Despite Denel’s future looking rosy under Martie Janse van Rensburg’s tenure as board chairperson, then public enterprises minister Lynne Brown replaced the board in July 2015 with a leadership lacking requisite skills and background, the Commission of Inquiry into State Capture, chaired by Deputy Chief Justice Raymond Zondo, was told yesterday.
Giving testimony before the commission, deputy director-general of public enterprises Kgathatso Tlhakudi – with several years’ experience at Denel and in the public service – described the 2015 Brown-appointed board, chaired by advocate Dan Mantsha, as “weak”.
Said Tlhakudi: “Looking at the incoming board holistically – in terms of qualifications and experience – I saw a gap compared to the outgoing one that was led by Van Rensburg, under whom Denel saw profits and orders of more than R35 billion.
“It was quite concerning that there was no sign of board experience to lead Denel – one of the top 100 defence companies in the world.
“It was led by Mr Mantsha – someone who was once struck off the roll of attorneys – something that did not seem like a good appointment.
“Directing a board and leading an organisation like Denel is tough and we understand we had to spread the pool of directors to reach developmental goals. But you needed to bring people with a solid background.”
To illustrate his misgivings, Tlhakudi said there was neither a chartered accountant, nor someone with audit and risk skills serving, with Gupta business associate Johannes “Sparks” Motseki the only member retained by Brown.
Sparks held 1.3% shares in the Gupta-owned Shiva Uranium.
Other board members were Thamsanqa Msomi, Tauyame Mahumapelo, Pinkie Martha Mahlangu, Themba Michael Nkabinde, Mpho Kgomongoe, Khumbudzo Ntshavheni, Nonyameko Mandindi and Refiloe Mokoena.
Said Tlhakudi: “When minister Brown was appointed in 2014, the process to review state-owned enterprise (SOE) boards started earlier than usual.
“In October that year, we sent out an advert to refresh the list of prospective board members. It was far away from the end of the financial year.
“It was not even a day thereafter when files were collected by the ministry from my office – moving responsibility to assist in choosing board members to the minister’s office. I did not hear of the process until a list came with a Cabinet memo appended.”
He said he was reluctant to get involved when asked to sign because he had concerns that it appeared like no more than an attempt to rubber stamp the list, but “by virtue of the environment that prevailed in the department, I had no option”.
Brown, said Tlhakudi, “stressed she was a shareholder representative and, as officials, we should know our place”.
“She reminded us at senior management meetings that we could not act without her directive,” said Tlhakudi.
The board changes led to a decline in Denel’s fortunes, with the new board unable to meet its corporate plan, and revenues halving, according to Tlhakudi.