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Denel facing liquidity crisis, predicts huge losses

It says it needs at least R1 billion to repay its creditors and get operations back on track.

FILE: This undated file photo shows Denel board chairperson Monhla Hlahla. Picture: World Economic Forum/Flickr

CAPE TOWN - State arms manufacturer Denel says that it is in a liquidity crisis and is forecasting huge losses.

It says it needs at least R1 billion to repay its creditors and get operations back on track.

Board chairperson Monhla Hlahla says that being implicated in state capture has cost the company reputational damage and has affected its ability to lend money.

Appearing before Parliament’s Public Enterprises Committee on Wednesday, Denel officials have been frank about the governance lapses which have beset the company.

It says that the parastatal knowingly entered into loss-making contracts and flouted policies.

Staff were appointed irregularly and employees have been implicated in fraud and corruption, colluding with third parties.

The board expects irregular expenditure in the 2017/18 financial year to be as much as R1.3 billion.

Board chairperson Monhla Hlahla took over the reins four months ago.

“Because Denel has been under pressure around VR Laser as well as Denel Asia, the board has had to be clever enough to look at how we manage all these things and how we understand them early on.”

Denel has requested a postponement until the end of October to finalise its financial statements.

(Edited by Shimoney Regter)

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