Big contracts for Denel landward defence, but suppliers maintain they are not being paid

An A-Darter missile and Badger armoured vehicle

10 November 2015 by defenceWeb

The Public Enterprises Minister has given Denel a clean bill of health and the announcement of major multi-million Rand contracts adds further credibility but at least some suppliers of goods and services maintain they have not been paid.

According to one supplier, his company’s account with the State-owned defence industry conglomerate is currently 90 days in arrears.

“We also have no commitment as to when the outstanding amount of more than R10 million will be paid,” the disgruntled contractor said, adding there are “at least 20 other suppliers to Denel Dynamics” who find themselves in similar positions.

Last month Public Enterprises Minister Lynne Brown said, in reply to a Parliamentary question, that the acquisition of BAE Systems Land Systems South Africa had not exhausted Denel’s cash reserves.

Natasha Mazzone, opposition Democratic Alliance (DA) party shadow public enterprises minister, who first asked questions about Denel’s liquidity, said: “It appears the extent of the problem is greater than what has been reported and I have written to Minister Brown requesting her to urgently appear before the Parliamentary Public Enterprises Committee to respond to the Denel crisis”.

Among the other 20 companies who still await payment for goods and services are some that have incurred penalties on export contracts.

The newest addition to the Denel stable, now renamed Denel Vehicle Systems (DVS), this week confirmed a R900 million plus contract with NIMR in the United Arab Emirates for the development and supply of N35 (formerly RG35) mine protected vehicles.

The contract, according to a Denel statement, is one of the largest received by the now DVS and previously BAE Land Systems Land Systems South Africa in recent years and will provide work for two of the company’s major divisions for the next 24 months.

“It is one of several contracts awarded to DVS since it became part of Denel earlier this year and further confirms Denel’s leadership role in landward mobility and mine protected vehicles,” Zwelakhe Ntshepe, Denel Group Executive Business Development, said.

Other contracts Denel landward defence has recently concluded include 24 RG-31 mobile mortar platform (MMP) vehicles, assembly of driveline components for NIMR, maintenance and supply of spares for combat and military support vehicles and for components in the new Transnet electric locomotives.