Solidarity wants Denel to work, despite court order

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Trade union Solidarity is talking to Denel to assist the beleaguered government-owned defence and technology conglomerate back onto a solid financial footing notwithstanding it having legal approval to attach assets.

The Centurion-headquartered labour organisation last year embarked on legal action against the State-owned enterprise (SOE) in the wake of continued short and non-payment of salaries and other employee benefits, including medical and pension contributions.

It said then, via deputy general secretary for the public sector Helgard Cronjé, the warrant of execution to seize assets valued at R12.7 million was “a victory for Solidarity members at Denel. They were on the receiving end of unprecedented hardship and uncertainty”.

Cronjé this week told defenceWeb assets – “which ones we are not exactly sure” – have been written up by the sheriff.

“They have not been removed and before Solidarity gives instructions to remove them we want to establish exactly which assets have been written up,” he said adding “some Denel divisions have complied with the order to pay outstanding monies and others not”.

“This means certain warrants can still be executed and others not. Solidarity is finalising further legal action for outstanding monies from August last year to now.”

That the union wants Denel to continue as a going concern is clear from meetings senior Solidarity representatives have had with Denel “at both executive committee and board level”.

“There is forward movement but progress is slow and it needs to be accelerated as Denel’s situation worsens on a daily basis,” Cronjé said.

On the issue of putting Denel into business rescue, as was done with SA Airways (SAA), he is of the opinion it “while being noble” would not be successful as it does not take into account the legislative framework for the process at Denel.

“A call by the Democratic Alliance (DA) for Denel to be put into business rescue is not possible as there is conflict in the legislation regulating the practice. This includes the Companies Act and legislation regulating transactions at SOEs – the Public Finance Management Act (PFMA).

“Business rescue practitioners (BRP) first have to determine if the company is saveable. If yes, the BRP will look for financing from banks and other financial institutions. If they do not want to provide financing, the BRP will go to the shareholder, in this instance government and will be viewed as a bailout of sorts for further financing. If the shareholder does not want to – or cannot afford to, as with Denel – provide further financing external parties will be approached.

“If any part of/or interest in a SOE is to be sold to external parties, approval from the Minister of Public Enterprises (Pravin Gordhan) has to be sought in terms of the PFMA. It means the Minister has the final say about the outcome of a business rescue process based on the current legislative framework. These challenges were the biggest stumbling blocks in the SAA business rescue process.

“The DA call for business rescue at Denel to be different than that used at SAA is noble but does not take into account the legislative framework in which the process has to unfold,” Cronjé said.