Suspended Denel Dynamics CEO Sello Ntsihlele’s defence against gross misconduct charges in his pending disciplinary hearing is set to boil down to allegations that political cronies have been lined up to loot the state arms manufacturer’s assets for a song through a scheme disguised as a restructuring plan.
Among the assets set to be sold as part of restructuring plan, are shares in the Hensoldt and Denel Gear Ratio (DGR) and properties worth over R750- million.
Denel’s 30% stake in Hensoldt, which produces electro-optical products for airborne, laser and helmet head tracker systems, is worth R175-million.
The plan also lists R200-million for properties to be sold and R550-million for properties to be sold along with DGR shares, which produces automotive equipment for military vehicles like Casspirs and Mambas.
Ntsihlele faces 17 charges including insubordination, gross insubordination, conduct unbecoming of a senior employee, failure to act in the interest of the employer, dishonesty, gross misconduct, dereliction of duty, breach of policy and breach of suspension conditions.
Ntsihlele is set to argue that the leasing and selling of the properties was a move designed to loot the assets.
Denel is also not taking any chances in the matter, as it has lined up a big-shot lawyer, Cliffe Dekker Hofmeyer, to present the case against Ntsihlele.
The disciplinary inquiry began on Monday with a preliminary hearing, where Ntsihlele’s lawyers raised preliminary matters before both parties agreed on a date for proceedings between the second and third week of next month.
According to a memorandum in the disciplinary inquiry record, Ntsihlele pushed back against the rush to lease and later sell three lucrative Denel properties on the Irene campus.
This after Denel interim group CFO Thandeka Sabela wrote to Denel Dynamic staff members on November 30 2021 informing them they should vacate the office within a week so the new tenants could take occupation. She said the potential rental income was expected to assist in alleviating the liquidity challenges that are facing Denel.
“The expected rental arrangement will be for a short period (6-12 months),” said Sabela, adding that “this is an opportunity to realise external revenues in the immediate term,” wrote Sabela on November 30 2021.
In a reply dated December 7 2021, Ntsihlele told Sabela that she had exceeded her powers.
He said Denel Dynamics had requirements for use of the Irene facility and “the proposed relocation of people out of it will negatively impact on Denel ongoing projects, including Seeker 400 missile project”.
He said he did not see why Hensoldt should be given preference over Denel’s needs.
“Since the suggested relocation will result in delays, we request that other properties be considered for Hensoldt’s usage. It cannot be that Hensoldt’s requirements are priorities over those of Denel Dynamics,” said Ntsihlele.
He said that Sabela’s stated income requirements could be met by “renting out other buildings that are not in use within the Irene Campus”.
“We need the space for our use in the programme and have funds to pay for it. We, therefore, see no reason to prioritise Hensoldt at the expense of Denel”.
It was alleged Denel’s board and the public enterprises department appointed Riaz Saloojee as chief restructuring officer despite the SIU warning in May last year.
It is also alleged that during his first stint as Denel CEO in 2014, Saloojee was accused of misappropriation of funds and maladministration and the matter was before the NPA.
Denel’s board allegedly ignored the SIU’s warnings, and Minister of Public Enterprise Pravin Gordhan, who presides over the entity, endorsed the decision.
Public Enterprises spokesperson Richard Mantu said then the Denel board did not need Gordhan’s approval to appoint Saloojee.
Gordhan was aware of the SIU letter, “the board’s legal opinion on the secondment of Saloojee as chief restructuring officer, and satisfied with how the board dealt with the matter”, Mantu said.
Saloojee and Ntsihlele have clashed since he returned last May. As a result, Ntsihlele lodged a formal grievance against Saloojee, alleging interference and harassment.
Denel’s restructuring plan included reducing its property portfolio. Insiders said the three Irene properties where Ntsihlele refused to move were worth R600-million each, totalling R1.8-billion.
But a document describing the restructuring plan, therefore, places the sum of all properties to be sold, including on the Pretoria and Kempton Park campuses, at far less than R750-million.
The decision to sell the assets was met with objections, including from trade union Numsa, but Denel dismissed the alleged undervaluation of the property as “speculation”.
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