State-owned defence industrial group Denel gave the assurance, on Wednesday, that it would soon start legal actions to recover losses from fraud and misappropriation. These would be the result of several forensic investigations into the actions of the group’s previous management.

“We started with thorough investigations more than six months ago, shortly after the appointment of the new Denel board,” stated Group CEO Danie du Toit. “We have kept stakeholders, including [trade union] Solidarity, informed about the progress we are making as recently as this week. There is no need to take Denel to court to force it to investigate allegations of irregularities.”

Du Toit reported that he had received several reports, regarding potential fraud, irregular appointments and improper transactions, which had been forwarded to independent legal firms for review. These firms would also help Denel implement the consequent recommendations. He added that there were also other investigations, which were approaching their conclusion.

He assured that the group had already started taking corrective actions. “It is completely untrue to allege that Denel has not taken actions to investigate transgressions and recover the money. We are in an advanced stage of investigations and there is no need to compel us to act through court actions.”

He listed five actions that are, or soon will be, under way. Listed first was civil action against certain previous Denel executives to retrieve money lost because of the irregular granting of pilot bursaries. Second on the list was that Denel would soon submit a statement to the South African Police Service, to lay complaints against those previous executives identified in the forensic reports. Third, a High Court application would soon be initiated, to review contracts that Denel had entered into with VR Laser. Fourth, once legal recommendations had been received, disciplinary actions would be taken against those Denel staff implicated in the forensic reports. Fifth, once the total of the losses suffered by the group had been ascertained, civil actions would be started against previous Denel executives to retrieve these losses.

Furthermore, the President had already authorised the State’s forensic investigations and litigation agency, the Special Investigative Unit, to probe the alleged illegal appropriation of money and maladministration within Denel. Most probably, this would result in civil actions to recover the funds.

Regarding the group’s difficulties in meeting its salary obligations in June and this month, Du Toit stated that the company had kept its employees, the unions and other stakeholders informed about its financial situation and liquidity “issues”. “We are encouraged by the positive sentiments towards Denel expressed by government and looking forward to possible decisions on the recapitalisation of the company,” he affirmed. “Denel remains a valuable national asset and still has the potential to play a vital role in the country’s economic future and its transition towards the fourth industrial revolution.”