Denel faces salary crisis as labour raises urgent concerns

State defence entity Denel has remained mum as labour and political parties have sounded strong alarm bells after employees at Denel PMP and Denel Dynamics were informed that the divisions are unable to pay salaries for this month, in what appears to be another salary crisis at the state-owned company.

Strong views have been expressed calling for the appointment of a new, permanent board with appropriate expertise in the defence industry, engineering, finance and project execution; consequence management for the non-implementation of board-approved strategies; a new management approach with zero tolerance for corruption; and serious consideration of public–private partnerships to restore sustainability, protect strategic capabilities and secure jobs.

The National Union of Metalworkers of South Africa (Numsa), which among other labour organisations has been involved in charting a turnaround plan, said the entity failed to implement a plan estimated at R120 million which would have delivered results.

“Team Numsa made concrete proposals, including suggestions for how Denel can be recapitalised. However, the executives ignored our suggestions and this is why we reject any excuses from the management, because they have solutions but they are not implementing them,” Numsa spokesperson Phakamile Hlubi-Majola said.

Denel has already received R1.8 billion in bailout funding from National Treasury, intended to reignite production, pay salaries and settle outstanding debts. This amount forms part of a broader R3.4 billion allocation, subject to certain conditions being met. Prior to this, Denel received R992 million in working capital support.

“Numsa, therefore, demands that the Denel board urgently engage National Treasury to secure the necessary funding to ensure that workers are paid their salaries in full and on time. Workers cannot and will not be treated as an afterthought while governance failures persist,” Hlubi-Majola said.

Cosatu said it was beyond furious that the two divisions had informed staff that they would not be paid this month.

Cosatu parliamentary coordinator Matthew Parks said the federation expected Minister Angie Motshekga to immediately intervene and ensure that management pays staff what they are owed in full by no later than the end of this week. This must include workers’ third-party deductions and taxes.

“Denel has the potential to be turned around. It has an impressive order book from countries around the world. But it requires competent management, including a board. It needs to be cleansed of the remnants of corruption and wasteful expenditure. Support for it from the SANDF and Police Service, as well as other state security arms and the private security industry, must be ramped up as local procurement is the most important path for nurturing a domestic industry,” Parks said.

The DA’s defence representative, Chris Hattingh, said Parliament had been informed that there were turnaround and ring-fenced interventions, including a specific recovery plan for PMP.

“If those plans were approved and funded, the obvious question is why workers are still facing uncertainty. Either the plans were never properly implemented, or the money was absorbed elsewhere. More broadly, this goes to Denel’s credibility. A company that cannot reliably pay its staff cannot claim to be stabilised, cannot support the SANDF properly, and cannot compete in export markets,” Hattingh said.

In response to questions last month on the Auditor-General’s repeated disclaimer opinions on the entity over the past five years, Defence Minister Angie Motshekga said she had contracted the board and Denel to monitor actions aimed at improving the disclaimer, and that the entity had a detailed project plan to achieve a clean audit.

Denel has, over the past five financial years, failed to submit its annual performance reports and financial statements within legislated timelines. Motshekga said this had now been corrected and that the prepared reports were awaiting legislative requirements for submission.

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