Public Enterprises Minister Pravin Gordhan has appointed an interim board of directors to “steer Denel on to a new path”.
“The new interim board will be required to move with speedy on some of the areas that need urgent attention,” Gordhan said in a statement on Monday.
He said Denel was a “strategic national asset” and “constitutes more than 45% to the local defence industry and sources about 70% of input from local suppliers”.
Gordhan met with organised labour and many of Denel’s suppliers to get their suggestions on how to fix the troubled company.
“Between 2010 and 2016 Denel experienced phenomenal growth, averaging more than 15% a year, with revenue growing from just over R3 billion to more than R8 billion in 2016,” Gordhan said.
“The company was winning significant export contracts and the order book peaked at R30 billion.”
But this positive story deteriorated because of bad decisions, Gordhan said.
“The Denel Asia saga in 2016 deeply tarnished the Denel brand. The insistence by the previous board to proceed with the venture, despite evidence showing it was a bad strategic move. Denel now faces the real threat of collapse unless far-reaching decisions are taken urgently,” Gordhan warned.
This was why he was appointing an interim board.
Former Acsa CEO Monhla Hlala, former Denel board member Zoli Kunene, State Information Technology Agency director Professor Tshilidzi Marwala and career soldier General TT Matanzima, are among the interim board members.
Former South African Airways chairperson Cheryl Carolus also made the list.
The rest of the 12 person board includes Wipcapital CEO Gloria Serobe, Basil Read CFO Talib Sadiq, political activist Sue Rabkin, Wits Business School head Sibusiso Sibisi, former Thebe Capital CEO Nonzukiso Siyotula, Thami Magazi and Martin Mnisi.
Gordhan said the interim board’s immediate priorities would be “to restore sound corporate governance; to review the effectiveness of the management team; to review major contracts; to review the company’s financial position with the view to creating sustainability; and to consult all stakeholders.
Gordhan also promised that changes were coming at other state-owned companies (SOCs).
“In the coming weeks I will be reviewing the composition of boards at other SOCs under the authority of the Department of Public Enterprises as well as the executive management teams to ensure that SOCs are set on a new path,” he said.
“We can no longer afford to delay these decisions.”