“A company that cannot reliably pay staff cannot credibly support the SA National Defence Force (SANDF) nor can it claim to safeguard strategic defence capabilities” is a scathing summation of Denel nearly missing January salary payments for two of its divisions.
Chris Hattingh, a Democratic Alliance (DA) representative on both the Joint Standing Committee on Defence (JSCD) and the Portfolio Committee on Defence and Military Veterans (PCDMV), has it the salary payment issue to staff at Denel Dynamics and ammunition manufacturer Pretoria Metal Pressings (PMP) was not surprising.
“This,” he said, “is the predictable outcome of years of failed governance, collapsed accountability and the unresolved legacy of state capture”.
“Denel was hollowed out during the state capture years: leadership was compromised, finances were abused, skills were lost and credibility with clients collapsed. That damage was severe.
“But what is now happening goes beyond history. Years later and after repeated bailout packages and turnaround promises, Denel still cannot meet its most basic obligation to its workers. Since 2019, Denel has received billions of rand in direct bailouts and guarantees. Much of this funding was meant to stabilise operations and enable recovery.
“Yet employees are again being told salaries may not be paid, raising serious questions about where the money went, whether turnaround plans were ever properly implemented and who is being held accountable for failure,” a statement has Hattingh saying.
Arguably Denel’s most visible failure is Project Hoefyster, a new infantry fighting vehicle (IFV) to replace the long-serving Ratel.
It’s now 19 years since a development contract was entered into with Denel, to be executed by Lyttelton, Centurion-based Denel Land Systems (DLS), for five engineering variant development models including logistics, ammunition and simulators of the new IFV, named “Badger”, the English translation of Ratel. Last November the PCDMV heard the first phase of the contract was set down for completion in May 2012 with Denel unable to meet the deadline. In turn this affected phase two of the project – industrialisation and production – with delivery scheduled for 2019 and then shifted to 2023. The deadlines, the PCDMV heard, “have slipped” with delays attributed to, among others, financial challenges experienced by Denel from 2016, technical complexities, under-estimation of the software qualification process/effort, extensive re-testing and development cycles, high staff turnover and cost escalation.
Denel’s “move” from the no longer existent Department of Public Enterprises (DPE) last April to Minister Angie Motshekga’s Ministry of Defence and Military Veterans changed nothing, Hattingh maintains.
“Denel has not been ‘incorporated into the SANDF’. Moving shareholder oversight does not magically fix weak financial controls, poor execution or the absence of consequence management,” Hattingh is on record saying.
He goes further stating non-implementation or “diverted funding” of apparently approved recovery plans and “so-called ring fenced interventions” mean nothing to workers left in limbo.
“Denel’s slow collapse is how strategic capability is lost, not with a bang, but through repeated crises, unpaid salaries, and the steady loss of skilled people. The DA will demand full transparency on the use of bailout funds, clear evidence of implementation, and accountability for those responsible. We will insist on full disclosure of where the money went, who failed to implement approved recovery plans, and why workers are again paying the price for executive and political failure,” Hattingh concluded.
The Congress of South African Trade Unions (COSATU) also weighed in on the near non-payment of Denel Dynamics and PMP salaries. On Sunday it said Denel managing to pay salaries provides welcome relief to employees and their families.
However, COSATU remains concerned about the state of these divisions and the broader Denel group. “Workers at these two divisions were informed earlier in the week that they may not be paid. Management needs to take workers into their confidence about the implementation of Denel’s turnaround plan, how the substantial financial support from government has been utilised, and what is being done to fulfil its backlog of orders to clients,” said Matthew Parks, COSATU Parliamentary Coordinator.
“Workers need assurance that this will not happen again next month and that management will ensure that Denel is truly on the path to recovery from the dark chapter of state capture and will return to its rightful place as the leading defence industry company in the continent and a global leader.
“It is critical that the Ministry and Department of Defence actively fulfil their oversight role for Denel and not simply rely upon good wishes and glossy presentations from management. This needs to include a close partnership with Armscor and the Department of Trade, Industry and Competition, as well as major domestic customers such as the South African National Defence Force, Police Service, Correctional Services and other law enforcement arms of the state and the private security and arms industry. This partnership is critical to reviving the defence and aviation masterplan,” the trade union said.
COSATU pledged to continue to offer its support to workers at Denel and said the company can and must be turned around as the state capture chapter is dismantled. “Its turnaround will be an important catalyst to the revival of South Africa’s lucrative defence industry and the sustaining and creation of thousands of badly needed jobs.”
COSATU General Secretary Solly Phetoe said the days of bailouts are over, and Denel has to fix the hard and fundamental challenges facing it. “The key to Denel’s return to the path of sustainability and profitability has to include the appointment of competent management and leadership, the removal of corrupt elements, the plugging of financial leakages, the recruitment of skilled staff and the honouring of workers’ rights.”
“Equally important to providing Denel a sustainable path to recovery and growth is to revive and ramp up our local procurement campaigns. This must be anchored by the revival of the defence and aviation industrial masterplan,” Phetoe said.
State entities can procure arms, munitions; land, sea and air vehicles; clothing and protective gear, and other materials from Denel while the private security and defence sectors must be partners in this journey. Private security companies alone with more than 500 000 security guards must procure their arms, munitions, vehicles, communications and protective gear from Denel. Local procurement is the bedrock of any industry, Phetoe continued.
“Denel’s world quality products have helped it to secure an impressive order book from across the world. Management needs to ensure that it honours these often-lucrative contracts in full. Reports of Denel securing bids, receiving payments and then failing to deliver the products or having to be chased by clients and even dragged to court, must come to an end. Such antics cause severe reputational harm to Denel and will eventually catch up with it. Robbing Peter to pay Paul has never been a sound economic model.
“Denel over the years has been close to securing very lucrative orders across the world for Rooivalk, armoured personnel carriers or artillery systems; only to be pipped at the post by other suppliers after pressure was placed by the governments of far more powerful nations for contracts to be given to their companies.
“This is an unfortunate reality of real politic and the unequal geo-political balance of forces. It necessitates strategic partners between Denel and South Africa and complementary arms manufacturers in similar likeminded countries.
“Particular attention must be given to the African continent where Denel’s products are tried, tested and best suited, especially armoured personnel carriers providing optimal protection to soldiers from landmines.
“Green shoots reported by Denel in 2025 gave workers hope that it was back on track. We hope that the scare of this past week will not recur, but we must remain vigilant. Accountability is essential.
“South Africa has a wonderful state-owned enterprise in Denel. One that was built over decades with the blood and sweat of its workers. It represents the best of South African intellectual and technical ingenuity. Its products are highly sought across the world, from developed to developing countries.
“It needs dedicated focus and support, in particular to weed out corruption and mismanagement and through a ramped-up localisation plan from the sector.
“Denel’s management must appreciate that its turnaround can only be achieved with an honest relationship with its staff, by honouring its legal obligations to its employees, by investing in these workers and tapping into their experience and expertise.
“If these can be done, not only will be Denel be returned its glory days but it will once again play a leading role in unlocking South Africa’s industrial potential, economic growth and decent jobs,” Phetoe concluded.
