Denel

Denel’s in the dwang again as auctioneers close in on its assets

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The first of several auctions will take place at Denel’s Centurion campus tomorrow in order for Denel staff to be paid, after the weapons maker failed to pay R636m in salaries. For two years, the company has struggled to pay employees despite executives suspended for corruption continuing to receive their salaries. Corruption and mismanagement have gutted the once-proud arms manufacturer, which made great products like the Rooivalk attack helicopter and the G6 self-propelled howitzer. Its revenue plummeted from R8.2bn in 2015/6 to R2.4bn in 2019/2020 – and it recorded irregular expenditure of R3.2bn during the last financial year. Interim chief financial officer Thandeka Sabela claims a lack of qualified personnel means the payroll has not been updated: but the Solidarity union seems to think differently. Article first published on MyBroadband. – Sandra Laurence

Denel disaster

By Jan Vermeulen

Embattled State arms manufacturer Denel has informed employees that their tax certificates are not ready for distribution.

It has also failed to comply with a court order to pay employees, resulting in assets being seized for auction.

The first of several auctions will take place at Denel’s Centurion campus on Friday, 15 July.

The South African Revenue Service’s (SARS) deadline for employers was 31 May 2022, and Denel failed to meet it.

In a letter from interim chief financial officer Thandeka Sabela that MyBroadband has seen, Denel warned employees that they could not submit their tax returns.

“We regret to inform you that Denel Dynamics, Denel Properties and Corporate office has not met their own tax obligation by submitting the annual reconciliation documents accurately and timeously,” Sabela wrote.

“SARS uses the submitted annual reconciliations to prepopulate auto-assessments and personal income tax returns.”

Sabela assured efforts were underway to correct the issue.

“We are working tirelessly to secure the necessary experienced individuals to assist the current personnel update the SAP payroll system to do the submissions as well as the reconciliations,” stated Sabela.

This latest setback from Denel staff comes after the weapons maker failed to pay R636 million in salaries.

For two years, the company has struggled to pay employees despite executives suspended for corruption continuing to receive their salaries.

Labour union Solidarity obtained a labour court order at the start of the year, forcing Denel to pay R90 million in outstanding salaries.

However, Denel has failed to pay employees the ordered amount and Solidarity has obtained permission to seize assets and auction them off to cover the amount.

Solidarity has also informed staff that Denel’s bank accounts have been attached as part of a labour court order. It also revealed that most Denel divisions had not paid employees’ income tax to SARS, despite deducting it from their salaries.

Denel is one of the state-owned companies the Zondo Commission of Inquiry found suffered severely under state capture by the Guptas and their cronies.

Corruption and mismanagement have gutted the once-proud arms manufacturer, which made great products like the Rooivalk attack helicopter and the G6 self-propelled howitzer.

Its revenue plummeted from R8.2 billion in 2015/6 to R2.4 billion in 2019/2020 – and it recorded irregular expenditure of R3.2 billion during the last financial year.

Denel has not released an annual report for the 2020/21 financial year.

Solidarity defence and aerospace sector coordinator Derek Mans said that Denel’s failure to render pay-as-you-earn income tax to SARS wouldn’t affect employees.

However, not being able to claim their tax returns is yet another major financial blow for staff.

“Members may not be able to file their tax returns timeously, which may affect their ability to claim on annuities, medical aid, and home office utilisation expenses,” he explained.

He said this comes at a time when such additional income is required to substitute wages which are either not being paid in full, or at all. Asked for his views on Denel’s explanation that a skills shortage is the problem, Mans said the real issue is probably, once again, cash flow related.

“I think it is more the inability to pay SAP rather than a shortage of skills,” he told MyBroadband.

“Denel still has personnel within its payroll departments to fulfil these administrative obligations. The problem is much bigger.”

Denel did not respond to a request for comment.

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