Denel owes its workers R500m

Full salaries were last paid in May 2020, Pravin Gordhan tells parliament

25 May 2021 - 15:17
Denel has a confirmed order book of R11bn but is experiencing operational and financial difficulties, parliament heard on Tuesday. File photo.
Denel has a confirmed order book of R11bn but is experiencing operational and financial difficulties, parliament heard on Tuesday. File photo.
Image: REUTERS/Siphiwe Sibeko

The embattled state defence manufacturer Denel owes its workers a whopping R500m in salaries.

Public enterprises minister Pravin Gordhan revealed this during his budget vote speech in parliament on Tuesday.

Denel has been at loggerheads with its employees since 2020 when it failed to pay staff members their full salaries.

“It is highly regrettable that Denel last paid full salaries in May 2020. The current amount owing to employees is about R500m. The business has subsequently experienced a loss of critical skills to both domestic and foreign companies,” said Gordhan.

“The board continues to make efforts to secure funding to pay salaries and implement its turnaround strategy and restructure Denel into a far more effective organisation.”

He said discussions with critical stakeholders such as the department of defence and others are taking place.

“Denel is in financial difficulties and operational difficulties. It has been a difficult year for Denel. It has a confirmed order book of R11bn but it is unable to secure the necessary capital and the support of suppliers to execute the contracts,” said Gordhan.

In February this year, Denel board chairperson Monhla Hlahla told MPs she was embarrassed by the performance of the parastatal after it tabled a report revealing it was insolvent and received a disclaimer audit opinion.

The report further showed the company was continuing to make losses after recording a R1.6bn loss in the 2019/20 financial year.

The company has made a total loss of R4.4bn in the past four years. 

“We did our best. Sometimes your best is not good enough and I take the criticism from everybody, saying maybe we are not good enough,” Hlahla said at the time when responding to criticism from MPs.

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