Govt committed to rebuilding arms maker Denel, says Gordhan

Government has reduced Denel’s debt to R290 million from R3 billion over the past two years, largely with the help of government funds used to pay off state-guaranteed loans, Gordhan said by phone from Pretoria.

“Our next job is to rebuild Denel,” he said. “How this will be done in refloating Denel has still to be determined.”

Finding the money to rebuild Denel presents another problem for the National Treasury as it’s not the only state-owned company that needs government support to survive.

The nation’s debt-laden power utility Eskom is seeking to restructure its loans as it struggles to keep the lights on in Africa’s most-industrialised economy.

Finance Minister Enoch Godongwana is scheduled to deliver his first annual budget on February 23.

A judicial panel investigating government corruption, referred to as state capture in South Africa, said on Tuesday it found that poor-quality appointments made to Denel’s board, including by Gordhan’s predecessor Lynne Brown, led to the company’s demise.

The so-called Zondo Commission recommended some board members appointed in 2015 be further investigated for possible contravention of the Public Finance and Management Act.

Read: Second Zondo report details rampant corruption at Transnet and Denel

“The Zondo Commission report showed how deep the issue of state capture went,” Gordhan said. “Our lawyers are looking at various legal options, including criminal and civil, and how to recover lost monies.”