Publication: Business Report Issued: Date: 2004-07-13 Reporter: Sherilee Bridge

Racial Cleansing Claim a Red Herring - Denel



Business Report

Date 2004-07-13


Sherilee Bridge

Web Link


Johannesburg - The furore about race and ethnic cleansing at Denel, the loss making defence parastatal, was "a red herring", Sandile Zungu, the chairman of Denel, has said.

Zungu stressed that Denel's anti-corruption drive was "following a due process". He was reacting to criticism of the defence group's alleged lack of transparency, especially over contentious labour issues that have erupted in the past 18 months.

Unions representing Denel employees have claimed that as many as 28 senior managers had been suspended and five general managers had already been dismissed - all of them white.

The unions - the United Association of SA (Uasa) and Solidarity - have claimed that the suspensions were part of an orchestrated campaign by Denel to avoid having to pay costly retrenchment packages while making space for its employment equity drive.

Zungu did not provide details of how many suspended employees were white or black. He said all the dismissals followed disciplinary hearings and "I am quite satisfied that a due process is under way".

He confirmed that the disciplinary hearings were part of a wide-ranging investigation into financial irregularities at the parastatal.

However, the unions have denied claims by Denel that the parastatal was following due process.

Johan van Niekerk, the senior manager responsible for professional services at Uasa, said last week that Denel's disciplinary process was in contradiction of accepted disciplinary practice and in some instances involved "the intimidation and victimisation of witnesses".

He claimed Denel used "underhanded tactics" to delay the resolution of the disciplinary disputes, and presiding officers at disciplinary hearings did not come to "the logical conclusion" based on the evidence.

Uasa said the cases of the five dismissed general managers had all been referred to the Commission for Conciliation, Mediation and Arbitration.

Denel is expected to post an R800 million loss for the financial year to March. In October it announced that the previous year's net loss of R363 million had narrowed to R72.6 million.

Factors hurting Denel's results are the strengthening of the rand and the cost of carrying non-core and loss making companies.

Despite Denel's secrecy over the anti-corruption drive, media reports last month suggested that the internal cleanup might stall the reorganisation.

Johan Pieterse, the secretary-general of metal industries at Solidarity, told Business Report last month that suspended managers could have cost Denel R2 million a month in salaries.

Sam Basch, the manager of promotions at Denel, said the parastatal, like any other company, operated in accordance with all relevant South African legislation.

"Denel's disciplinary procedures are transparent and make provision for suspensions if any staff member is suspected of contravening the policies and regulations," Basch said.

"We are not at liberty to elaborate in the media on internal procedures, particularly regarding specifics and individuals."

Denel is also still in the process of retrenching staff, under a separate mandate. Out of 400 positions, another 120 must still go.

With acknowledgements to Sherilee Bridge and the Business Report.