Denel CEO appointment infuriates black stakeholders, but the company insists that Daniel du Toit got the job on merit
Denel looked at almost 100 corporate executives in its bid to fill the position of CEO, preferably with a black person, but was rejected and bluntly told that, as a state-owned enterprise (SOE), the company was not a preferred career destination.
This is according to Denel chairperson Monhla Hlahla, who spoke to City Press on Friday, following the storm that was created when the Black Management Forum (BMF) threatened to approach courts to have the appointment of Daniel du Toit overturned because, in its view, there were many black professionals who could have been appointed instead.
Du Toit will start working at Denel on Monday.
Hlahla said the company received 132 applications, 44 of which were responses to adverts, while the remainder were approached as part of a headhunting exercise.
A total of 99 candidates were African, coloured and Indian men, while 43 of the candidates withdrew.
Eventually, from a shortlist of five male candidates, three were white and two were black.
“We headhunted, but we were rejected. Some of them told us that, although the offer was flattering, they were not interested. They saw the SOE roles as poisoned, while others said black people were punished at SOEs,” Hlahla said, adding that some believed that joining an SOE, let alone Denel, was a reputational risk because of past and recent revelations of corruption and other dodgy dealings at SOEs.
She pointed out that Du Toit brought with him expertise that the company needed to turn it around, and that there has already been positive feedback from the markets and some major clients had returned.
“We view transformation as critical to the growth and development of Denel,” she said, adding that the decision to appoint Du Toit had to be explained to Public Enterprises Minister Pravin Gordhan.
Hlahla said Denel had only received a formal letter about Du Toit’s appointment from the BMF and had requested a meeting with its leaders. It was also preparing the information the BMF had requested.
BMF spokesperson Philippe Bakahoukoutela confirmed that Denel had asked for the meeting.
The Liberated Metalworkers Union of SA (Limusa), a Cosatu-affiliated trade union, has also come out guns blazing against Du Toit’s appointment, and has asked for a meeting with Gordhan regarding the matter.
Hlahla said that, although Limusa had not written to the board, she agreed with some of its sentiments.
“I did not even know about the report and, when I read it, it was disheartening,” she said of a report that recommended a moratorium be placed on hiring more white men at Denel because they were over-represented.
The Hoefyster Employment Equity Compliance Assessment report was conducted on the Hoefyster programme, a multibillion-rand programme run by Denel Land Systems to deliver combat vehicles to the SA National Defence Force.
Limusa secretary-general Siboniso Mdletshe said the union wanted the recommendations of the Hoefyster report implemented at Denel.
Hlahla said Denel was operating in a sector where executives had previously mostly been army generals, therefore finding women, especially black women, to fill executive positions had not been easy.
However, she said the company was definitely looking at filling the two other executive vacancies – that of group chief financial officer and head of human resources – with black women.
“Today, Denel is a diverse organisation where black employees make up 61% of the workforce, while female representation has grown to 27%. During the past year, 84% of new appointments were from designated racial groups – African, coloured and Indian – with more than 50% of new appointees being female.”
There was a 16-member executive team consisting of three African men, one African woman, three white men – including Du Toit – one Indian man and eight vacancies, she said.
Hlahla said that, two weeks after joining the board in April, the situation was so dire that there was uncertainty about whether salaries would be paid.
“The first thing we had to do was renegotiate guarantees and reschedule payments because the liquidity challenges was serious.”
She added that, over the past few years, the company had seen costs rise, but had not been making a profit.
Hlahla said things seemed to have gone downhill from the moment the company applied to be exempted from compliance with the Public Finance Management Act a few years ago.
In addition to the liquidity and reputational challenges, Hlahla said the company had to tackle governance issues such as changing the structure it had of two executive committees, skills and the corporate culture.