Ahead of Thursday’s (February 22) Denel board meeting trade union Solidarity has called for the state-owned defence and technology group’s senior management to be suspended.
In a letter to Public Enterprises Minister Lynne Brown, the Centurion headquartered union asks that Denel Group Chief Executive Zwelakhe Ntshepe, Chief Financial Officer Odwa Mhlwana and board Chairman, Daniel Mantsha, be suspended pending “a probe into various allegations of financial mismanagement”.
Solidarity deputy general secretary Deon Reyneke said allegations against the three include misrepresentation of financial information and financial mismanagement leading to a loss of “around R600 million”.
He added the urgent letter to Minister Brown was necessitated by Thursday’s group board meeting because a proposed restructuring plan for the entire Denel group is due to be discussed.
Reyneke said Solidarity estimated up to 700 employees could be retrenched if restructuring goes ahead.
He also pointed out the Denel board granted performance bonuses of more than R8 million to its executive committee last year. This after the number of executive committee members were increased at what the trade union said was a cost of up R16 million for new board members’ wages and salaries.
According to Reyneke, Solidarity has laid criminal charges against Ntshepe and Mhlwana after 13th cheques were withheld at the end of last year.
“In spite of such gross mismanagement and criminal behaviour both men received a combined performance bonus of R3.2 million.
“The Denel group also had to foot the bill for Mantsha’s court cases and actions, including the controversial Denel Asia agreement, the Fireblade court cases as well as disciplinary process against the previous chief executive and financial officer which he initiated and Denel had to settle.
“It is unacceptable that Denel’s top six can go on without consequences to tap into and abuse tax money. Solidarity calls on the minister to urgently suspend these administrators,” Reyneke added.
Denel was granted an emergency government loan of R580 million in December to pay its 4 000 employees and suppliers in January. National Treasury was reported at that time as saying the guarantee was to resolve Denel’s “immediate funding crisis”.
Denel posted a profit of R333 million in the 2016/17 financial years, according to its latest annual report, down from R395 million the previous year.
“The decrease for the year under review can be attributed to softer local demand, as well as foreign exchange losses of R232 million mainly relating to the revaluation of revenue recognition debtors, partially offset by growth in export sales,” the company stated. As a result, “we have recognised certain of our entities and cost structures require repositioning” the annual report said.