Denel board resignations

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Five board members named by Public Enterprises Minister Lynne Brown in July 2015 as “a rotation” have resigned, leaving five nominated members and three top Denel executives to run the state-owned defence and technology conglomerate.

Soon after the new board, headed by Dan Mantsha, was named, one of its first decisions in September 2015 was to suspend the then chief executive Riaz Saloojee along with chief financial officer, Fikile Mhlonto, and company secretary Elizabeth Africa.

Speaking during the recent release of Denel’s financial results for the 2016/17 year, acting chief executive Zwelakhe Ntshepe announced the resignation of the five.

They are Tau Mahumapelo, Nonyameko Mandindi, Nkopane Motseki, Refiloe Mokwena and Thamsanqa Msomi.

This leaves the board comprising Mantsha as chair, retired lieutenant general Themba Nkabinde, Khumbudzo Ntshaveni, Pinkie Mahlangu, Mpho Kgomongoe and acting chief executive Ntshepe as members along with recently permanently appointed chief financial officer Odwa Mhlwana and company secretary Vuyo Xaxa.

Questions posed to Colin Cruywagen, spokesman for Public Enterprises Minister Lynne Brown, about the resignations and possible new appointments had not been answered at the time of publication.

It is not clear why the five board members resigned but it may be to do with the disastrous Denel Asia joint venture with the Gupta-linked VR Laser Asia. According to BizNews, leaked e-mails show that Msomi was the alleged middleman between finance minister Malusi Gigaba and Gupta family associates seeking visa favours for their associates from Home Affairs, for instance.

In response to a Parliamentary question, Minister of Defence and Military Veterans Nosiviwe Mapisa-Nqakula said Armscor had not supplied any “rescue funding” to Denel “other than what is allowed within its normal business practices”.



Mapisa-Nqakula also told Democratic Alliance MP, Kobus Marais: “Armscor followed its normal contracting process whereby contracts are placed on Denel for delivery of specific products or services. To this extent Denel, similar to any other contractor, requested advance payments on some contracts placed for paying long lead items, etc. This awarding of such an advance payment is in the sole discretion of Armscor and is subject to an associated benefit which may include reduction in the price offered as well a guarantee equal to the amount of the advance payment acceptable to Armscor. An acceptable benefit is measured against the norm of Bank Acceptance (BA) rate plus 1%.
“In terms of Armscor’s current financial policy, Armscor only accepts corporate guarantees, with certain parameters, of advance payments from State Owned Entities (SOEs) as it also reduces the cost for the State. Any advance payment exceeding the set corporate limit is then covered through an acceptable bank or insurance guarantee. Advance payments are then recovered pro-rata from future milestone payments.
“During this period, Armscor reviewed Denel’s corporate limit based on Denel’s financial position. The corporate guarantee limit was increased during the period; this assisted Denel to reduce bank or other guarantees to enable them to use their facilities for other business purposes. ”