Denel facing liquidation appeal – defenseWeb
Under fire, Denel faces yet another salvo – this time in the form of a demand for bankruptcy of the state-owned defense and tech conglomerate.
The demand, reported exclusively by the Johannesburg-based eNCA, wants the besieged Denel, already under fire from political parties and opposition unions, to be liquidated. Centurion-based Saab Grintek Defense, one of the many companies and ventures born out of the execution of the Strategic Defense Procurement Program (SDPP), would like Denel to be “liquidated”.
The TV news channel reports that the liquidation challenge was spurred by a contract with Saab Grintek Defense to produce fire control computers for the SA Army’s long-awaited new Infantry Fighting Vehicle (IFV). . Over 240 Badger VCIs are said to be produced by Denel Land Systems at its Lyttelton plant with subcontracts for components going to, among others, Saab Grintek Defense.
“In terms of the contract, Denel was supposed to provide Saab with specific equipment to fulfill its end of the deal. This did not happen,” the news channel said.
As has become the norm, Denel has not commented on the impending lawsuit and there is no information on the company’s website about it.
The UASA union said Saab Grintek Defense’s liquidation demand was avoidable if the state acted in time.
Denel owes the employees R500 million in unpaid wages. UASA, through its affiliate FEDUSA, has requested the ministerial leadership of the SOE Department to consult with other areas of government, including the National Treasury, to provide funding to ensure that Denel can honor the commitments of its creditors and continue its activities.
“Saab Grintek Defense’s liquidation offer, although justified in terms of Denel’s liquidity difficulties, could have been avoided if the state had intervened as it pleaded. The UASA is aware that other creditors are also asking Denel for long overdue payments, ”the union said.
“We remain committed to helping our members through this new development. If the liquidation is the result of a lawsuit by Saab Grintek or another creditor who may now have to go to the High Court, we will step in to assist members in their claims against the SOE by appointing a privileged liquidator to ensure a fair process.
The reported statement of intention to seek legal redress joins a call – repeated last week – by the Democratic Alliance (DA) for Denel to be placed in the corporate bailout. It was first made in April by the party’s shadow vice minister for state-owned enterprises, Michele Clarke. She stressed at the time that the process should not follow the same route as that which occurred at the national ground carrier South African Airways (SAA).
Company bailout is not an option for the Solidarity union, which has a court ruling in its favor for more than R12 million of Denel assets to be seized before auction or sale to settle wages and unpaid employee benefits.
Helgard Cronjé, deputy general secretary of the public sector of Solidarity, told defenseWeb last month that regular meetings with Denel management were taking place – an indication that the union wants Denel to remain operational.
“There is a movement forward but progress is slow and needs to be accelerated as Denel’s situation is getting worse day by day,” Cronjé said.
Denel has seen an exodus of directors, including board chairman Monhla Hlahla, and is currently under the leadership of a second interim CEO. William Hlakoane replaced Talib Sadik in February. Sadik is a former chief executive apparently called in when then chief executive Danie du Toit resigned last August. Directors who are no longer on Denel’s board of directors include the former head of the SA National Defense Force (SANDF) and former Minister of Communications Siphiwe Nyanda, Kabelo Lehloenya, Sibusiso Sibisi, Nonzukiso Siyotula and Sue Rabkin . Another decimation of Denel’s management came in March when CFO Carmen le Grange resigned.