Denel’s Sibisi has hard words for DPE

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Outgoing Denel board chairman Sibusiso Sibisi has taken exception to reports that he has been purged by Public Enterprise Minister Malusi Gigaba along with counterparts at Eskom and Transnet, when in fact his tenure was ending next month.

Sibisi was also not impressed by the Department of Public Enterprises’ statement on Friday, which appeared designed to soften the effect of earlier reports, Business Day reported. In an open letter, he said it still left “the reader with the distinct impression that the primary motive was indeed a conscious purge of the board”.

On Friday Gigaba said his action was motivated by Denel’s need for an “immediate business turnaround and strategic redirection”, saying there was a need to review Denel’s business case and whether it should include civilian products in its product offering, Business Day said.

Sibisi blamed a lack of bold leadership and a clear vision at Denel on the Department of Public Enterprises, saying it was “disingenuous to blame all losses on the board”. Its woes were due to a lack of consensus on its business model by public enterprises and defence — whether it should be a “bespoke product developer and manufacturer for the Department of Defence, with exports as an after-thought to attain sustainability” or an “advanced engineering and technology developer to promote local industry”.

This was compounded by “shareholder obsession” with the products of engineering rather than engineers themselves. “There is much indignant thumping of the table regarding loss of family silver (through foreign equity partnerships) rather than concern with nurturing and replenishing the craft of making silverware in the first place.”

Helmoed-Römer Heitman, South African correspondent of Jane’s Defence Weekly, said while public enterprises probably wanted Denel dead, the departments of defence, science and technology, and trade and industry understood it could play a bigger role in innovation and advancing SA beyond defence equipment manufacturing. “But they have no say on how to keep it productive or no resources to buy in bulk to sustain it.”

Outgoing Denel chairman Sibusiso Sibisi’s letter to Business Day

On my way out, but voluntarily

Reports that I have been removed as chairman of the board of Denel as part of a “purge” by the minister of public enterprises cannot be allowed to stand without riposte.

Reports that I have been removed as chairman of the board of Denel as part of a “purge” by the minister of public enterprises cannot be allowed to stand without riposte.

I was appointed to the board of Denel in 1998 by the then minister of public enterprises, Stella Sigcau. I have been chairman since 2005 and I have served under six successive ministers of public enterprises. It is plainly unseemly for anyone to serve on the board of anything for 13 years.

In 2008, after 10 years on the board, I signalled a desire to minister Alec Erwin to step down. Since the CEO was also approaching the end of his term, I was asked to continue. Shortly thereafter, there was rapid ministerial succession (Mr Erwin, Brigitte Mabandla , Barbara Hogan ). I again expressed a desire to step down. On the very day of the 2010 annual general meeting (AGM), Ms Hogan indicated that the succession process had hit a snag and appealed (to me) that I stay on for a further year until the 2011 AGM.

Clearly the fatal lapse of judg ment was to agree to Ms Hogan’s request. Much to my chagrin, I now learn from the media that I am ostensibly one of the victims of a far-reaching ministerial purge. I have not been contacted by public enterprises but I have seen a media release that makes reference to the arrangement of the 2010 AGM, but hastens to speak of the need for Denel’s “immediate business turnaround and strategic redirection”.

This is too clever by half. It is a weak sop to the 2010 agreement that still leaves the reader with the distinct impression that the primary motive was indeed a conscious purge of the board as a “show of strength”.

Given that Denel’s turnaround strategy of 2005, whose main pillar was international equity partnerships to enter global markets, is effectively on hold, with no coherent alternative, save the suggestion for Denel to “include civilian products in its product offering”, the apparent tough talk amounts to little more than weasel words.

Ironically, an exemplar of defence and civilian outcomes is in the product suite of Carl Zeiss Optronics SA, an equity partnership between Denel and Carl Zeiss (an international brand), that is a commendable outcome of the 2005 turnaround strategy.

We also need to back away from speaking of Eskom, Transnet and Denel in the same breath, simply because they happen to report to the same minister. The role of Eskom and Transnet in providing essential economic infrastructure and services is not difficult to grasp.

Denel? A general defence industry player that just happens to be state- owned? A bespoke product developer and manufacturer for the Department of Defence, with exports as an after- thought to attain sustainability? An advanced engineering and technology developer to promote local industry?

There can be no consensus on Denel’s business model until there is shareholder consensus on the primary objective. This must be complemented by coherent identification of the oft- cited “sovereign assets” that are off- limits in any foreign equity negotiations. In the meantime, it is disingenuous to blame losses on the board.

Denel’s woes are compounded by shareholder obsession with the products of engineering rather than the engineers themselves. There is much indignant thumping of the table regarding loss of family silver (through foreign equity partnerships) rather than concern with nurturing and replenishing the craft of making silverware in the first place.

Intellectual value and productive knowhow reside in people’s heads and hands. That is where the primary focus should be.

Lest this all sound like so much self- exoneration, it is worth pointing out that there is an example of a state- owned entity whose focus is science, engineering and technology where the accent is precisely on people first. It earns a healthy income from local and international sources that vastly exceeds its public funding allocation. It has an excellent demographic profile of researchers (race, gender, age) and an impeccable record of corporate governance to boot.

I should know; I run it. It is called the Council for Scientific and Industrial Research. I have been the CEO of it for the past 10 years. In that capacity as my day job, it has been nothing short of pleasurable to report to three supportive ministers of science and technology. No lack of shareholder vision here. Maybe our leadership should talk a great deal more.

Sibusiso Sibisi



Chairman (barely), Denel CEO (firmly), CSIR