Former Denel chief executive Talib Sadik will “care-take” the State-owned defence and security conglomerate until a new chief executive is named.
Denel on Monday announced that it had appointed Sadik as interim Group Chief Executive following the departure of Danie du Toit, whose tenure ended on 15 August.
In addition to his duties as chief executive for the four-year period 2008 to 2012, qualified chartered accountant Sadik was also a non-executive director of Denel. He was appointed to the interim Denel board in April 2018.
A Denel statement has it that Sadik, the interim group chief executive, “worked with the board (of Denel) developing the turnaround plan and he is well-positioned for a seamless transition as he brings a wealth of experience that will be of value”.
According to Denel board chair Monhla Hlahla, efforts to transform Denel into a sustainable defence and advance manufacturing company continue. “We assure employees, suppliers, customers and all stakeholders the board’s focus on the turnaround strategy is top priority. The shareholder and the board continue to find solutions to resolve the short-term challenges of the company.”
“The Board welcomes Mr Sadik into the interim role and looks forward to working with him on a successful outcome for Denel,” the company said.
A recruitment process for a permanent chief executive to replace du Toit, who left after just on two years, is underway. The statement did not indicate if the position would be advertised or whether a suitable person would be head-hunted.
Du Toit’s resignation was announced on 20 July. His departure came amid mounting challenges in returning the loss-making state owned company to financial health. Earlier last month, du Toit told Reuters Denel may not survive the next few months unless government lets it use some promised bailout funds to generate revenues rather than repay debt.
“I am a positive guy, but I’m gravely concerned we are not going to make it in the next two to three months. We cannot trade out of this situation, it’s impossible,” he said, adding management was in talks with union representatives about temporary salary cuts.
Denel has struggled to pay salaries for a long time especially as bailout money is earmarked for debt and cannot be used for salaries. Workers struggled to get paid several times in 2019 and for a few months this year and there is no sign the situation will improve soon. Denel’s wage bill amounts to about R150 million a month.
In early August, Denel was ordered by the Labour Court to pay outstanding salaries after an application by trade unions Solidarity and the United Association of South Africa (UASA). Denel’s lawyers subsequently said they cannot honour the court ruling.
Denel received R1.8 billion from the State in 2019 (it requested R2.8 billion) and, in this year’s budget, was promised another R576 million. It received only R72 million of the latest funds, earmarked to clear debt.
Business Live reports National Treasury is unable to assist Denel with emergency funding to pay salaries as it has no legal mechanism to do so. “Treasury explained on Friday it was unable to provide Denel with the remaining R500 million for any purpose other than debt repayment, as specified in the Appropriations Bill. The only likely quarter from where help could come is the Department of Defence, which could — with Treasury permission — provide Denel with funding from its own budget,” Business Live said.
Sadik is a graduate of the University of Natal with a BComm degree and a Diploma in Accountancy. He achieved his CA(SA) qualification from the Public Accountants and Auditors Board in 1989. He has an AMP qualification from Insead graduate business school in France. In 1995 he was appointed chief executive: finance at the SABC (SA Broadcasting Corporation) where he led a successful turnaround process resulting in privatisation of SABC commercial regional radio stations.
In 1998 he was appointed financial director at Times Media Limited and the following year onto the executive of NAIL where he helped build NAIL’s media assets to more than R600 million. Following a period as advisor to the National Treasury he was appointed chief financial officer of the De Beers Group Services in 2002.
Sadik was appointed Denel Group financial officer in 2006 and chief executive two years later. Since October 2016 he has been chief financial officer and an executive director of Basil Read Limited.