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Arms manufacturer Denel has placed its group chief financial officer Odwa Mhlwana on special leave pending a disciplinary process into allegations of misconduct against him.
According to a statement issued by Denel on Monday, the board had taken the decision to create a “conducive environment” for the “verification process” in respect of the allegations made.
“The verification process will include interviews with Mr Mhlwana’s colleagues, such that putting him on special leave is also in the interests of fairness to him, his colleagues and Denel,” the statement read.
Mhlwana’s special leave is effective from June 18 until the disciplinary process is completed. An independent chairperson will preside over the process, it is expected to be completed by the end of July 2018.
Mhlawana, a chartered accountant, was appointed CFO of Denel in 2017. He was previously the CFO for Denel Vehicle Systems and had also worked as a Finance Director for BAE Land Systems and CFO of the consumer section at FNB.
A number of serious allegations have been made by whistleblowers since Public Enterprises Minister Pravin Gordhan appointed an interim board in April, and at a briefing in May, he appointed three additional members. The move was made to address governance challenges at the arms manufacturer.
“Since its appointment two months ago, the Denel Board has been approached by various whistleblowers presenting a number of allegations of serious misconduct against Mr Mhlwana and a few other senior employees of Denel - which still need to be verified before any action can be taken against anyone,” the public entity said.
“In terms of governance process, the Board’s Audit Committee reviews and considers actions on each allegation.
“Where an investigation is concluded, the Audit Committee guide the Board and or Executive Committee on required actions and responses.”
Denel said that current investigations were concluded while the board was managing the 2018 financial year end and exploring along with debt providers strategies to relieve the company of its short-term liquidity constraints.
The former CEO told Parliament’s portfolio committee on public enterprise in January that Denel had liquidity challenges and there had been a risk in December last year to pay staff their 13th cheques, but he confirmed that all salaries had been paid.
Trade union Solidarity welcomed the news of Mhlwana’s disciplinary process. “The suspension of Odwa Mhlwana is another step in the direction of restoring confidence in the Denel Board and its executive management,” said Solidarity’s deputy general secretary Deon Reyneke.
“Solidarity members are all but happy with Denel’s offer of a 4% salary increase for 2018, while Denel’s executive management received salary adjustments of 47% and more during 2017,” the union said.
“The latest developments will make a significant difference in our members’ focus to support the Denel Group and its Board in the process towards financial recovery,” said Reyneke.
The union also called for further investigations and deliberate action against the “remaining two” of the top four executives. Denel’s former CEO Zwelakhe Ntshepe resigned in May.
“There is an expectation among employees that firm action will be taken against executives who violate rules in the same way as employees who fail to perform their duties are dealt with,” Reyneke said.
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