Just in time: Denel will be able to pay June salaries

Public Enterprises Minister Pravin Gordhan announced on Tuesday that employees at embattled state-owned arms manufacturer Denel will receive their full salaries this month, after a lender came to the entity’s rescue.

Group chief executive Danie du Toit had said earlier on Tuesday that the company had no alternative but to cut back on salaries and would only be able to pay staff 85% of their salaries.

READ MORE: Embattled Denel can’t pay full salaries for June

Du Toit had said: “Due to ongoing liquidity challenges we are now faced with the unfortunate reality that the company is not in a position to fulfil the 100% salary obligation for June 2019.”

Gordhan made the announcement that all salaries would be paid in full during the parliamentary debate on President Cyril Ramaphosa’s State of the Nation address but did not name the lender.

The public enterprises minister noted that what is happening at Denel is an example of the impact of state capture on state-owned enterprises and their employees.


“There is no clearer example of the damaging effects of state capture than the financial strain and uncertainty the 3 500 Denel employees and their families may face each month if the company’s liquidity problems continues,” he said.

“Denel, our producer of military and aerospace equipment, is a crucial and strategic state entity that was substantially harmed by state capture.”

Gordhan explained that the arms manufacturer was implementing several turnaround strategies including reviewing procurement processes and renegotiating contracts.

He also mentioned that the company had more than R30-billion in contracts in the pipeline.

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