DA calls on SIU investigation into Denel financials

8 February 2021

The Democratic Alliance (DA) will request a Special Investigating Unit (SIU) investigation into forensic reports at Denel into the State-owned entity’s (SOE) financials. These reports have reportedly been handed to the South African Police Service (SAPS) for investigation and the Standing Committee on Public Accounts (SCOPA) will call Denel and other poor-performing SOEs to account. Denel must also account to the parliamentary portfolio committee on public enterprises.

This after Denel only released its annual report at the end of January, months after it was supposed to be tabled. The SOE also did not have its annual general meeting (AGM) which was meant to be held 15 months after its last AGM on 15 September 2019.

The financial viability of Denel has eroded year on year showing huge loses within its financial liquidity.   A loss of R2.72 billion was recorded in the 2018/2019 financial year and 2019/2020 reflected a loss of R3.41 billion.

Denel just does not have the ability to ensure it manages its affairs with no production activity, liquidity constraints and poor program executing at the order of the day.

Denel recently received a R1.8 billion injection from government to boost the recapitalization fund in order to re-stabilize and improve solvency. The DA has requested a full report on Denel’s business plan and turnaround strategy regarding these funds.

Recently during the Zondo Commission Parliament was accused of being a rubber stamp that aided and abetted State capture. And while both President Cyril Ramaphosa and the Minister of Public Enterprises, Pravin Gordan, have made numerous promises to reform SOEs, no such plan has materialized. In fact, their insistence on bailing out failing SOEs have put the country in financial fire straits and can be directly linked to the economic implosion South Africa is experiencing at the moment.

All allegations made at the Zondo Commission must be investigated thoroughly and those found with their hands in the cookie jar must be fired and then prosecuted without delay.

This money could have funded the vaccination programme, been used as stimulus packages to save small, medium and micro enterprises (SMMEs) in a variety of sectors, or helped fund the reopening of schools.

SOEs are the shovels being used to dig the country’s grave. This is a truth that can no longer be denied or ignored. The only solution is privatization.

Issued by Michele Clarke, Shadow Deputy Minister of Public Enterprises, 8 February 2021