Call for business rescue at Denel


Put Denel under business rescue is one proposal this week to find a way of bringing some stability to the beleaguered State-owned defence conglomerate with another a call for it to diversify to remain operational.

Both calls come from National Assembly members, one the chair of an oversight committee and the other an opposition party member of the same committee – the Portfolio Committee on Public Enterprises (PCPE). They come in the wake of disclosures this week of short and possible non-payment of salaries again at Denel divisions.

The diversification call was made by PCPE chair Khayalethu Magaxa and reported by SABC TV News.

“As a committee we have been insisting that Denel should diversify and move towards using their capacities to start manufacturing other products that can be useful for our own internal use. For example, they can produce ambulances; they have capacity to build cars like Inyalas; they can produce vehicles for police and so forth. And therefore we have been insisting that there must be a mechanism to move towards that diversifying from Denel (sic),” the government broadcaster quoted Magaxa as saying.

Democratic Alliance (DA) shadow deputy public enterprises minister Michele Clarke maintains Denel will collapse if not placed under business rescue.

Calling Denel’s situation “dire” she is of the opinion “the only rational way forward is to place the State-owned enterprise (SOE) under business rescue as bailouts and government guarantees are not an answer”.

“There is no way forward other than for Denel to be placed under business rescue. If there isn’t an urgent intervention the entire entity will collapse. It is important business rescuers take over the running of the arms manufacturer and formulate a credible business rescue plan to create order.

“Unlike the sham of a business rescue plan we see at South African Airways (SAA), we want the process to be independent without any undue influence from Public Enterprises Minister Pravin Gordhan or his department. It should be a process that follows the letter of the law and shouldn’t be governed by ANC factionalism or ideological beliefs, but in terms of rules governing business rescue processes,” she said in a statement.