South African defence industry group beleaguered by financial woes

Trade union Solidarity on Wednesday reported that State-owned defence industrial group Denel might not be able to pay its staff their salaries for December. It did so in a press release, following a meeting with Denel management, and expressed its “shock and concern” at the situation. The union is continuing talks with management, on behalf of its members.

“This is yet another telling example of a [S]tate-owned entity that is suffering severe losses as a result of mismanagement while its workforce – and the entire South Africa for that matter – have to suffer the consequences,” highlighted Solidarity deputy secretary general Deon Reyneke. “The company is still short of around R130-million just to make its December salary payments. This is in addition to the huge amounts of debt which its creditors are now demanding.”

According to Reyneke, Denel has requested an R850-million guarantee from National Treasury, so that it can raise a loan to alleviate its financial situation. “Apart from the workers who would be hardest hit the taxpayer may well also have to foot the bill yet again for the mismanagement as is the case at so many other state entities in South Africa.”

The union has warned that failure to pay salaries for this month could result in significant labour unrest and instability at the company. This could also have a dampening effect on the economy.

In addition, the union has declared a dispute with Denel because, Solidarity affirms, the company “squandered money” that should have been ring-fenced for its employees, to pay their annual bonuses (13th cheque). This money formed part of the workers’ “cost packages”.

“Not only could Denel employees go without pay this month but the company, without having obtained the necessary permission to do so, has also exhausted the money workers have paid themselves to receive a thirteenth cheque. That is unheard of,” asserted Reyneke. “Solidarity will not hesitate to do the necessary should Denel not fulfill its contractual obligations towards its employees.”