Julius Malema’s Economic Freedom Fighters (EFF) in the form of Limpopo parliamentarian Omphile Maotwe is proving to be a persistent questioner in search of answers regarding poor performance of State-owned enterprises, including Denel.
In less than five days Public Enterprises Minister Pravin Gordhan and his acting Director-General Jacky Molisane responded to two Maotwe questions. Both related to SOEs in the Public Enterprises portfolio with the first on possible criminal action against personnel and directors implicated in State capture (grand corruption) and the second seeking clarity on whether or not the Department of Public Enterprises (DPE) is “living up to its mandate to champion and direct” SOE restructuring.
In this regard she was informed the DPE, working with the Presidential State-Owned Enterprises Council (PSEC), is strengthening SOE governance by a number of initiatives. They include introducing an over-arching act governing SOEs and an “appropriate shareholder ownership model”.
On Denel specifically Maotwe was told there was “notable progress” in restructuring the defence and technology conglomerate.
The DPE reply reads further: “Denel appointed a Chief Restructuring Officer to enable Denel to develop its strategic restructuring plan focused on the operational and balance sheet restructuring. The Minister was informed by the Chairperson of Denel for his information. The latter has seen Denel receive payments for guaranteed debt, enabling Denel to save on substantial interest payment costs and R3.4 billion recapitalisation allocation announced in October 2022”.
It continues: “These funds have significantly improved the SOC’s (State-owned company’s) balance sheet, stabilising the entity, allowing for the restart of income generating activities, honouring payment plans and gradually restoring its reputation as shown by renewed interest from international entities in partnering with Denel”.
One who is not convinced Denel is on the road to recovery and profitability is Democratic Alliance (DA) shadow defence and military veteran minister Kobus Marais. He maintains the Denel “technical profit” of R390 million before interest and tax for the financial year ending 31 March cannot be termed that. “Let’s be honest profit is earned from commercial activities where it derives from selling products and services. This Denel ‘profit’ is derived from skimming reserves from their medical aid [Denel Medical Benefit Trust]. It might deliver an accounting ‘surplus’ but not a profit”.