Solidarity demands Denel take legal action over company’s poor state

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Trade union Solidarity has legally demanded that Denel take legal action against individuals responsible for, or party to, the precarious financial situation Denel finds itself in, which includes trouble paying staff salaries.

Solidarity on 28 June served a demand to Denel under section 165 of the Companies Act. According to Solidarity’s Head of Legal Services Anton van der Bijl, under this section of the Act Solidarity can demand that Denel investigate irregularities and take legal action within 60 days after such demand was served on them.

The trade union said the move comes after various irregularities were brought to Denel’s attention in Solidarity’s Denel File provided to Denel in April 2018. This led to several dismissals at the institution.

This case is unique in the sense that from now on, government officials working at state-owned enterprises could possibly be held directly liable for malpractice committed at such companies, Solidarity said.

“If the alleged irregularities are not investigated, and/or if no legal action is taken because of the proven irregularities, we may take legal action against the responsible persons in Denel’s stead. The time has come to hold people accountable for their wrongdoing and to bring them to book,” van der Bijl said.

According to Solidarity General Secretary Johan Botha, the recent salary issues at Denel and the consequent references by Denel CEO Danie du Toit and Public Enterprises Minister Pravin Gordhan to the influence of state capture on Denel, make it clear that there is indeed compelling reason to take this action.

Last month Denel employees were notified they would only receive 85% of their salaries due to “ongoing liquidity challenges”, but at the last moment an unidentified lender, said only to be a local commercial bank, provided an input of funds, allowing employees to receive their full salaries.



Denel is instituting a turnaround plan, with du Toit confident the company can be rescued, but he cautioned that the next two to three months will be difficult.