Public Enterprises Minister Lynne Brown expects the investigation into the suspension of three senior Denel officials – chief executive Riaz Saloojee, chief financial officer Fikile Mhlontlo and group company secretary Elizabeth Africa – to be completed by the end of June, more than six months later than planned.
She was speaking during a meeting of Parliament’s Portfolio Committee on Public Enterprises in Cape Town this week, saying the trio had asked for more time to give their input into the investigation around their suspension as of September last year. At the time, Brown’s office indicated she was expecting a report on the suspension within two weeks. This then slipped to 10 December, with a decision on what action to take expected in the new year.
Speculation at the time of the suspensions was it had to do with Denel depleting its cash reserves with the acquisition of BAE Systems Land Systems South Africa (now renamed Denel Vehicle Systems). This was subsequently denied by Brown.
It was then speculated that the suspension was to clear the way for the formation of Denel Asia, a joint venture between Denel and VR Laser, which has connections with the Gupta family. Denel Asia had apparently not been approved by either Brown or the National Treasury.
Brown is also reported as has having told the meeting this week that the focus of the Denel board, appointed by her last September, would be on improving cash and working capital management as well as opening new markets through strategic partnerships.
The minister said the “acquisitive strategy” adopted by Denel had been “pegged back” by the new board of directors of the State-owned defence industry conglomerate but it was still augmenting its product programme.
She is reported as having told the portfolio committee there were discrepancies with a previous profit declaration.
“The State-owned company (Denel) said they made a R1billion clear profit, but it wasn’t. It was actually a large ring-fenced amount.
“The cash situation at Denel has however stabilised and a R850 million note brought to market in the fourth quarter of the last financial year was over-subscribed, showing the market’s confidence in Denel,” she said.
Brown also told the portfolio committee Denel had embarked on “an aggressive product portfolio augmentation programme”.
This included the SARA regional aircraft to address specifically African air travel requirements and the mid-life upgrade to the Rooivalk combat support helicopter.
“The launch of the Rooivalk upgrade is a product of the deployment of the helicopter on a peacekeeping mission in the Democratic Republic of Congo where it acquitted itself well.
“These developments,” she said “must be celebrated by all South Africans as they show Africa is playing its role in giving the world complex technological products”.
She also said the focus of her department was to position State-owned companies to drive economic recovery and set the national economy on a growth trajectory with better developmental outcomes.
“As a department we have to ensure we leverage our State-owned companies to drive the industrialisation programme, accelerate transformation of the economy and support Africa development.”