Union says Denel PMP financial crisis still not solved

Mounting pressure is being placed on conglomerate Denel to come clean on deepening governance concerns at its subsidiary, Denel Pretoria Metal Pressings (Denel PMP), as trade union Solidarity demands the full release of a long-awaited internal audit report.

Denel PMP is a state-owned arms manufacturer, based in Pretoria West, employing hundreds of workers, producing ammunition, explosives, and industrial components for both local and international markets.

It plays a strategic role in South Africa’s defence capability, particularly as a key supplier of ammunition to security forces.

Denel’s troubles escalated during the period associated with state capture, when allegations of mismanagement, irregular contracts and weak oversight significantly weakened the group’s financial position.

Since then, the Denel conglomerate has struggled to regain stability, with recurring liquidity challenges, delayed salaries, and an inability to meet operational demands consistently.

It was announced in March 2026 that the conglomerate will undergo an independent review of its turnaround strategy and long-term sustainability.

The review was announced in the Defence Vote of the latest national budget, presented by Finance Minister Enoch Godongwana on February 25.

The plan includes a new operating model, restructuring, and cost optimisation.

It requires R5.2 billion in total funding, with R1.8 billion to be raised through asset disposals and R3.4-billion already allocated under the Special Appropriation Act (2022). The funding aims to settle legacy obligations, ease liquidity pressures, and support ongoing operations.

Minister of Defence Angie Motshekga also became involved in appointing a new Denel board in February 2026, as part of stabilisation efforts, which signals official acknowledgment of ongoing problems.

The union has warned that a separate announced audit into corporate management issues at Denel PMP must be conducted and presented without compromise, raising alarm over delays and a lack of transparency that have left employees and stakeholders in limbo.

The dispute dates back to January 21, when the union formally approached Denel’s Office of the Chief Audit Executive to request an urgent investigation into what it described as serious governance failures.

The request followed a staff meeting a day earlier, where employees were told salaries might not be paid, a moment that underscored the severity of the crisis facing the division.

However, just days later, the situation changed. By January 23, Denel confirmed that January salaries had in fact been paid to employees at both Denel PMP and Denel Dynamics.

The union’s concerns extend beyond immediate financial instability.

They include questions around the appointment of an acting general manager, as well as broader issues relating to governance, execution of strategy, and accountability at management level.

Central to the complaint is the alleged failure to implement the announced board-approved turnaround strategy designed to stabilise operations and ensure financial sustainability.

Months later, however, there has been little to no feedback on the progress of the investigation.

The union said it has not received the internal audit report, nor any clear indication of the scope, status or timelines of the probe.

Derek Mans, Solidarity’s sector co-ordinator for the defence and aerospace industries, said the situation has reached a critical point where accountability can no longer be delayed.

“The Auditor-General’s long-standing concerns about Denel’s audit outcomes including repeated disclaimers due to the absence of credible financial statements place this situation in a very serious light,” emphasised Mans. “It creates a familiar pattern: when transparency declines, accountability begins to disappear. It is a pattern South Africans know all too well from the era of state capture.”

Mans adds that Solidarity has developed an extensive network of sources within Denel, allowing the union to independently verify information emerging from within the organisation.

“Solidarity’s sources across Denel are increasingly providing concrete information. Any audit report will be measured against what we can independently verify,” he says.

The prolonged delay in releasing the audit findings has intensified suspicion among employees and observers alike.

At stake, according to the union, are not only jobs but also the integrity of a strategic state entity central to South Africa’s defence capabilities.

The situation raises a critical question: whether a thorough investigation is indeed underway, or whether time is being deliberately bought to manage reputational fallout.

Solidarity has expressed concern that the final outcome could be diluted, with a comprehensive report potentially replaced by a shortened or sanitised version that prioritises image management over factual accountability.

“This is especially true where the central question concerns the integrity of management, accountability, and the potential failure of critical decisions,” Mans explained.

He warns that any attempt to obscure the truth will be swiftly challenged.

“A half-baked report will certainly not restore confidence, it will deepen the crisis.”

Compounding concerns are reports of a separate forensic investigation conducted by Adams & Adams, dated November 12, 2025 that allegedly points to serious shortcomings within Denel.

While this forensic report is distinct from the internal audit requested by Solidarity, the union argues that it reinforces the need for full transparency and decisive action.

Against this backdrop, Solidarity has outlined a series of demands that it says must be addressed without further delay.

These include confirmation of whether the investigation has been completed, clarity on its scope and terms of reference, and a firm timeline for the release of the full audit report.

The union is also calling for clear consequences where wrongdoing is identified, including accountability for irregularities, negligence or failure to implement board decisions.

According to Mans, employees should not be left to bear the consequences of poor governance or delayed decision-making.

“Employees can no longer be expected to pay the price for poor governance, delay tactics, or acceptable versions of the truth,” he said.

Denel was approached for comment, and a list of questions was provided to them, but no response had been received by the time of publication.

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