Parliament expresses concern about governance, finance challenges at Denel

Johannesburg – Parliament said on Thursday that it was concerned about the governance and financial challenges at state arms manufacturer Denel.

The portfolio committee on public enterprises said it had head from Denel officials during a briefing that the struggling firm suffered an unaudited loss of R1.8 billion for the 2019-20 financial year, due to a significant decline in revenue and poor programme management, the committee said in a statement.

Denel officials said the arms maker’s equity is significantly below previous levels, at R4 billion, despite an injection of R1.8 billion disbursed in 2019-20.

The company got R305 million of the R576 million allocated to Denel in the 2020-21 financial year medium term expenditure framework.

Parliamentary committee members said Denel had taken no action after they previously raised issues of concern and asked questions in a bid to help the company plan more effectively for the future.

“The committee believes that the government and state-owned companies should begin trading amongst themselves in business, skills and capacity,” said the committee.

“In addition, Denel should look beyond the department of defence and Armscor to market its products.”

Armscor is the acquisition agency for South Africa’s defence department.

During the briefing, Denel told legislators that the non-payment of salaries had contributed to the loss of key technical staff in some divisions.

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