Solidarity tackles Denel head-on

31 July 2019

Solidarity today served urgent court documents on the struggling arms manufacturer Denel to force the company to pay the unemployment insurance levy and taxes that had been deducted from employees’ salaries. Solidarity also launched a process in terms of section 165 of the Companies Act to investigate the mismanagement and corruption of former members of the Board of Denel, with a view to possible prosecution.

The victims of reckless mismanagement and state capture are real people with families and emotions. Employees’ salaries are used to subsidise cash flow. However, Denel went even further and withheld compulsory income tax payments to the South African Revenue Service (SARS), even though these payments were indicated on the employees’ pay slips,” Solidarity Chief Executive Dirk Hermann said.

Therefore, the legal steps now taken by Solidarity are twofold. An urgent application followed after Denel had announced that it could only pay a certain portion of its employees’ salaries for June and July. Some statutory, compulsory payments such as PAYE, UIF and SDL appear on the pay slips, but have not been paid.

“Unfortunately, we have seen it becoming general practice that taxpayers and employees of state enterprises are being treated as financiers for state capture and the misdeeds associated by that. Solidarity says enough is enough, and because of this case, institutions will be obliged to accept responsibility for these misdeeds,” Anton van der Bijl, head of Solidarity Legal Services, said.

The second legal action that will be undertaken pertains to Solidarity’s Denel Dossier. The dossier, released in April 2019, made it clear that mismanagement and possible corruption by former Denel executives led to the arms giant’s financial woes. Since then, a forensic investigation had been done and Denel this year confirmed that steps were contemplated against those involved. However, Solidarity has not received confirmation of any such steps.

“Those responsible for Denel’s financial crisis are not being held accountable and they are getting off scot-free, while our members, innocent employees, have to bear the consequences. The recent non-payment of salaries can be traced directly to the effect of state capture,” Solidarity Deputy General Secretary Johan Botha said.

By this legal action Solidarity puts the management of state enterprises back into the hands of the taxpayer. The taxpayer can use this useful legal process to ensure that the highest standard of accountability is maintained at institutions.

The Denel action forms part of a much larger campaign – that of Solidarity’s lawful tax protest. This protest includes at least six legal actions against state enterprises and tax plunderers

“Taxpayers simply have to say “no”. We don’t have to allow the wasting of our money,” Hermann concluded. 

Issued by Dirk Hermann, Solidarity: Chief Operating Officer, 31 July 2019