Defence Minister Angie Motshekga is standing firm in her refusal to freeze new orders for arms manufacturer Denel, despite the state-owned enterprise’s financial failure to meet parliamentary reporting deadlines.

Motshekga asserts that her ministerial role does not extend to interference in Denel’s commercial dealings.

She made the statement days after she wrote to Parliament, requesting an extension to table Denel’s 2024/25 annual report after the entity failed to meet the stipulated September 30 deadline because the audit for the 2024/25 financial year has not yet been finalised.

Replying to parliamentary questions from DA MP Chris Hattingh, Motshekga said while her department was the government’s shareholder representative, Denel was governed by the Public Finance Management Act (PFMA).

“This means it operates as a government business enterprise with its own legal identity, separate from the Department of Defence,” she said.

Hattingh had enquired whether Motshekga will freeze any new Denel orders above R100 million pending the tabling of the entity’s financial statements in Parliament.

Motshekga said her role was to hold Denel’s board of directors accountable and to oversee Denel’s performance and ensure compliance with its legal and financial obligations.

“This executive authority does not give the minister the power to interfere in the day-to-day commercial operations, like freezing specific orders or bids from other clients.

“Freezing orders would (be in) conflict with the core principles of corporate governance and the legislative framework,” she said.

The PFMA entrusted the Denel board of directors with the responsibility for the financial and operational management of the entity.

“Unilaterally freezing orders would be detrimental to Denel’s revenue and ability to recover, potentially putting the breach of its duties,” Motshekga said.

The Companies Act obliged the board to act with care, skill, and due diligence in the company’s interest.

“Halting commercial activities could be seen as undermining this obligation. And it is in contradiction with the minister’s role as stated by the PFMA,” Motshekga added.

She said that although the proper channel for a directive to freeze orders would be the board, it would be obligated to consider the legality and commercial impact of such a directive, as it could expose the company and its directors to legal action from clients or creditors.

But, Hattingh said Motshekga hides behind the PFMA to claim that only the Denel board can decide to freeze orders when, as the government’s shareholder representative and Denel’s main customer, she has the leverage to demand accountability, transparency, and risk mitigation.

“Instead, the minister has chosen to shield Denel, a bankrupt state-owned enterprise, at the expense of the SANDF’s operational readiness,” he said.

When asked whether she will ring-fence SANDF readiness by immediately dual-sourcing critical spares and maintenance to certified non-Denel suppliers, Motshekga ruled that out as it related to prime mission equipment and services, which Denel is the original equipment manufacturer.

She said the department will collaborate with Denel to source critical spares to ensure the state of readiness of the defence was not materially affected.

“The department acknowledges that deeper collaboration between Denel and its suppliers is vital in achieving a resilient local defence-related supplier base as it seeks lasting solutions to the challenges facing Denel.”

However, Hattingh said the defence force cannot afford to depend on a monopoly supplier that has defaulted on contracts, lost critical skills, and drained billions in bailouts.

“The refusal to ring-fence readiness by dual-sourcing critical spares is reckless. Our soldiers in the field, from the DRC to our borders, are left vulnerable when aircraft are grounded, vehicles stand idle, and equipment cannot be maintained on time.”

He said critical spares and maintenance must be dual-sourced from certified local and international suppliers to ensure resilience, competition, and reliability.

Hattingh insisted that no new mega-contracts should be approved to Denel until it produces audited financials, tables its annual reports, and resolves its legacy disputes.

“The minister’s refusal to act is a political choice, and it is a choice directly against the readiness of our armed forces,” he added.

mayibongwe.maqhina@inl.co.za

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