The writing is on the wall for inefficient SOE boards
The Organisation Undoing Tax Abuse (OUTA) welcomes Minister of Public Enterprises Pravin Gordhan’s replacement of the Denel board and promise to hold wrongdoers accountable and "follow the money". The new board must still be approved by the Cabinet.
“At last decisive action is taking place, after the country begged the previous Minister, Lynn Brown, to appoint competent, dedicated and incorruptible directors at the SOEs,” says Rudie Heyneke, OUTA Portfolio Manager for Transport.
“The new Denel board follows the appointment of a new Eskom board in January 2018 and shows that the Executive is busy with a clean-up operation at SOEs.
“We look forward to seeing the same decisive action at other SOEs that were captured and have been used as vehicles to syphon off state funds like SAA, Transnet and PRASA. Instead of being drivers of the economy and helping creating employment, under the shadow of state capture and the Guptas these entities were a drain on our economy and created a crisis that will take many years to eradicate.”
OUTA wants the boards which presided over corruption and failure at SOEs removed, replaced with trustworthy boards, with competent and technically sound individuals.
We hope that the new Denel board will review the business processes, focus areas and the key individuals in the organisation. This organisation may need some major surgery after the effects of the Guptas are exposed and analysed.
Under Minister Brown and the outgoing board, Denel’s debt was a staggering R3.265 billion by the end of the 2016/17 financial year and, in December, it needed an emergency government loan guarantee of R580 million to pay its 4 000 employees and suppliers.
In September, five of the 10 outgoing board members resigned. On 2 March, that board’s chairman, Daniel Mantsha, resigned days before he was due to meet Minister Pravin Gordhan.
Mantsha’s resignation coincided with the change of guard in the Presidency and the Public Enterprises Ministry.
“If he thought this will bring him respite, we have some bad news: he will not escape justice. OUTA will ensure that he has his day in court, next to people such as Lynn Brown and her director general Richard Seleke,” says Heyneke.
OUTA provided former Minister Brown with evidence of Mantsha’s misdeeds, corruption and involvement with the Gupta family, but she preferred to turn a blind eye and not act. OUTA laid a complaint at the Law Society of the Northern Provinces against Mantsha for unethical and unprofessional behaviour, which is being investigated.
OUTA laid charges of corruption against Mantsha on 30 August 2017. OUTA is in contact with the Hawks and we believe this case is making progress.
OUTA calls on the new Denel board to investigate the activities of the old guard at Denel, including:
Former chairperson Mantsha, who was central to allegations of state capture at Denel;
Ousted board member Nkopane “Sparks” Motseki, who received financial aid for the MKMVA from the Guptas, received a significant stake in the Guptas’ Shiva Uranium mine in 2010, and was the only board member kept on for “continuity” by former Minister Brown in 2015;
Stephan Burger, the former CEO of Denel Land Systems, who resigned on 29 March 2018, was intimately involved with the Denel/Denel Asia deal and reportedly visited Saxonwold and was involved with Salim Essa’s company, VR Laser;
Zwelakhe Ntshepe, the current CEO, over his role as one of the key decision-makers in the Denel/Denel Asia deal;
Ntshepe and CFO Odwa Mhlwana, over the alleged financial mismanagement and misrepresentation of financial information leading to a loss of around R600 million;
The suspension and ultimately firing of former Denel CEO Riaz Saloojee, and the suspension of former CFO Elizabeth Africa and former company secretary Fikile Mhlonto and for unspecified reasons just two months after the outgoing board was appointed in July 2015 by former Minister Brown, as this has largely been regarded as an attempt to clear out any opposition to state capture;
The reasons for the withdrawal of the Dentons forensic investigation report into the conduct of the suspended executives. The findings of this report and the reasons for the report’s withdrawal should be made public;
The Denel order book, particularly cases where contracts cannot proceed because of a lack of financial guarantees from Denel.
“It is sad that people entrusted to safeguard state assets actively worked to destroy them. We can only hope that their departure does not equate to evading prosecution,” says Heyneke.
Denel had a reputation as a leader in the defence industry but lost its lustre when individuals in key positions were “captured” and chose to serve their corruptors rather than our country. OUTA hopes much of this wrongdoing will be uncovered in the state capture inquiry.
“We wish the new Board all the best with their important task of turning Denel around,” says Heyneke.