UASA concerned by Denel request for more funding

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Trade union UASA has expressed concern over another Denel application for funding at a time when there is still no clear plan to pay outstanding salaries.

UASA spokesperson Abigail Moyo said the application for a government bailout to keep Denel from falling into the abyss of bankruptcy follows mere days after the second report of the Zondo Commission into State Capture, which revealed damning evidence about the former Denel Board and management’s role in the looting and hollowing out of the state-owned weapons manufacturer.

“The enterprise has been receiving state intervention for years while those in charge looted the exact funds meant to rescue the company and turn it into a revenue and job generator,” Moyo stated.

“Denel has been unable to pay workers’ full salaries for the past two years, making it almost impossibly difficult for its employees to survive. The SOE owes R636 million to staff and R900 million to suppliers.”

UASA sees little hope for the state weapons manufacturer despite repeated financial injections. It reported a loss of R2 billion in 2019/2020, generating only R2.7 billion in revenue. It received recapitalisations of R1.8 billion in 2019/2020 and again R576 million in 2020/2021, as well as an extended R5.9 billion guaranteed debt facility. In 2021 Denel received an additional R2.9 billion to cover its debt.

“UASA strongly urges government to hold all directors and executives who played a part in the looting of Denel accountable and make examples of them and pay outstanding salaries,” Moyo said. “It is time to claim South Africa’s state-owned enterprises back from the claws of looters. A complete overhaul is needed to open the door to economic recovery and create sustainable jobs for our people once more.”

National Treasury’s decision on whether or not Denel will receive additional state funding will be announced in the upcoming budget.

Denel’s liquidity challenges caused it to miss loan payments at the end of January, and the Johannesburg Stock Exchange suspended the trade of its bonds due to the company’s failure to publish its annual report.

Trade union Solidarity was in court on 10 February to try and get Denel to pay R90 million in outstanding salaries and benefits owed to hundreds of its members that employed by the state-owned company.