Denel facing liquidation call


Under-fire Denel faces another volley – this time in the form of a court application for liquidation of the State-owned defence and technology conglomerate.

The application, reported exclusively by Johannesburg-headquartered eNCA, wants embattled Denel, already under fire from opposition political parties and trade unions, liquidated. Centurion-based Saab Grintek Defence, one of many companies and enterprises spawned in the execution of the Strategic Defence Procurement Package (SDPP), reportedly wants Denel “wound up”.

The TV news channel reports the liquidation challenge was spurred by a contract with Saab Grintek Defence to produced fire control computers for the SA Army’s long-awaited new infantry fighting vehicle (IFV). More than 240 Badger IFVs are supposed to be produced by Denel Land Systems at its Lyttelton factory with sub-contracts for components going to, among others Saab Grintek Defence.

“In terms of the contract, Denel was supposed to supply Saab with specific equipment to fulfil its side of the deal. This did not happen,” the TV news channel said.

As has become the norm, Denel has not commented on the looming legal action and there is no information on the company website regarding it.

Trade union UASA said Saab Grintek Defence’s liquidation application was avoidable had the State acted in time.

Denel owes employees R500 million in unpaid wages. UASA, through FEDUSA to which it is affiliated, requested the ministerial management of the Department of Public Enterprises consult other spheres of government, including National Treasury, to provide funding to ensure Denel could honour creditor liabilities and continue trading.

“The liquidation bid from Saab Grintek Defence, although warranted in terms of  Denel’s liquidity struggles, could have been avoided had the State intervened as pleaded. UASA is aware of other creditors also demanding long outstanding payments from Denel,” the trade union said.

“We remain committed to assist our members through this new development. Should liquidation be the result of Saab Grintek’s court application or other creditor that might now be prompted to approach the High Court, we will step in to assist members with claims against the SOE by nominating a preferred liquidator to ensure a fair process.”

The reported statement of intent to seek legal redress joins a call – repeated last week – by the Democratic Alliance (DA) for Denel to be place in business rescue. It was first made in April by the party’s deputy shadow public enterprises minister Michele Clarke. She stressed at the time the process should not follow the same route as happened at grounded national carrier South African Airways (SAA).

Business rescue is not an option for trade union Solidarity, which has a court decision in its favour for more than R12 million worth of Denel assets to be attached ahead of auction or sale to settle outstanding salary and employee benefit payments.

Helgard Cronjé, Solidarity public sector deputy general secretary, last month told defenceWeb regular meetings with Denel management happen – an indication the trade union wants Denel to remain operational.

“There is forward movement but progress is slow and needs to be accelerated as Denel’s situation worsens on a daily basis,” Cronjé said.

Denel has seen an exodus of directors, including board chair Monhla Hlahla, and is currently under the leadership of a second acting chief executive. William Hlakoane replaced Talib Sadik in February. Sadik is a former chief executive apparently called in when then chief executive Danie du Toit resigned last August. Directors no longer on the Denel board include former SA National Defence Force (SANDF) chief and past Minister of Communications Siphiwe Nyanda, Kabelo Lehloenya, Sibusiso Sibisi, Nonzukiso Siyotula and Sue Rabkin. Further decimation of Denel management came in March when chief financial officer Carmen le Grange resigned.