Parliamentary committees want government assistance for Denel


Parliamentarians were this week given insight into the State-owned defence and technology conglomerate Denel with its second interim chief executive pointing out “it is not a rosy picture”.

The year-to-date balance sheet shows Denel is technically insolvent; available cash is insufficient to meet operational requirements, including paying salaries and suppliers and the group currently owes R636 million to employees and a further R900 million to suppliers. Latest cash flow projections for the current financial year indicate Denel’s balance sheet will be R600 million in the red if no mitigating action is taken.

Against this sorry background, Parliament’s Portfolio Committee on Public Enterprises and its Select Committee on Public Enterprises and Communications noted Denel “requires financial assistance from government”. This, a Parliamentary Communication Services statement said, is government’s legal responsibility to cover its liability as the shareholder.

“Funding is required for Denel’s working capital and operational costs to ensure it is able to implement the turnaround strategy,” the statement said in reference to a five-year turnaround plan made public by William Hlakoane, successor to Talib Sadik, earlier this month.

Suggestions from committee members to assist in bringing Denel back from the brink include a Special Investigation Unit (SIU) probe into corruption and apparent intellectual property theft and meeting the Department of Defence (DoD) and the SA Police Service (SAPS). The national crime, defence and security agency meetings are intended to shed light on “why they are not procuring their supplies from Denel”.

Public representatives on both committees were also “concerned” regarding the defence budget allocation by National Treasury.

“Given recent rioting in South Africa and ongoing events in Mozambique the committees are concerned, particularly in light of the fact that defence budgets around the world are generally on the increase,” the statement said.

There was “encouragement” for comments from newly installed Minister of Defence and Military Veterans Thandi Modise. She is reported, among others, as saying South Africa’s security cluster should never be caught unaware and establishment of an intermediary force was under consideration.