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Denel places finance head honchos on precautionary suspension

Denel places finance head honchos on precautionary suspension
Michael Kgobe. (Photo: LinkedIn) | Thandeka Sabela. (Photo: LinkedIn)

The suspension of Thandeka Sabela, Michael Kgobe and Gawie van Zyl means Denel’s finance operations have been left rudderless at a time when the state-owned arms manufacturer is trying to rebuild its financial affairs after being the key site of State Capture corruption.

State-owned arms manufacturer Denel has placed three senior executives – who are responsible for the entity’s financial affairs and reforms – on precautionary suspension over possible misconduct. 

Daily Maverick understands that Denel placed acting chief financial officer Thandeka Sabela, Michael Kgobe (who also served as acting CFO and CEO), and Gawie van Zyl, the head of corporate finance and treasury, on precautionary suspension in early April. 

An insider said there has been no official internal communication about the suspensions but Denel staff had been informed about the trio’s temporary replacements. 

The suspension of Sabela, Kgobe and Van Zyl means Denel’s finance operations have been left rudderless at a time when the state-owned arms manufacturer is trying to rebuild its financial affairs after being the key site of State Capture corruption. 

Read more in Daily Maverick: State Capture report puts Malusi Gigaba and Lynne Brown at the centre of capturing and weakening Denel

Denel has also tried to stand on its own, without further taxpayer-funded bailouts, but has failed. Since 2019 it has received bailouts worth R9-billion but continued to pencil in financial losses – the latest being R463-million in the nine months ending December 2023 (against a budgeted loss of R339-million), according to a presentation by National Treasury in Parliament. 

Denel has largely been insolvent, unable to pay staff salaries and benefits (such as medical aid contributions) while also facing an exodus of experienced staff, losing engineering and innovation excellence in the process. 

At a basic level, Denel manufactures armoured vehicles, air-to-air missiles and stand-off weapons. These are manufactured in South Africa and exported to richer and more advanced countries – even those involved in armed conflict. Denel’s innovation goes beyond the military and defence industries. Its technology has been instrumental in the development of the MeerKAT and Square Kilometre Array radio telescopes – two global astronomy projects that are important for understanding the beginnings of the universe.

Denel gave no further details of the suspensions when asked for comment, saying only that it was not “in a position to provide any details on any internal matters”. 

“We have a duty to protect not only our internal processes but our employees as well, for fear of wrongful public accusations,” a Denel spokesperson told Daily Maverick, without clarifying whether Sabela, Kgobe and Van Zyl are facing charges of misconduct/wrongdoing or whether there is an ongoing disciplinary process against them. The spokesperson added: “Should it become necessary to make public comments, we will certainly do so, at the right time.”

Van Zyl refused to comment, saying it would be in contravention of his employment conditions at Denel. Kgobe referred a request for comment to Denel. An attempt to reach Sabela for comment through LinkedIn was unsuccessful.

Possible link to a R43-million refund

Daily Maverick has been informed that the precautionary suspension of Sabela, Kgobe and Van Zyl was related to a case of fraud and theft opened by the Democratic Republic of Congo (DRC) embassy against that country’s former defence attaché to South Africa, Brigadier Ngoy Timothee Makwamba. According to the National Prosecuting Authority’s Asset Forfeiture Unit (AFU), Makwamba allegedly misappropriated a refund of R43-million from Denel for his benefit. 

The unit recently secured a preservation order against Makwamba to recover the R43-million by attaching his assets, including four properties and two bank accounts.

Read more in Daily Maverick: Asset Forfeiture Unit seizes four properties, bank accounts from former DRC defence attaché

As the defence attaché to South Africa, the AFU said, one of Makwamba’s duties was to buy weapons from Denel. “The DRC embassy then made a payment of R49.6-million to the Denel group. However, the Denel Group could not process the order and arranged to pay back the money to the DRC Embassy,” the AFU said. 

In December 2022, the DRC government terminated Makwamba’s employment contract and he was no longer mandated to represent the country. However, the AFU said Makwamba “fraudulently and unlawfully represented himself to Denel as the delegated representative of DRC”, which would pave the way for him to instruct the state-owned arms manufacturer where to make the refund payment. The refund had then been paid by Denel and found its way to bank accounts belonging to Makwamba. The funds had allegedly been used to buy properties in the name of his children.

Denel’s financial and treasury function (headed by Sabela, Kgobe and Van Zyl) would have been involved in the process of effecting the refund. But there was no evidence of possible wrongdoing against them. 

