Kunene to take charge July 6

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New Denel chairman Zoli Kunene will take charge of his first board meeting July 6. The Ministry of Public Enterprises says a new board, announced last week will then also take charge of the state arsenal.

Minister Malusi Gigaba on Friday thanked the outgoing non-executive directors of Denel “for their contribution and service to the nation.” In a statement Gigaba added “Denel requires immediate business turnaround and strategic redirection. Its sustainability and profitability are not beyond question. There is a need to review Denel’s business case. It is necessary for Denel to also investigate whether it should not include civilian products in its product offering.”

Defence diversification, “turning swords into ploughshares” was popular in the 1990s and many Denel companies tried their hand at it. Many of the ventures were not profitable and were spun off as “non-core” as part of former CE Shaun Liebenberg’s “turnaround strategy” announced in late 2005. officials at the time also said the state entity had trouble competing against the private sector in markets the latter understood better and that Denel lacked entrepreneurial skills. Some Denel entities have, however stayed in civil markets, notably PMP that makes drill bits for the mining industry.
“The Minister of Public Enterprises, as a shareholder representative, has a duty to ensure that SoEs [state-owned enterprises] are aligned to the vision of government and its objectives.” Gigaba reminded President Jacob Zuma, in his inaugural address in June 2009, “implored the government to reshape public policy and usher in an agenda of a developmental state. The latter requires the state to take a longer term view of investment and infrastructure development. The backlog in infrastructure investment requires a bold agenda by the government to meet the demand by the steady economic growth.
“The implementation of the developmental state agenda requires a paradigm shift on the role of the state owned companies in the economy from trading strictly within the constraints of their balance sheets to exploring innovative ways to fund infrastructure development including partnership or cooperation with the private sector. Consequently, the developmental state also requires a different governance and shareholder management model of SoEs. It calls for a degree of active participation by the shareholder representative in the areas of policy, planning, strategic direction and oversight,” Gigaba said in his Friday missive.
“At the Annual General Meeting (AGM), and in addition to receiving reports on the performance of the SoEs, the Minister assesses the challenges of SoEs, the implications of policy imperatives on these, the skills required by the SoEs to meet their challenges and deliver on the government’s mandate.”

Gigaba added the board members of SoEs are appointed on condition that he as responsible minister may review their continued membership annually at the AGM. “The minister considers, amongst other factors, the following prior to reaching a decision whether a Board member should be retired or not:

The immediate priorities of the government;

The number of terms and number of years a member has served in the board;

The collective skills required by the board to deliver on the government’s priorities;

The need to continuously instill innovation and new thinking;

Prevailing demographics and gender representation;

Collegiality and cohesion amongst Board members;

Availability of a Board member to devote their time to the affairs of the SoE;

Avoiding conflict of interest; and

Continuity and overall business sustainability and efficiencies.
“The minister has approached Cabinet for approval of Board changes in preparation of the forthcoming AGMs.”

Gigaba in his statement also thanked the outgoing non-executive directors of Denel “for their contribution and service to the nation.” He also noted the reason for the volume of new appointments: “During the 2010 AGM, four members including the chairperson whose terms were set to expire were requested to stay on for another year. These are the members whose terms were not renewed in this phase. Five more members were required to bring the Board to its full compliment in terms of the Memorandum of Incorporation (MoI). The appointments to be made by the Minister seek to fill the vacancies that currently exist and to allow members whose terms have expired to retire.”



Other than Kunene, the new directors are: Bafana Felix Ngwenya, Ghandi Badela, Nkopane Johannes Motseki, Melissa Ntshikila, Sonja Sebotsa, Professor Stella Nkomo, Ziphozethu Mathenjwa, Mavuso Msimang and Matodzi Ratshimbilani. The Mail & Guardian noted Tshilidzi Marwala, Martie Janse van Rensburg, Bulelwa Paledi and Gert Cruywagen retained their positions.