Findings of Denel forensic investigations expected to see recovery of funds, disciplinary action


Allegations of fraud and mismanagement raised by Solidarity’s Denel Dossier are among forensic investigations already done by Denel with legal action to recover losses “expected soon”.

With a Solidarity media conference scheduled for today (Wednesday, 31 July), the State-owned defence and technology conglomerate took the wind out of the trade union’s pending announcement saying it has, to date, taken five legal steps. These stem from reports on investigations initiated by Denel.

They are: civil action against former Denel executives to recover monies lost through irregular awarding of pilot bursaries; a statement will be submitted to the SA Police Service laying complaints against former executives identified in forensic reports; a High Court application will be launched to review contracts concluded between Denel and VR Laser; disciplinary action will be taken against implicated Denel employees, pending legal recommendations; and, civil claims will be instituted against former Denel executives to recover losses once “the quantum of losses has been determined”.

Denel Group chief executive, Danie du Toit, said in a statement issued on Wednesday ahead of the Solidarity media conference, that he has several reports concerning improper transactions, irregular appointments and potential fraud while other investigations are at advanced stages. The reports were referred to independent legal firms to review and assist Denel with implementation of recommendations.

Du Toit added: “Denel is aware of the content of a dossier on alleged corruption compiled by Solidarity and of the union’s intention to institute legal steps to investigate”.

“We started with thorough investigations more than six months ago, shortly after the appointment of the new Denel Board. We kept stakeholders, including Solidarity, informed on progress made as recently as this week. There is no need to take Denel to court to force it to investigate allegations of irregularities.

“It is completely untrue to allege Denel has not taken action to investigate transgressions and recover money. We are in an advanced stage of investigations and there is no need to compel us to act through court actions,” he said.

Du Toit also pointed out Denel keeps employees, unions and other stakeholders regularly informed about the company’s financial position and liquidity issues, which impacted Dene’s ability to pay salaries on time.

“We are encouraged by the positive sentiments towards Denel expressed by Government and looking forward to possible decisions on the recapitalisation of the company,” Du Toit said.

At the same time Dirk Hermann, Solidarity Chief Operating Officer said the trade union served urgent court documents on Denel today (Wednesday) to force it to pay unemployment insurance levy and taxes deducted from employees’ salaries. Solidarity also launched a process in terms of section 165 of the Companies Act to investigate mismanagement and corruption of former members of the Denel board, with a view to possible prosecution.

“The victims of reckless mismanagement and state capture are real people with families and emotions. Employees’ salaries are used to subsidise cash flow. Denel went further and withheld compulsory income tax payments to the SA Revenue Service (SARS), even though these payments were indicated on pay slips,” Hermann said.

“The legal steps taken by Solidarity are twofold. An urgent application followed after Denel announced it could only pay a portion of salaries for June and July. Some statutory, compulsory payments such as PAYE, UIF and SDL appear on pay slips, but have not been paid,” Solidarity said.

“Unfortunately, we have seen it becoming general practice that taxpayers and employees of state enterprises are treated as financiers for state capture and the associated misdeeds. Solidarity says enough is enough and because of this case, institutions will be obliged to accept responsibility for these misdeeds,” Anton van der Bijl, head of Solidarity Legal Services, said.

The second legal action pertains to Solidarity’s Denel Dossier, released in April 2019. Since then, a forensic investigation was done and Denel this year confirmed steps are contemplated against those involved. Solidarity has not received confirmation of any such steps, it said.