PRETORIA– State owned companies cannot just simply borrow their way out of the difficulties they find themselves in, says South African Public Enterprises Minister Pravin Gordhan.

Announcing the appointment of an interim board at the premises of State-owned aerospace and defence technology conglomerate Denel SOC Limited here Monday, Gordhan, who was appointed to the portfolio in President Cyril Ramaphosa’s February Cabinet reshuffle, said the appointment of a new board was part of the government’s ongoing efforts to stabilise State-owned companies (SOCs).

He said the appointment of the new board was in line with what President Ramaphosa said in his State of the Nation Address to intervene decisively to stabilise SOCs. Gordhan echoed the President’s commitment to strengthen governance, root out corruption and restore the financial position for SOCs while also sustaining their developmental mandates.

The Minister said structural challenges within SOCs need to be addressed. Denel, which is one of the six SOCs falling under the ambit of the Department of Public Enterprises, has in the past been financially stable. Between 2010 and 2016 the company, which constitutes more than 45 per cent of the local defence industry experienced phenomenal growth with revenue growing from just over 3.0 billion Rand (about to more than 8.0 billion Rand in 2016.

In the recent past that reputation has regrettably been lost and much of the good work that we used to do certainly in terms of earning the trust of the South African people has fallen on difficult times, said Gordhan.

The all-new 12 member board is chaired by former the chief executive officer of Airports Company South Africa (ACSA), Monhla Hlala. Gordhan said the changing of the board is the first step that Government is taking to ensure change.

He said the role of the board is to ensure that good governance is restored and that Denel was a victim and participated in the process of State Capture and that those processes be reversed.

The Minister added that it is important to retain the engineering and unique skills possessed by Denel staff and its divisions.

Gordhan, who prior to the media briefing met with the board, also engaged the five trade unions represented in Denel as part of efforts to cultivate an open line of communication. He also discussed issues related to the payment of the entity’s suppliers.