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Arms manufacturer Denel has been grappling with financial and governance issues.
- Denel has been on a downward spiral for the past three years and has been plagued by financial and governance problems.
- The state-owned arms maker has approached the Department of Defense for a ransom of R683 million.
- Nonyameko Mandindi, a former board member, said meetings often include items that are not on the agenda.
Poor governance at Denel took center stage in the commission of inquiry into the state’s capture on Monday, when current board chair Monhla Hlahla painted a picture of an organization where compliance had faded into the background.
Hlahla is one of 12 interim members of the board of directors of the state defense company appointed by the minister of public companies Pravin Gordhan in 2018 to turn the troubled entity around.
‘Very dazzling’
“The general lack of appreciation for the need to deliver is very apparent, and I wasn’t sure if it’s because everyone is stressed, they don’t know if they’re going to get paid or not, or it’s just the way things are on Denel? “said Hlahla, describing the state of the company when the new board entered.
He explained that the staff had not been performing tasks that all state-owned companies should be familiar with, such as meeting monthly with the Treasury to make sure Denel was financially compliant.
“There was almost a general lack of awareness and, therefore, of responsibility.”
– Monhla Hlahla
Denel has been on a downward spiral for the past three years and has been crippled by financial problems, poor governance and allegations of involvement in the capture of the state. Just this month, he approached the Department of Defense for a R683 million ransom.
There have also been several criminal and forensic investigations into the company by the law firms ENS Africa, Dentons, Bowmans, BDO, Ngidi, the South African Police Service and the Special Investigation Unit.
Hlala said the state entity was in a deep liquidity crisis when the new board entered with staff in limbo over whether or not their salaries would be paid. He added that employees had turned to the board for a solution on how the company had found itself in dire straits and how it would turn out.
The president explained that one of Denel’s challenges is related to his lack of information management, such as keeping an updated record that makes it impossible to learn from the past.
Earlier Monday, the investigation had heard from former board member Nonyameko Mandindi, who was appointed in May 2015 and resigned in July 2016. Mandindi told the investigation that company meetings would include topics that had not been raised. for discussion and they were not prepared.
One was the audit risk committee’s request in September 2015 to assess the competence of the group’s then CEO, Rias Saloojee, as well as that of then-CFO Fikile Mhlontlo and company secretary Elizabeth Africa. Mandindi said the move appeared to be rushed as the request was only months after the board was appointed and it was too early to pass judgment on the trio.
He said he had raised his issues around the expectation that the board would evaluate and perhaps make a decision on whether the executives should be suspended, but he never received a response to his letters and emails.
The investigation will continue on Tuesday.
