Denel State capture allegations being investigated

1990

Ahead of Chief Justice Raymond Zondo expressing concern around Parliament not being able to prevent another round of State capture, Public Enterprises Minister Pravin Gordhan told a Parliamentary questioner law enforcement agencies are investigating “all recommendations of criminal [action]” against Denel listed in Zondo’s state capture report.

Omphile Maotwe, a Limpopo EFF (Economic Freedom Fighters) National Assembly (NA) member, bluntly asked Gordhan if he intended to resign for “failing to stabilise SOEs (State-owned enterprises)”. By way of qualification he pointed out “only six SOEs fall in the DPE (Department of Public Enterprises) mandate” listing details of five in a written response. They are Eskom, Transnet, SA Airways (SAA), Alexkor and Denel. A large number of SOEs, Gordhan told Maotwe, are the responsibility of other departments. This includes defence and security acquisition SOE Armscor, which reports to Defence and Military Veterans Minister Thandi Modise.

On Denel Maotwe was informed the former board chair (presumably Daniel Mantsha) “implicated in State capture” was referred to the Law Society to prevent further practice. Gordhan explained that former director Daniel Mantsha was referred to the Legal Practice Council for discipline and all incidents of criminal conduct contained in the state capture report are under investigation by law enforcement agencies.

Furthermore, director delinquency proceedings are to be instituted via the Companies and Intellectual Property Commission against nine former – also unnamed – directors.

Denel is still without a chief executive officer with Michael Kgobe currently interim replacing previous interim holder of the office, William Hlakoane. Gloria Serobe, interim Denel chair, earlier this month (June) told Parliament’s Standing Committee on Public Accounts (SCOPA) the process to appoint a permanent chief executive along with a chief financial officer (CFO) and chief audit executive “to lead the organisation and bolster its efforts to improve governance, restructure and stabilise the organisation to fulfil its mandate” was underway.

During the SCOPA meeting, the defence and technology conglomerate made known it showed a technical profit of R390 million before interest and tax for the year ending March 2023. This is after a R747 million loss the previous financial year. However, the profit was not from operations but National Treasury bailout money and funds from the Denel Medical Benefit Trust.

“Let’s be honest about this ‘profit’,” Democratic Alliance (DA) shadow defence and military veterans minister, Kobus Marais commented. “Profit is earned from commercial activities where profit derives from selling products and services. This ‘profit’ is derived from skimming reserves from their medical aid [Denel Medical Benefit Trust]. This might deliver an accounting ‘surplus’ but not a profit”.