Monday, August 15, 2022

Denel employees in bid to attach R4.3m in assets after court order to pay outstanding salaries

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In the recently tabled National Budget, Denel has been allocated R3 billion.

  • The High Court ordered Denel to pay a total of R4.3 million to a group of 14 former and current employees.
  • The group is now trying to get the money from a Denel corporate account at RMB.
  • In the recently tabled National Budget, Denel was allocated R3 billion to settle interest payments.

A group of current and former employees of Denel says its next step is to attach around R4.3 million held in an RMB corporate bank account after the state-owned arms manufacturer failed to comply with a court order to pay their unpaid salaries dating back to May 2020. 

The North Gauteng High Court in Pretoria granted the order in January this year. Denel did not oppose the application and was ordered to pay up within 10 days, by 3 February. According to their lawyer, the payment has not yet materialised. 

The 14 employees, only four of whom are still working at Denel, are represented by Ipeleng Motshegoa of Ipeleng Motshegoa Attorneys in Pretoria, who is trying to recover the money on their behalf. 

Motshegoa confirmed on Wednesday that the group had obtained an order in the High Court on 27 January this year to the effect that Denel is in breach of its contractual obligations to pay its employees. 

“The order was served on Denel to be aware of immediately after it was granted. We have not heard anything from Denel yet. When we served them with the order, we attached a letter to say what the consequences would be if they do not comply, namely that we will attach assets by any legal means to try to satisfy the order,” says Motshegoa.

Consequently, the group decided to attach assets of Denel and opted for a corporate bank account at RMB. A warrant of execution to attach the money stipulated in the court order and pay it over to the group of claimants was served on RMB on 25 February, according to Motshegoa, after Denel was informed on 24 February that this step would be taken.

“At this stage we have not received any word from Denel, but we are engaging with the bank. We can … only confirm that the bank has been served and we are trying to communicate with its legal team to find out how much money is in the Denel account and if it will be enough to fulfil the court order of my clients,” said Motshegoa. 

“According to the sheriff, the bank has been requested to freeze that Denel account, but we are not sure if this has been done already. We are still urgently trying to ascertain that.”

Denel told Fin24 that it was not aware of the matter of a bank account being frozen or any attempt to do so.

Court documents relating to the urgent application by the group of former and current employees, tell of the hardships of not being paid or only partially paid. Some were unable to pay their children’s school fees, bond and car payments, facing repossession.

In August last year, interim group CEO William Hlakoane told MPs the company’s balance sheet showed it was technically insolvent, with a negative cash flow of around R600 million, and that it owed a total of over R600 million in unpaid salaries, as well as some R900 million to suppliers. The arms manufacturer made headlines after it controversially awarded contracts to Gupta-linked company VR Laser.

The Guptas and their associate Salim Essa used a supplier, VR Laser Services, as a “vehicle” to capture Denel, the State Capture Commission found.

In the recently tabled National Budget, Denel has been allocated R3 billion to settle interest payments. This amount is inclusive of the R2.9 billion announced during the medium-term budget policy statement in November 2021. Recently, the JSE suspended Denel bonds owing to its failure to submit annual results for the 2021 financial year. Denel has relied on government support to reduce its debt from R3 billion to R290 million over the past two years.

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