DA calls on Auditor General to investigate Denel’s R855 million job-killing blunder 

Weekend media reports that state-owned arms manufacturer Denel has exhausted its cash reserves on the ill-thought acquisition of vehicle manufacturer BAE Land Systems SA mean that the jobs of thousands of employees, who Denel can now not afford to pay, are at serious risk. 

I will be writing to the Auditor General (AG) to commission an investigation into Denel’s financial disarray. 

Denel reportedly owes its contractors millions due to the dubious R855 million acquisition of the company, which produces landmine-resistant vehicles for which there is little demand. Supplier firms which have not received payment for their supplies in recent months will soon start retrenching people. 

The AG must intervene, firstly in the interests of transparency, so that the full extent of Denel’s debt crisis can be ascertained.

Secondly, clarity is needed for Denel’s own employees and those of its contractors, who face retrenchment or, worse, the prospect of unpaid salaries, with no guaranteed date for compensation. 

The AG is empowered to investigate in terms of section 188 of the Constitution, which states“The Auditor-General must audit and report on the accounts, financial statements and financial management of -a. all national and provincial state departments and administrations”. Furthermore the Public Audit Act, 2004 (Act No. 25 of 2004) (PAA) mandates the AGSA to perform its Constitutional functions to report its investigative findings to Parliament’s National Assembly. 

A key question which should be answered is how  Denel has gone from boasting R1.9 billion in cash reserves in its recently released annual report, to now, declaring that it cannot pay its own employees if it pays contractors for their products and services? How did Denel get itself wrangled in financial malfeasance after it has kept a clean track record for so long? 

Denel should also, as a matter of urgency, account to Parliament as to how this misjudged decision, which has the potential to result in numerous jobs losses in South Africa, came about. 

I will be submitting written questions to the Minister of Public Enterprises, Lynne Brown, asking how workers are going to be paid their salaries when the company has no cash reserves. Furthermore, the DA will ask whether the suppliers will continue to be unpaid.  

Parliament deserves to know exactly how much Denel owes its contractors in order to understand the full extent of the firm’s debt and financial mismanagement. 

The DA will remain resolute in fighting for jobs for South Africans, especially in instances where state-owned entities show disregard for the nation’s unemployment crisis. 

Issued by Natasha Mazzone, DA Shadow Minister of Public Enterprises, 6 October 2015