Denel’s financial woes and inability to pay its workers continue to worsen as one of its divisions indicated that its workers would only be paid 20% of their May salaries.
On Friday, Denel Land Systems (DLS) appealed for “extraordinary understanding” from its employees as it indicated that it was unable to fulfil its salary obligations due to lack of funds.
DSL CEO Mxolisi Makhatini hinted that the company was also not certain about its ability to pay workers in the coming months, which has angered unions including the National Union of Metal Workers of SA (Numsa).
“As the company’s liquidity status worsens, the payment of salaries for the upcoming months will continue to be a challenge to honour. However, management continues to engage with employees on activities that will be undertaken in order to maximise cash in the next coming months,” Makhathini said.
Public enterprises minister Pravin Gordhan told parliament, where he delivered his budget vote speech, that Denel owed its employees more than R500m due to unpaid salaries since last year.
The state-owned arms manufacturer had last paid full salaries to its employees in May last year as it continues to suffer the effects of insolvency.
Denel is among the state-owned enterprises that have been heavily affected by the rampant looting related to state capture over the years, resulting in the loss of billions.
Numsa spokesperson Phakamile Hlubi-Majola accused Gordhan and his department of allowing and aiding the collapse of the company.
“Not only are they deliberately involved in its collapse, they are doing absolutely nothing to help workers with their financial distress. For example, DPE could have negotiated with the department of labour to guarantee TERS (Temporary Employer/Employee Relief Scheme) payments at this time,” Hlubi-Majola said.
A number of Denel employees have been reported to be running the risk of losing their homes and vehicles.
Hlubi-Majola said the union was taken aback by Denel’s deepening financial troubles despite having an order book of more than R11bn.
“How do you allow an entity which actually has demand for services to the tune of billions of rand to collapse? What Denel needs is for the government to capitalise it because it clearly does not have the operating capital,” Hlubi-Majola said.
Numsa is, however, rejecting the private partnership proposal for Denel as the union said it would be used to benefit those who were politically connected.
“There is no reason for Denel to be collapsing as an entity ... [with] such high demand for its products. It is only like this because you have a government that has decided that it wants to collapse this entity for the benefit of private capitalists who are close to the leadership. It is the same story with SA Airways and SA Express, and even at Eskom,” Hlubi-Majola said.
Numsa has filed papers with the Constitutional Court in a bid to force parliament’s intervention in saving the financially troubled SOEs, which the union says should never be allowed to go insolvent.
Denel spokesperson Pam Malinda could not be reached by the time of publication.
Gordhan's spokesperson Richard Mantu did not respond to questions.
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