Denel “buck” passed to Armscor by Public Enterprises

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Defence and technology conglomerate Denel is one of Pravin Gordhan’s State-owned entities (SOEs) responsibilities with his department displaying nifty political footwork to divert a Parliamentary question from the public enterprises portfolio.

Democratic Alliance (DA) parliamentarian Farhat Essack, who sits on the Public Enterprises Portfolio Committee (PEPC), asked Gordhan about Denel’s ability to support the SA National Defence Force (SANDF). He also wanted to know, in support of questions posed by colleague Kobus Marais, shadow minister for Thandi Modise’s defence and military veterans portfolio, to the Joint Standing Committee on Defence (JSCD) of any failings by the State-owned defence and technology conglomerate as regards defence equipment contracts and the status of Denel deliveries to the national defence force.

Essack was informed – in writing – “Armscor as the acquisition agency for the Department of Defence (DoD) will be in a position to provide the required information. Denel is not authorised to provide this information”.

The response, seemingly signed off by Jacky Molisane on the Parliamentary Monitoring Group website, acting Department of Public Enterprises (DPE) Director-General, writes further that “contractual relations between Denel and Armscor is managed, among others, by commercial agreements which contain confidential information provisions. These provisions preclude Denel from disclosing such information (sic)”.

“Therefore, Armscor as the acquisition agency for the DD will be in a position to provide the required information. As per the existing commercial agreements, Denel is not authorised to provide this information.”

This “disjuncture”, between acquirers, manufacturers and the user of defence equipment (Armscor, Denel and the SANDF), was recently under the JSCD spotlight.

Concerning to the defence oversight committee was “uncertainty on the ability of Denel to deliver on its mandate as the entity implements its turnaround strategy”. JSCD co-chair Cyril Xaba said after a March meeting it was “concerned” about a “seeming disjuncture” between SANDF expectations and Denel’s ability to maintain critical PME (prime mission equipment)”. The committee’s advice was for all involved to “thrash out” concerns about support of SANDF “strategic and sovereign capabilities”.

Gordhan and his Public Enterprises Ministry again came under fire from the official opposition recently with Standing Committee on Public Accounts (SCOPA) member Benedicta van Minnen noting the “resurfacing of a disturbing narrative”. She was responding to ministerial utterances regarding Eskom and its previous chief executive Andre de Ruyter.

Practices of what she termed “evasion” Van Minnen sees as perpetuating a culture of impunity. “This threatens to undermine South Africa’s economic stability and, if left unchecked, will continue to burden taxpayers with the cost of propping up moribund state-owned entities.”

Post the SCOPA meeting, she noted government has “injected a staggering R331 billion into SOEs. “This misallocation of public funds, driven by a lack of oversight and accountability, reflects the current South African leadership’s disregard for fiscal responsibility.”