Military conglomerate Denel is virtually on its knees following years of State Capture and maladministration with several commentators calling for President Ramaphosa to finally act against those implicated in the downfall of SA’s failed SOEs after the release of part two of the Zondo Commission report.
Speaking to The Citizen, director of African Defence Review, Darren Olivier said that State Capture issues had totally disrupted Denel’s recurring revenue, while it hoovered out the capital from the business and cut down operations in many areas.
Olivier explained that the damage wrought on Denel had forced key parts of the business to shut down while experienced engineers who had been with the company for ten to 20 years had left and would not be coming back into the business.
Denel was a key buyer for smaller defence industry companies who have had to shut down completely following the collapse of Denel.
The Zondo Commission report found that “former Denel chair Daniel Mantsha, appointed by former public enterprises minister Lynne Brown, played a key role in capturing the state company for the Guptas.”
Before Lynne Brown and her predecessor Malusi Gigaba was appointed to the public enterprises’ portfolio, Denel was a profitable company and highly regarded amongst international defence industry players, but today the business relies on government bailouts and cannot pay staff salaries.
The commission concluded that the Gupta brothers and their associate Salim Essa used VR Laser Services, a supplier of armour plate and steel for the defence industry, as a “vehicle” to capture Denel.
The Organisation Undoing Tax Abuse’s (Outa) Wayne Duvenage said the “miscreants” named in the report have been known to the public for years and must be held accountable. The commission recommended Mantsha and other board members be investigated for breaching the Public Finance Management Act.
While the government has proven to be incapable of being trusted with appointing the right people to run public enterprises according to acting chief justice Raymond Zondo. In the latest State Capture report, Zondo has recommended that an independent board select people to be appointed to run our various SOEs as the “dismal failure” of these companies stems from government officials and ministers getting involved with appointing executives.
Meanwhile, the JSE has suspended Denel’s bonds after the company failed to produce its annual results for the 2021 fiscal year. The JSE made the decision as the failure to release annual financial results breaches the debt listing requirements, which stipulates that SOEs must submit their financial results within seven months of the financial year-end.
In the markets, the Dollar remained flat during Asian trade currently trading at $1.13 against the Euro. “We expect the Dollar to hold around this level until we have non-farm payrolls tomorrow. There has been a shift in sentiment in the equity markets overnight, with the US indices ending their session in the green, while markets in Asia have a deciding red tinge about them,” comments forex trading house TreasuryONE.
The Rand is currently trading at R15.39 against the Dollar against the backdrop of a return in load shedding and the lasting effects the lack of electricity supply will have on the struggling SA economy.
“In a scenario where we had US dollar weakness yesterday, the weight of load shedding and SOE bailouts erased any positive sentiment and Rand strength that could have happened yesterday. Most of the Rand’s peers traded sideways in the evening and Asian session on the EM front, which shows that the Rands movement was a Rand issue and not an EM problem,” says TreasuryONE.
There is little movement amongst commodities with gold trading at $ 1,805, platinum is trading at $ 1,033 and palladium at $ 2,378. Brent Crude is just below the $90 a barrel mark, currently trading at $89.19.
Here’s a roundup of the world’s top and most interesting headlines:
SA Business
Most in-demand and best-paying tech jobs in South Africa – My Broadband
Mantashe sued amid fight over Koeberg’s life extension – Fin24/Bloomberg
Cape Town begins plans to move off Eskom’s grid and away from load shedding – BusinessTech
Global Business
Meta Plunges as Facebook Users Stall, Forecast Falls Short – Daily Maverick/Bloomberg
CNN President Jeff Zucker Quits After Failing to Disclose Relationship With Co-Worker – Bloomberg
Spotify shares fall on worries over slowing growth amid Rogan row – AFP
Markets
Asia stocks mixed as profit-taking, tech woes offset catch-up play – AFP
Nasdaq Futures Drop 2% on Dim Earnings; Dollar Up: Markets Wrap – Bloomberg
Gold flat as dollar gains ground with cenbanks in focus – Reuters
Opinion/In-depth
Gold ‘scam’ robs South Africa of tens of billions of rands in unpaid tax, says SARS – Daily Maverick
Bitcoin Lovers Like the Winklevoss Twin Urge Patience After Declines – Bloomberg
The choice of the next Chief Justice is critical for the future of South Africa’s democracy – Daily Maverick
Video
Guptas centre stage in 2nd State Capture report; SA govt behind SOE collapse – Zondo; Solidarity – BizNews
New York Times Buys Viral Word Game Wordle – Newsy
SpaceX launches Italian satellite – euronews
Image: Flickr
