A litany of the woes that have and still currently afflict Denel comes from trade union Solidarity which is embroiled in ongoing litigation with the State-owned defence and technology conglomerate.
The litigation centres on full payment of salaries and employee benefits to Solidarity members employed by Denel. The issue first came to the fore mid-last year and has now evolved into a Labour Court hearing, with judgement reserved late in January. Solidarity is seeking attachments of Denel assets to pay outstanding amounts on salaries and employee benefits, apparently including company pension contributions.
According to Reon Janse van Rensburg, an author at the Centurion headquartered trade union, Denel was a proud institution worthy of recognition and “whose artisans produced excellent weapons”.
“This can still be testified to, but there is widespread speculation about the future of this state institution, repeatedly unable to pay salaries to employees.”
Following the release of Solidarity’s Denel Dossier in April 2018 with allegations of mismanagement and corruption, a new board and new chief executive were appointed the following year.
“Solidarity was delighted and looked forward to a future where strategies would be put in place and where co-operation between key players at Denel would be the driving force to create a sustainable future with Denel again having the opportunity to compete internationally.”
A turnaround plan presented by then new chief executive Danie du Toit, according to Van Rensburg, was further defined and “progressed slowly but surely”.
“In September 2019 it was announced the Denel bailout entailed inclusion of strategic equity partnerships worth R2 billion, which means the state and other stakeholders regarded it a condition and expected it to take place. According to Helgard Cronje, Solidarity’s Deputy General Secretary of Public Industries, Denel emphasised with this announcement it enjoys good support from the state and other stakeholders.
“Stakeholders include National Treasury, the Department of Public Enterprises, the Department of Defence as well as the Parliamentary Portfolio Committee.
“According to Denel’s proposal, the reason for seeking potential investors included penetrating the market, obtaining a technology injection and raising capital.
“By the end of 2019, the turnaround plan had not yet come into effect and by March 2020, at the initial stage of the COVID-19 pandemic, with meetings limited due to the virus, Du Toit sent a proposal to Solidarity where two places indicated restructuring of Denel was approved by the board. Du Toit resigned later in 2019 and it appears the process came to a halt.
“Historic financial mismanagement and consequent liquidity challenges that pushed the arms manufacturer further into the abyss can be attributed to the ANC government, Denel top management and the Denel board dragging its feet and not realising the seriousness of the crisis.
“Solidarity was shocked to learn, according to Denel interim chief executive Talib Sadik the state as shareholder only approved restructuring Denel in November 2020 and approval must now also be given by Cabinet before the process can continue.”
“It is outrageous the state is still determining what needs to be done and debating what approvals are needed, while state departments still have to be aligned to adapt to restructuring. One Denel division, Denel Dynamics, lost more than a hundred technicians and engineers in the last ten months alone. Good employees are snatched up by the competition and given the circumstances employees cannot be blamed for looking elsewhere. Their knowledge is in demand in a highly competitive labour market presently the norm.”
Cronjé maintains “employees will bear the brunt of poor performance by top management, the board and the state. It is unacceptable for hardworking people who contribute daily to make the organisation a success to be harmed by this behaviour and Solidarity will ensure people who must take responsibility, do so.”