Citizen reporter
3 minute read
31 Jul 2019
11:43 am

Denel to pursue legal action against former bosses to recover losses

Citizen reporter

The SOE's CEO says the entity has initiated several forensic investigations into alleged fraud and misappropriation of funds.

A Badger infantry combat vehicle gives a demonstration of the vehicle's mobility on 19 November at the launch of the Badger at Denel Land Systems in Pretoria. Picture: Christine Vermooten

Struggling state-owned arms maker Denel has said that it would soon institute legal action against former bosses at the entity to recover losses.

In a statement on Wednesday, group chief executive officer at Denel Danie Du Toit said the entity had initiated several forensic investigations into alleged fraud and misappropriation of funds conducted by its previous management, and that these investigations would soon result in legal action to recover losses.

Du Toit said he had already received several reports concerning improper transactions, irregular appointments and potential fraud while other investigations were in advanced stages.

The reports were referred to independent legal firms to review the evidence and to assist Denel with the implementation of the recommendations, Du Toit added.

He said that at the entity they were aware of the contents of a dossier on alleged corruption compiled by Solidarity and of the union’s intention to institute legal steps to investigate the issues.

ALSO READ: Solidarity serves court papers to force Denel to pay unemployment insurance levy

“We started with thorough investigations more than six months ago, shortly after the appointment of the new Denel Board. We have kept stakeholders, including Solidarity, informed about the progress we are making as recently as this week. There is no need to take Denel to court to force it to investigate allegations of irregularities,” said Du Toit.

He said that following reports on the investigations, Denel had already taken a number of corrective steps, including:

  • Civil action against some of former Denel executives to recover monies lost through the irregular awarding of pilot bursaries;
  • A statement will soon be submitted to the SAPS to lay complaints against former executives identified in the forensic reports;
  • An application will soon be launched in the high court to review the contracts concluded between Denel and VR Laser;
  • Disciplinary action will be taken against Denel employees implicated in the reports, pending the legal recommendations;
  • Civil claims will be instituted against former Denel executives to recover losses once the quantum of the loses has been determined.

Du Toit said in addition to these steps, the president at Denel had already published a proclamation to enable the Special Investigative Unit to conduct probes into alleged maladministration and unlawful appropriation of expenditure. It is highly likely that this will be followed by civil actions to recover the money.

“It is completely untrue to allege that Denel has not taken actions to investigate transgressions and recover the money.

“We are in an advanced stage of investigations and there is no need to compel us to act through court actions,” Du Toit said.

He said employees at the entity, unions, and other stakeholders were also kept informed about the financial position of the company and the liquidity issues, which had an impact on Denel’s ability to pay salaries on time for the past two months.

“We are encouraged by the positive sentiments towards Denel expressed by government and looking forward to possible decisions on the recapitalisation of the company.

“Denel remains a valuable national asset and still has the potential to play a vital role in the country’s economic future and its transition towards the fourth industrial revolution.”

The cash strapped entity recently announced that it could only pay a certain portion of its employees’ salaries for June and July.

(Compiled by Makhosandile Zulu)

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