The board of Denel will need to explain to both parliament and Public Enterprises Minister Lynne Brown why it spent about R3.4-million to force the removal of chief executive Riaz Saloojee‚ even though he was never charged with an offence.
Saloojee‚ who along with his predecessor Shaun Liebenberg is credited with the spectacular turnaround of Denel‚ had his contract terminated last week and will be paid out until the end of January next year.
Paying public servants and executives of state-owned companies to go away‚ despite no evidence of wrongdoing or in the absence of disciplinary processes‚ is a chronic problem in the public service. It is likely to be deemed “fruitless and wasteful” by the auditor-general and has been condemned by the African National Congress.
Although the crisis over the executives has dragged on more than six months‚ Brown has repeatedly said she has not been briefed by the board on the situation at Denel.
Asked on Monday whether she approved the expenditure to terminate Saloojee’s contract early‚ she said again that she could not comment until she had engaged with the board.
As Saloojee earned R4.1-million last year‚ the cost to Denel of paying him out for the remaining 10 months of his contract will be in the region of R3.4-million.
Denel did not comment on Monday.
Chairman of parliament’s standing committee on public accounts Themba Godi said that paying executives and managers to leave without proving or disproving claims against them was “fruitless and wasteful” expenditure and of great concern to the committee.
The circumstances around the removal of Saloojee have also raised suspicion as it occurred shortly after the installation of a new board.
Chief financial officer Fikile Mhlontlo‚ company secretary Elizabeth Africa and Saloojee were suspended by the new board that went on to form a questionable joint venture with a company associated with the Gupta family.
As Denel formed the new venture without the Treasury’s permission‚ Finance Minister Pravin Gordhan has warned the directors that they could be charged with willfully or negligently contravening the Public Finance Management Act.
Denel insists that all legal requirements were followed.
Last September‚ Denel told the three that their suspension was because they had failed to comply with the act in the re-acquisition of BAE’s stake in Denel’s land systems business.
However‚ the transaction had received permission from the Treasury‚ the department of defence and the department of public enterprises.
A disciplinary hearing was set down‚ but never went ahead‚ as mediation was held instead. After mediation failed‚ Denel declined to convene the hearing again.
Saloojee’s contract was then terminated unilaterally.
Two weeks ago‚ Brown raised new allegations against the executives including that they had misstated profit in the 2015 financial statements.
This charge has never been put to them and is contested by the previous board‚ which says Brown failed to read the balance sheet correctly.
Denel board facing probe
Saloojee‚ who along with his predecessor Shaun Liebenberg is credited with the spectacular turnaround of Denel‚ had his contract terminated last week and will be paid out until the end of January next year.
Paying public servants and executives of state-owned companies to go away‚ despite no evidence of wrongdoing or in the absence of disciplinary processes‚ is a chronic problem in the public service. It is likely to be deemed “fruitless and wasteful” by the auditor-general and has been condemned by the African National Congress.
Although the crisis over the executives has dragged on more than six months‚ Brown has repeatedly said she has not been briefed by the board on the situation at Denel.
Asked on Monday whether she approved the expenditure to terminate Saloojee’s contract early‚ she said again that she could not comment until she had engaged with the board.
As Saloojee earned R4.1-million last year‚ the cost to Denel of paying him out for the remaining 10 months of his contract will be in the region of R3.4-million.
Denel did not comment on Monday.
Chairman of parliament’s standing committee on public accounts Themba Godi said that paying executives and managers to leave without proving or disproving claims against them was “fruitless and wasteful” expenditure and of great concern to the committee.
The circumstances around the removal of Saloojee have also raised suspicion as it occurred shortly after the installation of a new board.
Chief financial officer Fikile Mhlontlo‚ company secretary Elizabeth Africa and Saloojee were suspended by the new board that went on to form a questionable joint venture with a company associated with the Gupta family.
As Denel formed the new venture without the Treasury’s permission‚ Finance Minister Pravin Gordhan has warned the directors that they could be charged with willfully or negligently contravening the Public Finance Management Act.
Denel insists that all legal requirements were followed.
Last September‚ Denel told the three that their suspension was because they had failed to comply with the act in the re-acquisition of BAE’s stake in Denel’s land systems business.
However‚ the transaction had received permission from the Treasury‚ the department of defence and the department of public enterprises.
A disciplinary hearing was set down‚ but never went ahead‚ as mediation was held instead. After mediation failed‚ Denel declined to convene the hearing again.
Saloojee’s contract was then terminated unilaterally.
Two weeks ago‚ Brown raised new allegations against the executives including that they had misstated profit in the 2015 financial statements.
This charge has never been put to them and is contested by the previous board‚ which says Brown failed to read the balance sheet correctly.
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