Pay woes continue at Denel


State-owned defence and technology group Denel remains mired in financial misfortune with a national business daily reporting it is – yet again – unable to meet salary and benefit commitments to employees.

According to Business Report, the Irene, Centurion-headquartered Denel Group’s inability to pay employees this month (June) is due to “a dire liquidity position, competing priorities and declining sales”.

There was, at the time of publishing, no Denel statement to either support or vindicate the publication’s position.

Business Report has it Denel employees were last week informed there was “not sufficient cash with various plans undertaken slowly taking shape to improve sales and cash inflows”.

Positive results are anticipated in between three and six months.

In what is presumably an internal memo to staff, Denel said it “did not foresee being able to honour financial obligations for the month of June”. This includes “employee salaries, related statutory and third party payments”.

Denel divisions and associated companies to date have a 12 month history of not meeting employee financial obligations with in excess of R500 million owed to staff.

Not happy with the treatment meted out to it members, two trade unions – Solidarity and UASA (United Association of SA) – sought legal redress to force government-owned Denel to meet its obligations. In one instance a court order has been granted for Denel assets valued at over R12 million to be attached and sold to pay salaries and benefits, including medical aid.

Saab Grintek Defence, a company created as part of the defence industrial participation (DIP) component of the Strategic Defence Procurement Package (SDPP), better known as the Arms Deal, is seeking Denel’s liquidation and reportedly approached the High Court in this regard. The Centurion-based company is bringing the application for its involvement in Project Hoefyster for new infantry combat vehicles for the SA Army. Saab Grintek wants Denel wound up because of failure to meet commitments in terms of a contract to manufacture more than 200 fire control computers for use on the new Badger wheeled fighting vehicles.