Government kicks the ball to management and management has no solutions or answers
“I need chronic medication, will my medical aid be paid?”
“My 1-year-old child has breathing problems and has to go to hospital every month, I cannot go without medical aid!”
“I am one year from retirement, I cannot go without salary for a month, should I resign or go on pension to at least have an income?”
“Are we going to receive at least part of our salaries?”
“I do not have money for fuel to go to work, will I be penalised if I am not at work?”
“My children are studying and have to write exams online, if I cannot buy data, they cannot write exams.”
“I cannot pay my medical aid or vehicle or life insurance if I do not receive a salary, what will happen if I am involved in an accident on my way to work?”
These are the questions Solidarity is confronted with every single day since the announcement by Denel that they would not be able to pay salaries. These are the questions one would typically expect an employee to ask his employer. In the case of Denel, however, these questions remain unanswered, so they are directed to the union by frustrated, desperate and worried members anxious to get clarity.
Since Denel at a meeting on 18 May 2020 finally confirmed that the May 2020 salaries would not be paid on time, they have not yet met with any of the organised unions in an official meeting. The meeting scheduled for 22 May 2020 was postponed to early in the week of 25 to 29 May but was never arranged in spite of several requests by Solidarity. Denel’s feedback was that they had been in contact with the shareholder but that it had not produced anything and that meanwhile they were invoicing clients but that this had not produced anything either and that, consequently, they did not have any feedback worth mentioning.
The government, through the acting Director-General of the Department of Public Enterprises, last week in the parliamentary committee made it clear that Denel would indeed receive the lifeboat amounting to R576 million. However, nobody knows when, and the conditions for spending this lifeboat are not clear either. Denel previously intimated that it may be used only to redeem historical debt but that they were negotiating with the government for greater freedom to use it also for projects that could generate further income. No clarity in this regard has yet been given.
Apart from the DG saying that the Minister (Mr Pravin Gordhan) was part of the NCACC and that they would do everything in their power to issue export permits as quickly as possible, no further clarity has been given on what extra actions were being taken to expedite the process.
However, the government has shown its true colours on various occasions reflecting slow and vacillating action in managing the state-controlled entities. In certain union quarters the shortage of funds currently is ascribed to the present management team, but for all intents and purposes they inherited a bankrupt institution last year. In February 2019 turnaround plans requiring recapitalisation to the tune of R2,8 billion were submitted. The state then promised R1,8 billion, which was paid only at the end of August 2019 instead of April 2019 as most people expected. The result was that Denel in the meantime had to borrow R400 million as bridging finance. When the recapitalisation was paid to Denel at the end of August 2029, R400 million was immediately paid to the financiers of the bridging finance and R225 million to SARS. For all practical purposes, management therefore was left with only R1,2 billion of the R2,8 billion required by the turnaround plan.
At the recent meeting of the parliamentary committee, Denel’s management again were left to their own devices. The DG said they should do whatever they can to expedite orders so that they can issue invoices and receive payment. He conveniently forgot, however, to mention that the entity’s and its management’s ability to do that were being and still are paralysed by the state’s draconian lockdown measures, and he offered no assistance.
At Denel Aeronautics, certain employees were retrenched in March already and should have received packages, but this has been postponed and they are being kept employed because Denel does not have enough cash available, and meanwhile they are still receiving monthly salaries even though they cannot in any way contribute anything to the organisation any more. They form part of the group that currently are not receiving salaries. The group of employees who were retrenched have been confronted with the uncertainty of possibly losing their jobs since December 2019. Then they found out they were going to lose their jobs, then they found out there was no money for packages, then they found out they were still receiving salaries and meanwhile there is no money for this either. The government as stakeholder could have made funds available a long time ago to cover this temporary expenditure and in so doing limit the damage in the long run. But nobody is making these decisions and in the meantime it is the employees who remain behind and Denel’s sustainability that is threatened.
The government as stakeholder was responsible for appointing a weak board who appointed weak and corrupt management, resulting in paralysing these institutions. Now that they have appointed a new board and management who are likely to pull the chestnuts out of the fire, the government is not providing the necessary support to give the institutions an opportunity to rise from the ashes.
Management appear to be at their wits’ end, because they are unable to answer the questions of desperate employees, and they apparently now are following a strategy of silence while the employees are left to their own devices.
Somewhere, someone earning the salary of a leader now has to stand up and start leading!