Denel believes the positive sentiments expressed towards it by both President Cyril Ramaphosa and Public Enterprises Minister Pravin Gordhan will help to restore confidence in the company, but others, including the Democratic Alliance (DA) and trade union Solidarity, are not as enthusiastic.
Speaking after this week’s revelations as regards short payment of June salaries and the subsequent arrival of a Good Samaritan to make up the shortfall, Denel chief executive Danie du Toit maintains the support received from Ramaphosa will help position Denel as “a reliable designer and manufacturer of world class defence and technology systems”.
On the downside senior Democratic Alliance (DA) MP Natasha Mazzone maintains the arrival of an unidentified lender ensuring full salaries for Denel employees is “a temporary bandage for an entity on the brink of collapse”.
Trade union Solidarity is “extremely concerned” about the State-owned company’s (SOC) short term financial position and welcomes future monthly Denel management/Solidarity meetings. “This is where we will receive the latest information on progress with the Denel turnaround,” deputy general secretary Johan Botha said.
Du Toit acknowledges Denel “took a battering” with revelations of state capture. This was also pointed out by Gordhan who said the financial strain and uncertainty facing the families of Denel employees was a clear example of state capture’s damaging effects. He went on to say Denel was “South Africa’s producer of military and aerospace equipment – a crucial state entity substantially harmed by state capture” during the Parliamentary SONA debate.
The Denel chief executive also came out in support of Ramaphosa’s vision for “a new landscape where SOCs have the expertise, leadership and appropriate financial models to fulfil their mandates”. He indicated Denel was looking forward to working with the Presidential SOC council.
Mazzone, the DA shadow public enterprises minister, said the financial assistance provided at short notice by an as yet unnamed lander was “not a get out of jail free card but a temporary reprieve”.
“Denel, like other state-owned entities is circling the drain and continues to be plagued by numerous legacy issues resulting from years of state capture, mismanagement and graft,” she said adding her party would seek a full-scale review of all state entities.
Du Toit said today the company is busy with a comprehensive programme to restore good corporate governance, reduce costs and find new opportunities for growth, especially in export markets.
Botha noted there are talks of a bailout for Denel by the end of September or October this year, “but there is no certainty about the cash flow challenges facing Denel and possible solutions for that in the meantime.”