Solidarity shows Denel a tax fist
31 July 2019
South Africa has recently been bombarded by state capture, ailing state enterprises and mismanagement. Billions of rands of tax money have been squandered. It’s not government’s money that has been squandered, but our money, ordinary taxpayers’ money. Its extent is just so overwhelming that we cannot remain silent about it any longer. The time for a lawful tax protest has come. South Africa must develop a culture of tax activism. It is not unpatriotic, if anything, it is about being patriotic. Accountability is a core part of democracy.
There are several legal instruments at taxpayers’ disposal to stop tax squandering and to hold tax plunderers accountable. Trade unions must be at the forefront of such protest. Not only are our members taxpayers too, but workers have become the first ones who have to subsidise ailing state enterprises.
Denel is the best example of this. The arms manufacturer pays its employees late and can give no guarantee that this will not happen again. It creates incredible uncertainty among employees. We are not only being confronted by uncertainty about non-payment but also with stress-related problems, depression and various other health problems employees are experiencing.
The victims of reckless management and state capture are real people who have real families and real emotions. One of our members said in an interview we had with him: “The uncertainty about what is happening here at Denel is something I’ve never ever experienced. It’s an uncertainty that grows inside a person like the worst cancer, something that doesn’t leave you for one second. Our hearts are sore; we’ve lost courage and we cannot express our disappointment. We don’t even know whether we would get our salaries next month. This thing makes one sick.”
Another member of Solidarity said the following: “My wife and I have something in our hearts that should not be there. We have two small children. I already moved my debit orders to a few days later since we do not know when we are going to get paid. Our concerns are nauseating. Nothing in my wildest dreams could prepare me for the tremendous bitterness I am walking around with today. I gave my life, my health and my family’s time to Denel.”
Tax plunderers and state capturers not only captured the state, they also hijacked our members’ joy. Employees’ salaries are used to subsidise cash flow. However, Denel went even further and refrained from making compulsory payments to the revenue service, even though it was indicated as done on employees’ payslips.
Solidarity will urgently approach the High Court to compel Denel to make the payments.
Solidarity also started with a process, in accordance with section 165 of the Companies Act, whereby companies can be compelled to investigate and rectify wrongdoings through civil law actions and criminal prosecutions.
Solidarity has, among other things, prepared a Denel Dossier containing alleged wrongdoings and corruption which was also handed to Denel. In response to Solidarity’s section 165 process and the Solidarity Dossier, Denel’s Executive Officer, Danie du Toit, wrote to Solidarity’s legal team stating that they conducted many forensic investigations. They also undertake to continue with civil and criminal law actions against several former executive directors and senior management.
They gave the assurance that money that had been wasted by civil action would be recovered and that charges based on forensic investigations would be laid with the South African Police Service. In Danie du Toit’s letter to Solidarity, he wrote:
We can confirm that following recommendations on the reports that we have so far received, Denel, among other things:
1. Has instituted civil action against four former Denel executives to recover the monies lost through the awarding of the pilot bursaries;
2. Is currently compiling a statement to be submitted to the South African Police Service laying complaints against some of the former executives of Denel based on the forensic reports;
3. Is currently in the process of lodging an application in the High Court to review the contract concluded between Denel and VR Laser;
4. Is, pending the legal review of the forensic reports received, initiating disciplinary actions against the Denel employees implicated in those reports; and
5. Is currently working on assessing the quantum of the loss Denel might have suffered due to the actions of the Denel executives and / or former executives. This will lead to the institution of civil claims to recover the losses as recommended in the forensic reports.
These steps are a major breakthrough in our fight against tax abuse and state capture. We will keep a close eye on all assurances that had been given to make sure they are implemented.
The steps taken against Denel form part of a much larger campaign – Solidarity’s legal tax protest. We plan a similar section 165 application against Eskom, in conjunction with Sakeliga. Former Eskom CEO Brian Molefe still owes Solidarity money after a cost order was issued in the case that Solidarity won in the High Court. This pertains to Molefe’s unlawful enrichment from the Eskom pension fund.
This case will be heard in the Constitutional Court. Solidarity also laid a criminal fraud charge against Molefe. However, the National Prosecuting Authority has not taken any steps against Molefe and has not responded to Solidarity’s letters. Solidarity plans to take the case to Gerrie Nel of AfriForum’s prosecuting authority for possible private prosecution.
One of the major tax court cases in South Africa will be an application by Solidarity to have the SAA placed under business rescue. This application will be filed within the next ten days.
The purpose of the application is to save the SAA and to protect taxpayers’ money. Denel showed us what happens to employees when it is left for too long. Taxpayers must simply say “no”. We don’t have to allow the wasting of our money.
Issued by Dr Dirk Hermann, Solidarity Chief Operating Officer, 31 July 2019
