The Solidarity trade union announced on Wednesday that it had served urgent court papers on State-owned defence industrial group Denel to force it to pay over taxes to the South African Revenue Service (Sars) and the unemployment insurance fund (UIF) levies that had been deducted from employees salaries. Furthermore, the union has initiated a process, under Section 165 of the Companies Act, to inquire into corruption and mismanagement by previous Denel board members. This process could lead to criminal prosecutions.
While these tax and UIF deductions had appeared on employees’ salary slips for June and July, they had not in fact be paid over to the respective government agencies. This was in addition to Denel having said that it could not pay its staff their full salaries in those months. (As it happened, a loan allowed the group to pay full salaries in June, albeit late; for July, it also managed to obtain the funding needed to fully pay its employees, but was only able to announce this about a week before pay day.)
The union asserted that staff salaries were being used to subsidise the group’s cash flow. “Unfortunately, we have seen it becoming general practice that taxpayers and employees of State enterprises are being treated as financiers for State capture and the misdeeds associated by [sic] that,” stated Solidarity Legal Services head Anton van der Bijl. “Solidarity says enough is enough, and because of this case, institutions will be obliged to accept responsibility for these misdeeds.”
The second legal process launched by the union is rooted in the ‘Denel Dossier’ that it released in April. This affirmed that Denel’s financial crisis was the result of mismanagement and perhaps corruption by former executives of the group. A forensic examination had since been done and Denel had stated that action against implicated people was being considered. But the union had not had any confirmation that action was being taken.
“Those responsible for Denel’s financial crisis are not being held accountable and they are getting off scot-free, while our members, innocent employees, have to bear the consequences,” stressed Solidarity deputy general secretary John Botha. “The recent nonpayment of salaries can be traced directly to the effect of State capture.”
The union said that its legal action was returning the management of State-owned companies to the taxpayers. It formed part of a greater “lawful tax protest” campaign by Solidarity. which involved at least six legal actions against State companies and “tax plunderers”. “Taxpayers simply have to say ‘no’,” asserted Solidarity CE Dr Dirk Hermann. “We don’t have to allow the wasting of our money.”