Asked whether the the provisional suspension of Sabela, Kgobe and Van Zyl was linked to the refund matter in the DRC, Denel’s spokesperson said: 

“Denel’s refund to the DRC got us concerned and we have had to look internally at whether there was anything that we could have done to avoid or prevent the funds from being redirected away from their intended destination, as it is being alleged.” DM

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  • Ex Pat says:

    Unbelievable…when there is beyond doubt there has been a crime committed the best they can do is place them on “precautionary suspension”
    If this is the current judicial process then there is no hope left for SA…

    • Dermot Quinn says:

      If you read the details the fraud may have been committed by the Rep of the DRC. On the face of it there may have been no issue, negligence or fraud. Let’s let the process play out and see what comes out in the wash.

  • Ben Harper says:

    Like all other SOE’s, a disaster and monumental failure, only set up to be plundered by the anc

    • Vic Mash says:

      Are this people affiliated to the ANC? are they ANC card carrying members? Isn’t it possible that these individuals are affiliated to any other political party rather than the ANC? or is it because they are Africans and in high positions then you concluded that they got where they are because of favors from ANC politicians?

      • Sydney Kaye says:

        Yes

      • Middle aged Mike says:

        Ah yes, the old ‘implausible deniability’ card. This scenario must be different to the hundreds of others where it was exactly what you suggest it may not be this time round. Luckily you threw in the race card to get your argument over the line. It wouldn’t have been nearly as compelling without it.

  • Ismail Fredericks says:

    Meh

  • Charles Withington says:

    From world leaders in arms manufacture we have degenerated to world leaders in corruption. Frequency hoppers, drones, G5 technology, sonar detection, Rooivalk attack helicopter were way ahead of their time.

  • Rae Earl says:

    Simply another story of Cyril Ramaphosa’s lame and timid ability (or lack thereof), to remove hopelessly inept people at all levels in our SOE’s and replace them with the
    previous administrators who were excellent in their positions but were forced out in the drive to give comrades and cadres gravy train access.. The very idea of people like Gigaba, Brown, and Mapisa-Nqakula being given the defence portfolio screams of a gutless head of state who has no idea of what leadership or business acumen is all about. Another once highly successful and profitable SOE with a solid international reputation reduced to a pile of rubbish. ANC at its worst.

    • Middle aged Mike says:

      What makes you think that billionaire dollar couch guy has any interest in making things better? Beyond his schtick pre-election there’s not a hint of evidence that I can see.

    • James McMichael says:

      Yup, an absolutely living calamity is our New Dawn man, overseeing another 6 wasted years as he has relentlessly tried to curry his own ego at the national expense. A true “Nowhere Man”, whose personal approval rating has consequently collapsed, bringing it into line with the rest of the ANC.

  • Middle aged Mike says:

    Mark me down as neither shocked nor surprised. I would be both of those things if a read about a parastatal that wasn’t a wicker basket case with a tax hose shoved in the top. The only reason for their existence is to buy votes and provide opaque funding for the glorious liberation movement.

  • Penny Philip says:

    Words really do fail.

  • Thupha Mokoena says:

    Why is Gawie van Zyl’s photo not shown?

    • Ace Tshobs says:

      My question as well Thupha, what is the agenda here ?

    • Phila Patterson says:

      …why?

      • Dermot Quinn says:

        Perhap she doesn’t have one on facebook where the journos always look.

        • Celeb Taylor says:

          In this case it appears they looked at LinkedIn if you check the photo sources. Van Zyl also has a LinkedIn, but no photo.

          In these cases, I question posting the photos as well, they don’t have all of them and the allegations aren’t proven, so I’m not sure why this editorial decision was made. But wanted to add this to maybe help understand how this may have happened

  • Ace Tshobs says:

    Ray Mahlaka, why then do you have ONLY Michael Kgobe’s and Thandeka Sabela’s pictures publicized with this article and NOT Gawie van Zyl’s PICTURES also ? why exclude Gawie van Zyl ??

    • Celeb Taylor says:

      I also disagree with this editorial decision by DM, but it should be noted that while Kgobe and Sabela have public photos on LinkedIn, Van Zyl does not have a public photo. I only bring this up because the source of the pictures is listed as LinkedIn, so I presume that is where Mr Mahlaka found the source.

      Under circumstances like these though, there is no need to publish the photos though if they don’t have all of them, and besides, it is under suspicion and not a proven allegation anyway. Still I thought this might offer a reason

      • Greeff Kotzé says:

        Employing a bit of Google-fu, Gawie van Zyl’s photo can be found in a PDF document entitled ‘Denel SOC Ltd Annual Report 2012″. Just saying, you know… if DM wants to update this article’s banner image… or something.

  • Robert de Vos says:

    Rinse and repeat for every SOE. When will we see CEOs and directors jailed?

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