News / South Africa

Ilse de Lange
2 minute read
16 Dec 2017
7:56 am

Denel under legal fire

Ilse de Lange

Employees put aside percentage of salaries every month for year-end payout.

Denel logo.

Trade union Solidarity has laid fraud charges against state-owned arms company Denel and its directors after it announced it did not have enough money to pay the December salaries and year-end bonuses of its nearly 4 000 employees.

Solidarity deputy general secretary Deon Reyneke said a charge was filed in terms of section 332 of the Criminal Procedure Act against Denel, its CEO Zwelakhe Ntshepe and chief financial officer Odwa Mhlwana.

“Denel, knowingly and without the permission of the employees, mismanaged employee funds that have been put aside by the employees themselves in order to receive a year-end bonus. “These funds are part of the employees’ total cost package and as such have been taxed,” he said.

While the employees’ own money was not paid out to them, Mhlwana saw fit to pay himself 100% of his allocated performance bonus by March 2018, Reyneke said.

“Denel has admitted it is experiencing a shortage of approximately R350 million to pay all its creditors and, so far, it could not explain to its employees why money that has been deducted from their salaries to pay their bonuses with is not being paid out to them,” he said.

Reyneke alleged these actions by Denel’s management were criminal and totally unscrupulous.

“There is no excuse for squandering employees’ hard-earned money without their permission when the onus was on the company to have invested it on their behalf. “Solidarity is filing this charge on behalf of its members, who deserve justice and fairness,” he said.

The charges were filed with the National Director of Public Prosecutions, the Gauteng director of public prosecutions and the control prosecutor at the Commercial Crimes Unit.

Denel draughtsman Leon Jansen alleged in an affidavit that Denel and its directors were guilty of “criminal mischief” and had fraudulently misappropriated funds to their benefit and the detriment of employees.

Some employees were part of a savings scheme in terms of which a percentage of their salaries was put aside every month to be used for a payout at the end of each year and Denel was obliged to invest the monies, he said.

The payout was not a discretionary bonus, but a contractual obligation and employees were taxed on those amounts.

He insisted that although Denel’s conduct had the “whiff of civil liability”, it “reeked of criminal intent”, which amounted to fraud.


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