Trade union Solidarity on Thursday alleged in a report titled ‘Denel Dossier’ that State-owned aerospace and defence group Denel’s top management received increases of up to 60% in their salaries, as well as 100% performance bonuses last year, while there were insufficient funds to pay employees their full salaries in December.

Solidarity further expressed concern that about 700 job opportunities may be jeopardised as a result of the financial problems at the beleaguered State-owned entity.

The dossier is a memorandum highlighting that Solidarity is currently extremely concerned about the top executive management of Denel, with the memorandum aiming to prompt necessary investigations and urgent interventions at a Ministerial level, as well as corrective actions to save the defence industrial group.

“Denel has also been bailed out of financial difficulties by the government through several assistance packages and has threatened to retrench hundreds of workers. In spite of Denel’s financial crisis, top management received performance bonuses of 100%,” said Solidarity CEO Dirk Hermann.

According to the ‘Denel Dossier’, the weapons manufacturer also allegedly deducted an amount from employees’ salaries as part of a savings plan, which would have been managed on behalf of the employees.

However, the report notes that Denel’s financial position was in so dire that the employees could not be paid these funds.

“Denel was supposed to manage the funds on behalf of the employees. It seems that the money was used to finance mismanagement,” Hermann told media at a briefing on Thursday.

The trade union further claimed that the report includes documents proving that the R1.15-million bursary, which was awarded to the son of the North West Premier Supra Mahumapelo, was not awarded according to the correct procedure and was awarded unlawfully.

The bursary was awarded for a jet pilot programme, said trade union official Willie Venter, adding that such a programme was not included in Denel’s policy.

“The [policy] allowed study fields at Denel to include accounting and finance, business management, computer science, engineering science, explosive technology, quality and safety. There’s no pilot programme,” he said.

The policy, while not updated recently, is still applicable and does not stipulate that the board or the executive can override the policy, simply by getting more approval, Venter said.

However, Denel earlier this week refuted media reports that the awarding of the bursary had been in contravention of its policy, stating that the award was made in compliance with Denel’s relevant policy after a full disclosure and presentation to the entity’s board of directors.

The ‘Denel Dossier’, Hermann argued, is regarded as part of Solidarity’s bigger campaign against tax looting at State-owned companies.

In the 250-page report, Solidarity requests that Denel’s top management, including the group CEO Zwelakhe Ntshepe and CFO Odwa Mhlwana, be suspended pending a forensic investigation.

The trade union also requests that the alleged financial mismanagement, circumvention of tender procedures and contempt for internal policy be investigated.

According to Hermann, President Cyril Ramaphosa and Public Enterprises Minister Pravin Gordhan have already, at various events, spoken out against corruption and State capture.

“The Denel Dossier will be handed to Minister Gordhan with the view of further action,” Hermann promised.

Engineering News has sent a request to Denel for comment.