again, it seems a weak and captured board and executives were intent on facilitating exploitation of the company’s valuable intellectual property to enrich Gupta associates and potentially launder money offshore. In doing do the company flouted the Public Finance Management Act (PFMA) and other legislation.”

Gordhan said the new Denel board, appointed in April, was tasked with implementing the findings of all forensic reports and holding those implicated to account.

He gave the example of Denel not being able to pay salaries as one outcome of state capture.

“To ensure Denel could meet its obligations, government increased its guarantees to the company. The company’s cash flow position remains tight. The department will be working with the company to improve its liquidity position as well as reviewing operations and improving performance. “

The Public Enterprises Minister noted the resignation of chief executive Zwelakhe Ntshepe only hours before he delivered his budget vote address.

Ntshepe’s resignation was hailed as a victory for trade union Solidarity which the Centurion-headquartered labour union put down to “constant pressure” by it against him and “other corrupt Denel management”.

Deon Reyneke, Solidarity deputy general secretary, said the Denel dossier it made public in April was the final nail in Ntshepe’s coffin.

The dossier highlighted various examples of financial mismanagement and disclosed documentation revealing a R1,2 million bursary was awarded unlawfully to the son of North-West Premier, Supra Mahumapelo.

“In the report we also asked for Ntshepe to be suspended pending an investigation,” Reyneke said,

 

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