Call for Denel to appoint permanent CEO

2216

Two senior Democratic Alliance (DA) public representatives, whose shadow portfolios include troubled State-owned defence and technology group Denel, maintain priority number one should be finding – and appointing – a full-time chief executive.

Kobus Marais (defence and military veterans) and Ghaleb Cachalia (public enterprises) welcomed – with reservations – recent promotional events, but remain adamant it is essential for Denel to move from either acting or interim chief executives.

Since Danie du Toit’s resignation in July 2020 after less than two years occupying the chief executive suite in the Denel Corporate Office in Centurion’s Irene, there have been, according to Cachalia, “seven varieties of chief executive”. Backing the need for someone permanent, he said research showed less disruptive chief executive transitions lead to better company performance.

That acting/interim chief executives have been in place for lengthy periods of time and appear to, de facto, be permanent, is disturbing and is worsened by replacement happening only when the Denel board applies its collective mind, Cachalia believes.

“All round the situation is untenable as it impacts negatively on an already benighted company.”

When Du Toit exited, Denel Aeronautics Chief Executive Michael Kgobe moved from the Denel Kempton Park campus to Irene until William Hlokoane, then Denel Group Chief Operating Officer (COO), took over in February 2021. Eight months later Kgobe was again named interim chief executive.

Marais is of the opinion the non-appointment of a chief executive is driven by a lack of political will rather than any desire to put Denel back on its feet.

“Assuming government is serious about repositioning Denel as a strategic munitions partner to the national defence force and the wider South African defence industry, a permanent chief executive should have been appointed a long time ago. Sadly the lack of political will to steer drastic changes at Denel is absent.”

He asks further, in view of an ANC congress resolution to move Denel from Pravin Gordhan’s Department of Public Enterprises (DPE) to Thandi Modise’s Department of Defence (DoD), whether this is possibly a contributing factor.

In June, Denel interim chair Gloria Serobe told Parliament’s Standing Committee on Public Accounts (SCOPA) the process to appoint a group chief executive, a chief financial officer and a chief audit executive would be completed in the current financial year. The board is down to six members, less than half the 13 it should be.

On the Denel capability demonstration at Armscor’s Alkantpan test range in August and a “show and tell” at Denel’s Overberg Test Range (OTR) early in September, Cachalia has it “cost has to be an issue”.

“Given the state of Denel’s finances and a transparent presentation of the business/interest generated versus the cost would be in order – all of which underscores it cannot be business as usual at Denel. Hard decisions about viability, amalgamation and sale need to be addressed before the company is able to operate in the normal course involving development, showcasing and executing of orders,” he said.

The shadow public enterprises minister takes published comments on the Overberg event to elaborate.

“OTR Chief Executive Bridget Salo is reported as saying: ‘The show and tell … affords an opportunity to interact with our stakeholder and provides a valuable platform to showcase the developments’. SA Air Force (SAAF) Chief, Lieutenant General Wiseman Mbambo remarked ‘openness can be costly but it’s critical in building strong relationships’.  He went on to say, the event gave him an opportunity to ‘witness OTR becoming open about their challenges’.  This highlights the contradiction between being ‘showcase ready’ and ‘challenges’ which should have been attended to prior to showcasing”.

Marais is more circumspect telling defenceWeb “both Alkantpan and Overberg were successful” pointing out the strategic value of both facilities to South Africa “in the past when they were used by important defence partners companies from abroad”. He maintains both are “assets” which should be retained to benefit South Africa and be “supported to grow Denel’s return to a viable business”.

On the August and September Denel events he has it determining whether they were “good business opportunities one needs to know about the clients hosted and realistic short, medium and long term advantages”.

“If there is/was a high probability to generate business, then it might make good business sense. If not and it is/was a shot in the dark, it might be a bad decision and a waste of money.”