R700m buy could be behind Denel suspensions

Fin24 and Netwerk24

Johannesburg - Serious cash flow problems after the recent acquisition of the local vehicle manufacturing component of BAE Systems Land Systems for more than R700m are rumoured to be a possible reason for the suspension of three top managers at SA weapons manufacturer Denel, Netwerk24 reported on Monday.

There were even claims that suppliers do not want to supply parts to Denel any more until the company pays them.

Although Denel spokesperson Vuyelwa Qinga denied the validity of these rumours, she admitted that any company has "challenges" from time to time. She pointed out that Denel has made a profit the past four financial years.

Netwerk24 reported it is well known that BAE Systems was keen to get rid of its SA subsidiary, since the global market for military vehicles has shrunk considerably after Nato intervened in Iraq and Afghanistan.

Fin24 reported last week that the Denel board placed CEO Riaz Saloojee, chief financial officer Fikile Mhlontlo and company secretary Elizabeth Africa on compulsory leave pending the outcome of an investigation.

Public enterprises spokesperson Colin Cruywagen told Fin24 on Friday that “the board of Denel is dealing with the matter and Minister Lynne Brown is kept abreast of it”.

The current board has only been serving for the past six weeks and according to Netwerk24 those in the know claim it is almost unthinkable that it could have identified issues with such far-reaching potential implications in such a short time.

Source http://www.fin24.com/Companies/Industrial/R700m-buy-could-be-behind-Dene...