Haibo: Parliament Told Denel Owes Employees R636 in Unpaid Salaries
- Arms company Denel is in serious trouble and is unable to meet its financial obligations
- It owes its employees R636 million in unpaid salaries and a further R900 million to suppliers
- If the situation does not change the company will be in the red by a astonishing R900 million
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The arms company Denel owes its supplies R900 million and its employees a further R636 million according to a report presented to parliament’s standing committee on public accounts (Scopa).
Denel is in deep trouble and is unable to meet its financial and operational commitments due to a lack of cash.
Source: UGC
Denel chairperson Gloria Serobe told Parliament on Tuesday that the hole the company has dug for itself is quite big and it does not have enough resources to operate according to TimesLIVE.
Interim CEO William Hlakoane told Parliament that the company is insolvent and running at a R360 million deficit.
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Defence Web reported that in addition, Parliament was shocked to hear that the company does not have a valid tax clearance due to non-payment of PAYE and VAT.
If things continue as they are the company would be in the red to the tune of R600 million by the end of the year.
Company Denel, essential to SANDF operations, needs restructuring to stay afloat
Denel, a state arms-maker, requires funding to restructure and save itself. The business is crucial to the South African National Defence Force meeting its mandate, according to the Public Enterprises Department.
Denel is facing crippling financial strain as shown by its inability to distribute full salaries, resulting in the departure of skilled staff members and litigation focused on liquidating the company.
The state-owned company has faced a number of tribulations over the prior few years with alleged corruption and financial turmoil. The company, currently surviving on the guarantees of Government, indicated a nett loss of R1.2 billion at the end of December.
South African rand breaks R15 to the US dollar
In other business-related news, Briefly News reported that the South African rand broke the R15 to the dollar level on Thursday, 19 August, trading at R15.03 to the US dollar. This happened just three hours after the Johannesburg Stock Exchange (JSE) opened. At the time of writing this report, the rand was trading at R15.18 to the dollar.
The dollar is continuing to strengthen, thus weakening the rand. Expectations of an increase in interest rates have reportedly been decreased given a better-than-forecast consumer price inflation rate for July. The rand has reached its weakest level since March, according to a report by Moneyweb.
According to SABC News, on Tuesday, trading on the JSE was delayed. This was due to the large trading volumes that extended to a record R145 billion. The trading still needs to be processed.
Source: Briefly News
