New board for state-owned enterprise struggling to pay salaries

South Africa’s Minister of Defence and Military Veterans, Angie Motshekga, has announced a new board of directors for the country’s struggling state-owned enterprise (SOE), Denel.

“The appointment of the new Board marks an important step in stabilising the company and accelerating its turnaround and recovery,” said Motshekga.

The new board will serve until 2029, and while there have been many changes, Group CEO Tsepo Monaheng, Group CFO Matodzi Mukwevho, and Interim Chairperson Tshidi Mokgabudi remained in place.

Motshekga thanked the outgoing board for their service “during a particularly challenging period in the company’s history.”

“The incoming board brings a wealth of experience across governance, defence, finance, engineering, and executive leadership,” said Motshekga.

“We have full confidence in the capability of the new board to strengthen governance, restore operational performance, rebuild stakeholder confidence, and guide Denel towards long-term sustainability.”

Motshekga also said that the Department of Defence looks forward to working closely with the new Denel board as it undertakes the task of being an innovative, ethical, and commercially viable entity.

Years of decline

Once an internationally respected and profitable state entity, Denel has been in a downward spiral for years.

Problems included sensitive missile intellectual property being misappropriated to foreign SOEs, and the SOE becoming entangled with the Gupta family, which harmed its reputation and left it financially crippled.

Skilled employees left, and the state entity went from a net profit of R476 million in 2016 to a net loss of R550 million in 2024.

It was technically insolvent and claimed it could not be stabilised, despite bailouts totalling almost R2.4 billion in 2019 and 2020.

More recently, in January 2026, the arms manufacturer informed employees that it could not pay salaries.

It ultimately averted the disaster for January after trade union Solidarity stepped in.

Derek Mans, Solidarity’s coordinator for defence and aviation, credited sustained pressure from Solidarity for this outcome, but noted that Solidarity remains concerned about the state of Denel’s financials.

Recent developments

Solidarity earlier this week expressed concerns about a recent article by Rapport, which highlighted a confidential forensic report that exposed alleged renewed corruption and maladministration at Denel.

“It is now clear that this is a systemic failure of ethical leadership and management at a strategic state-owned enterprise in the defence industry,” said Mans.

“Allegations of coordinated misconduct, if proven, represent not only a betrayal of employees and taxpayers, but also a direct threat to institutional credibility and the national interest.”

He added that since Denel exists to support the South African National Defence Force (SANDF) in protecting South Africa, its leadership must be beyond reproach.

Solidarity called on the Denel board to place implicated officials on precautionary suspension, including the Group CEO and Group CFO.

Three days later, Motshekga announced the new board. The Group CEO and Group CFO remained on the board.