Danie du Toit, Denel’s group CEO, has resigned after less than two years in the job, as the turnaround of the state-owned arms manufacturer after years of mismanagement remains in the balance.
Du Toit’s resignation is a blow for the company, which is struggling to get back on its feet after years of mismanagement and looting during the state capture years left it in financial dire straits.
Denel announced on Monday that Du Toit, who had signed a five-year contract, will be leaving the company on August 15 and that it would appoint an interim CEO shortly. No reason was given for his departure.
The company has yet to emerge from a turnaround strategy that includes cutting R1bn in costs, selling noncore assets and seeking international strategic partners with the approval of the government.
Denel said the board had taken far-reaching steps to stabilise the business and prepare the ground for its long-term sustainability under the growth blueprint the board introduced and had hired Du Toit to build on and execute.
In June, board chair Monhla Hlahla told parliament the company’s turnaround was “painful” and it was not easy for it to access funding. She said the business was in a crisis that had existed for a long time, but it could be stabilised.
Du Toit, a former MD at Saab Medav Technologies in Germany, was appointed group CEO in December 2018. He replaced Zwelakhe Ntshepe, who resigned in May of that year just six months after getting the top job.
Ntshepe left a month after reports that Denel had given former North West premier Supra Mahumapelo’s son a R1.1m bursary to become a pilot. The scholarships for Oarabile Mahumapelo and two others have since been terminated.
The company has laid criminal charges against former executives and taken action against employees involved in wrongdoing. The company is also working with the Special Investigating Unit.
In an effort to recover stolen money, Denel last year lodged civil claims against four executives involved in the irregular awarding of pilot bursaries.
Denel, which was once a profitable company, is one of the state-owned enterprises that was ruined during the state capture years under former president Jacob Zuma’s administration. The government has committed to turning it around, appointing new directors and management, and transferring significant funding from the fiscus.
The business has been in a dire financial position and the company has faced liquidity challenges. In 2019, it received R1.8bn for recapitalisation and in 2020/2021 was allocated a further R576m.
The company has also been hit by the Covid-19 pandemic, which stalled imports and exports, drying up revenue and leaving it once again unable to pay full salaries for May, with June and July also in doubt. In May, staff were paid on a sliding scale, with those on the lowest salaries getting their full pay while executives got just 20% of theirs.
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