Denel executive and staff salaries cut amid cash crisis

State-owned aerospace and military technology company Denel has denied claims that its Land Systems (DLS) executives were getting full salaries in the wake of the division’s financial woes.

Also read: Denel on the verge of imploding

“It is not true that executives are earning full salaries,” said spokesperson Pam Malinda on Wednesday.

She also stressed that different divisions were responsible for their cash management and that while some divisions would be paying 100% salaries, some would be paid their wages in separate tranches.

In a situation the embattled SOE attributed to poor revenue and a worsening liquidity situation, DLS this week informed its 507 employees that they would not be receiving their April salaries.

By March, Denel still owed workers part of their salaries for May, June and July 2020.

In the internal communique, chief executive officer Sello Ntsihlele blamed the failure to honour their commitment for March salaries and delays in giving an update on April salaries on a delay in realising a milestone with a foreign client.

He, however, said progress had been made with this client and expected to receive payment soon.

“Our ability to pay the salaries in time for the end of April 2021 remains a risk as things stand. The team is also working hard to complete the next milestone with this client,” Ntsihlele said.

The strategic company designs, develops and offers defence and security solutions and services to the country’s law enforcement agencies, including the SA National Defence Force (SANDF), as well as export markets.

But in recent years Denel has been crippled by financial woes, with its liquidity challenge emerging as the most important risk that has been threatening sustainability of the organisation its 2019/20 annual report.

The report states that the 2019/20 financial year proved to be another challenging one for Denel, with a total loss of R1.962 billion for the year, compared to a loss of R1.469 billion in the previous year.

This net loss was primarily attributed to a delay in sales, with the R1.8. billion in recapitalisation it received in August 2019 used to repay long-overdue creditors, settle debts and restart operations.

Also read: SIU looking to recover more than R1m in Denel bursary saga

Trade union UASA said it would continue to pursue all avenues to assist their members in this matter, even if it meant using its Federation of Unions of South Africa affiliation.

Spokesperson Abigail Moyo said the union leadership met with Denel management to discuss the company’s change in policy, which could impact on employee benefits.

She said management was also informed that the company’s policy on retrenchments had not been reviewed since 2007.

Moyo said pushing for such policy changes while discussing potential retrenchments would be met with resistance.

“We certainly remain available and willing to participate in consultations, but such consultations should not result in unfair and exploitive actions,” she said.

– siphom@citizen.co.za