Denel executives suspended for alleged corruption continue to receive full salaries while the company owes employees over R600 million.
Appearing before Parliament’s standing committee on public accounts, Denel acting CEO William Hlakoane provided feedback on the status of the state-owned enterprise.
Hlakoane revealed that Denel is technically insolvent, available cash is insufficient to meet operational requirements, and it is operating without a tax clearance certificate.
The company has already recorded a loss of R368 million in the current financial year — double what was budgeted.
Hlakoane further revealed that Denel owed R636 million to its employees in salaries and R900 million to suppliers.
Denel has not been able to pay full salaries to employees for over a year. Solidarity’s Helgard Cronjé said employees have only received partial salaries in most instances from April 2020.
Denel Dynamics hasn’t paid employees their salaries at all in some months. Other divisions have paid partial wages of between 40% and 80%.
The company’s dismal financial state has seen many employees leave over the past year.
The people who left Denel are typically skilled technical employees who could find employment elsewhere.
Between April and June this year, Denel’s permanent employees declined from 2,456 to 2,336, while students at the company plummeted from 142 to 32.
What stunned members of the standing committee on public accounts is the lack of action regarding corruption at Denel.
Hlakoane said three Denel executives suspended for alleged wrongdoing connected to the Gupta-linked VR Laser Group still receive their full salaries.
He said that suspension with full salaries was done to “allow the investigation to be able to proceed”.
“We have taken cognisance of the labour relations act and their employment contracts, and hence they were suspended with full pay,” Hlakoane said.
These executives have been suspended for “more than eight months”. The lengthy suspensions with full pay, Hlakoane said, are linked to “internal issues in conducting disciplinary actions”.
“The disciplinary actions are a very complicated process that deals with intellection property rights,” he said.
Despite numerous forensic investigations pointing to misdeeds at Denel, there is little to show for it in terms of arrests and prosecutions related to these alleged crimes.