Denel group CEO accused of leaking information and selling technology for bargain prices

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Denel CEO, Mike Kgobe.
Denel CEO, Mike Kgobe.
Craig Nieuwenhuizen


The Group CEO of state arms company Denel has been fingered in explosive allegations purporting that he and the chief restructuring officer were responsible for the unlawful sale of crucial company technology for much less than its market value.

The allegations are contained in an urgent court application by Denel Dynamics suspended CEO Sello Ntsihlele, who has asked the Labour Court to prohibit the arms company from instituting disciplinary action against him for making protected disclosures of alleged corruption against his superiors who, he said, were allegedly sharing sensitive information with Denel competitors.

In his application, Ntsihlele told the court that he had been victimised and bullied by Denel CEO Michael Kgobe and the arms company chief restructuring officer Riaz Saloojee, because he stood in the way of the stripping of Denel's assets and key intellectual property.

READ: Denel Dynamics institutes disciplinary action against CEO

Targeted for blocking illegal actions

He also said he had been targeted for refusing to follow alleged unlawful instructions issued to him by the pair, in as far as the sale of Denel assets under his authority was concerned.

The suspended CEO is attempting to prevent his employer from, allegedly, unlawfully proceeding with disciplinary action against him for making protected disclosures about his colleagues who may have compromised Denel.

When asked for comment, Kgobe told City Press: “Please note that Denel respects the confidentiality of internal disciplinary processes and does not discuss them in public.”

In his affidavit, Ntsihlele proclaims that Public Enterprises Minister Pravin Gordhan and Denel board chairperson Gloria Serobe insisted that Saloojee be granted unfettered access to Denel systems – something he says is not only illegal, but unprecedented.

“During a meeting chaired by [Gordhan] at the Denel corporate office on August 18 last year, the chairperson of the Denel group board unambiguously instructed those in attendance that Saloojee must be given unrestricted access to the company.

READ: Gordhan ‘dragged’ into Denel squabbles

“I took that to be directed at myself because I had raised the issue of Saloojee being given this kind of access. [Serobe] also told those in the meeting that Saloojee was appointed by the board, something that was not within the knowledge of the audit and risk committee [meeting of] May 24 last year,” he said.

He told the court that his troubles at Denel had started when he had lodged four grievances last year, between August 4 and 24, against Kgobe and Saloojee for, among other activities:

· The sharing of sensitive client and proprietary information belonging to Denel Dynamics with a competitor/s in the United Arab Emirates by Kgobe and another high-ranking official;

· Saloojee’s interference with the company’s dealings with its suppliers, direct engagement with suppliers with the company management, coercing me as the CEO to sign a contract with Incomar Aerospace and Defence Systems in terms favourable to Incomar rather than Denel Dynamics; and

· Saloojee's engagement with employees directly, without following proper channels, and making decisions about the business without the involvement of management and me, as the CEO, in particular.

The suspended Denel Dynamics CEO's grievances also included:

· Granting Saloojee unfettered powers to Denel as expressed by the chairperson of the board on August 18 2022 and an allegation that the board appointed Saloojee when members of the board were not aware of Saloojee’s involvement in Denel.

· Unauthorised activities by individuals from Denel’s corporate office and other companies, who appear to have concocted an elaborate scheme to siphon Denel Dynamics’ missile capability, and dissolution of Denel Vehicle Systems and tabling a submission for approval to the board without following the Public Finance Management Act and without the involvement of management, particularly the CEO of the entity.

Denel Dynamics is a subsidiary of state-owned Denel Group, operating in the defence, security, aerospace and related technologies.

Apparently, once elevated to the position of Denel acting group CEO, Kgobe – whom Ntsihlele had levelled serious accusations against – saddled the erstwhile Denel Dynamics CEO with 18 charges and placed him on paid suspension with full benefits.

“On November 18 last year, I was informed that I was suspended for ‘various acts of ill-discipline and gross insubordination’. The above letter was written and signed by Kgobe as an interim GCEO. I repeat that the second grievance lodged by me is against Kgobe for sharing sensitive client and proprietary information belonging to Denel Dynamics with a competitor or competitors,” said Ntsihlele in his affidavit.

He also said:

Kgobe, through the acting Group HR informed me that, in respect of a grievance involving him, a decision had been taken to appoint an independent service provider to conduct an enquiry. Despite the serious allegations against Kgobe, he was instead appointed as interim GCEO and, after assuming the position, suspended me.

Ntsihlele further told the labour court in his urgent application that he had not been granted the opportunity to give reasons he should not be suspended “in breach of the disciplinary code and procedure, which forms part of my contract for employment”.

He said he was forced to pursue an urgent interdict after Denel insisted on going ahead with a disciplinary hearing against him on May 29 this year, even after it was found that he had made protected disclosures when making allegations against Saloojee and Kgobe.

Ntsihlele said:

As a CEO entrusted with managing the operations of Denel Dynamics, I was legally obligated to raise concerns regarding Saloojee’s conduct and interference with the functioning of the company. Any reasonable person in my position would not have allowed Saloojee to interfere with the dealings of suppliers, to engage with employees without following proper channels and to make decisions without consulting the [CEO].

He added: “The powers of Saloojee were unknown to me or certain other board members. In addition, any person in my position would have reasonably believed that the sharing of information to competitors without approval was unlawful and may cause serious harm to Denel Dynamics and Denel as a whole. I also had an interest in safeguarding state-owned assets (in not allowing them to be sold for less than fair value). This was also a matter in the public interest.”

Kgobe is also facing heat from state arms contractor, Armscor, after it emerged that Denel could lose R8 billion of taxpayer’s money for failing to deliver Badger infantry combat vehicles to the South African Army for over 10 years, since it had been awarded the contract.

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