Democratic Alliance public enterprises spokesman Manie van Dyk has labelled the loss-making state owned arms company Denel a “cash-guzzling” parastatal and called on government to reduce the taxpayer’s exposure to such entities – for the “sake of the poor”.
“The R1.6bn in indemnities that the government appropriated from the taxpayers` money to keep struggling state-owned arms manufacturer, Denel, afloat is a typical example of how cash-guzzling state enterprises are taking food out of the mouths of the poor,” Van Dyk said in a statement received by defenceWeb.
‘Despite the fact that it had no foothold in any official government policy, Minister [Brigitte] Mabandla`s discredited predecessor, Alec Erwin, reasoned that state enterprises such as Denel basically had to serve as sheltered employment structures with which economic growth should be spearheaded.
“The ANC-aligned directors of these enterprises were then kept well-oiled with unjustified cash bonuses while the SOEs failed to perform – a typical example of how the ANC`s closed patronage network works: advantaging the politically-aligned few at the cost of the poor majority,” the MP charged after a meeting of Parliament`s finance and joint budget committees.
Treasury deputy director-general Kuben Naidoo reportedly told the committees government had a contingent liability of R940 million on its books in terms of a R1.6 billion indemnity issued for the company`s contracts. It has already had to pay R660 million to enable loss-making Denel subsidiary Denel Saab Aerostructures to honour its international contract obligations, some of which relate to the 1999 Strategic Defence Package.
Van Dyk says with Erwin gone; “and both the needs of the poor and pressure on the economy growing more acute by the day, there should be no reason why Minister Mabandla cannot move with speed to unbundle seemingly unviable entities such as Denel to promote investment in the economy, open up empowerment opportunities and boost competitiveness.
“She needs to do this as a matter of urgency, so that National Treasury can enjoy greater freedom to focus the taxpayers` money on funding priorities that really matter, such as projects to facilitate economic growth and provide service delivery and relief to the poor.”
Business Day newspaper yesterday noted Finance Minister Trevor Manuel has highlighted the accumulation of liabilities by state-owned enterprises as a risk to taxpayers and said the control over their contractual obligations had to be strengthened.
He said it was “very clear we need a centre that will check and verify the contractual obligations of all of those kinds of things.… We must have the wherewithal to deal with these matters as these are effectively subsidiaries on our balance sheets which have to be accounted for”.