Denel CFO sent packing in SOE clean-up
JOHANNESBURG – The clean-up in struggling state-owned companies has claimed its latest victim with arms manufacturer Denel pulling the trigger on its controversial chief financial officer Odwa Mhlwana.
The group, which has attracted interest from the Saudi Arabian government, said on Friday that Mhlwana was fired after he was found guilty of irregular expenditure and failure to act in the best interests of the company.
“Denel has appointed Mr Wim de Klerk, former chief executive of ArcelorMittal SA, as acting group chief financial officer (GCFO). A formal process will commence, to recruit a permanent GCFO,” Denel said.
Mhlwana was only appointed to the role in August last year. He was suspended in June after corruption allegations were levelled against him.
Gordhan appointed the new Denel board in April and tasked it with rebuilding and strengthening governance, rooting out corruption and restoring the company’s financial standing.
The group’s chief executive Zwelakhe Ntshepe resigned in May amid allegations that he signed off a questionable R1.1 million bursary for erstwhile North West Supra Mahumapelo’s son. Ntshepe had been with the company for 20 years.
Ntshepe and former Denel board chairperson Daniel Mantsha were implicated in allegations of state capture in a tranche of leaked Gupta e-mails made public last year.
The group wanted to forge a strategic partnership with a company called VR Laser Asia, headed by Salim Essa, a close associate of the Gupta family.
Its business plan showed that the company hoped to make R2 billion over 10 years from its partnership with Denel in the Asian market. In another development, the company said it has completed the recruitment process for a new chief executive and made a recommendation to the Minister of Public Enterprises, Pravin Gordhan.
It said an announcement is expected to be made by mid-December 2018 once the Cabinet has given the appointment of the unknown candidate the green light.
The National Union of Metalworkers of South Africa (Numsa), urged the government to inject at least R7bn into the ailing Denel. “Such an amount will go a long way, not just to pay Denel’s suppliers, but it will be sufficient enough to ensure a viable turnaround strategy,” Numsa said.
The company, which has been plagued by lapses in governance, saw the group reporting an operating loss of R1.7bn in the 2017/18 financial year. The group’s revenue for the year has plunged by 38 percent to R4.9bn. Media reports last week suggested that Saudi Arabia is bidding $1bn for a stake in Denel.
The government has said no decision has been taken yet. However, President Cyril Ramaphosa earlier this year secured a minimum investment commitment of $10bn from the Saudi Arabian government.
The leadership changes at Denel mark another wave of changes at state-owned entities found at the heart of the state capture project. Boardroom changes or sudden management resignations have been the new order.
Transnet chief financial officer Garry Pitta resigned after Gordhan took office in February, while his boss Siyabonga Gama was fired last month.
Eskom has fired its suspended head of legal Suzanne Daniels and former acting chief executive among other changes at ailing state-owned entities.