The Democratic Alliance (DA) says the Department of Defence materiel acquisition agency, Armscor, should tomorrow explain the 89% remuneration increase granted CE Sipho Thomo and even larger increases for directors.
DA defence shadow minister David Maynier says Armscor`s latest annual report shows Thomo received a 19% salary increase, taking his salary from R1.22 million to R1.45 million and a 1181% benefits increase, taking the latter from R108 624 to R1 391 395.
His total remuneration increased from R1.7 million to R3.27 million, which amounts to a gross increase of 89%.
Executive directors received a combined increase from R168 192 to R1 570 861 – “an increase of 834% – in their benefits from last year,” says Maynier. “Overall benefits, including bonuses and performance benefits, for directors increased from R714 929 to R2 877 042, which amounts to an increase of 302%.
Thomo and his management team are scheduled to appear before the Portfolio Committee on Defence and Military Veterans in the morning.
Armscor`s annual report covers the activities of the arms acquisition and research & development agency for the year to March 31, 2009. The report could not this morning be found on the company`s website.
Maynier says these increases contrast with figures elsewhere in the report that shows the state entity posting a smaller surplus (R37.9 million in March 2009) than last year (R44 million) as well as an increase in government transfer payments from R415.6 million in 2008 to R479 million in March.
“It seems as though without the increased government transfer payment of R479 million, Armscor would have made a deficit of R441.1 million in 2008/2009, says Maynier.
Returning to Thomo, the DA MP said “Sipho Thomo is not exactly Jack Welch.” Thomo has been required to undergo counselling on his management style as well as a disciplinary hearing after making offensive remarks to an employee.
In addition, there are serious delays in various acquisition programmes including the Ground Based Air Defence System and New Generation Infantry Combat Vehicle for which Armscor is responsible.
Maynier continues that there “appear to have been problems with frigate obligation of the defence industrial participation agreement for the Strategic Defence Package” and that Armscor “is swallowing up increasing government transfer payments while at the same time there is a concern that over the long term [the arms agency] may not be able to fulfil its mandate to acquire defence materiel for the Department of Defence.
“Why are we rewarding Sipho Thomo and his management team with higher salaries and bigger benefits payments when there is a concern about the long term viability of Armscor?”
The salary increase comes against the backdrop of SA`s first recession in 17 years that has already stripped about 400 000 jobs out of the economy and taken the formal unemployment rate to 23%.
State power utility Eskom last week defended a 27% increase for its CE Jacob Maroga, while ordinary employees just received 10.5%. He is now paid R4.96 million a year. The figure came in the same annual report that noted a near R10 billion loss at the utility for the last financial year. Municipal workers recently also received a 13% increase, double the Reserve Bank`s inflation target amid concerns that such increases would stoke inflation.
Denel`s recent annual report indicated that its CE, Talib Sadik, was being paid R5.6 million or R466 666 a month. Denel posted a loss of R544 million last year; an improvement on the R1.6 billion lost in the year-to-March 2006.
Pic: Armscor headquarters, Pretoria