Campaign of the Month: Ceasefire Campaign argues for responsible closure of Denel

The apartheid government relied heavily on conscription to perpetuate its power in the region as well as to suppress the majority of South Africans.

Conscientious objection increased in the 1980s and found popular support in the End Conscription Campaign. The ever-increasing number of young white men refusing to serve in the apartheid army or just not turning up for duty, was a contributing factor to demise of the apartheid state. In 1993, with the first democratic election in sight, the ECC disbanded.

At the time the country was engulfed in internecine violence and war continued in Angola. Some anti-apartheid activists felt that there was still a need for a demilitarist campaign focusing on peace and disarmament. Thus the Ceasefire Campaign came into being. Its first campaign focused on promoting a peaceful election under the slogan: use the ballot not the bullet. Since 1993 Ceasefire has continued to promote non-violence and its anti-arms campaign had had a number of important thrusts including the call for the responsible closure of Denel the state-owned arms manufacturer.

During apartheid, arms sanctions were imposed on South Africa. This led to enormous investments in its own arms industry, particularly the state armaments board, Armscor (Armaments Corporation of South Africa).

In 1992 the South African government split Armscor and established a manufacturing division under Denel (Pty) Ltd. Almost every year since then this state-owned company has returned massive losses and government has responded by pumping billions into it (R5.1 billion since 1997 and its most recent loss was R543.9 million as per its 2008-2009 annual report). Although the company’s staff has gradually become more representative of all race groups, it is still more than 50% white with the majority of white staff being in management (78.4% of management).
Denel has received from government cash and promises of some R5,1 billion since 1997; money that could have been used to reduce poverty and improve the quality of life for South Africans living below the breadline.

The arms industry is notoriously capital-intensive. Denel is no exception. During the last financial year it employed an average of less than 7300 employees, while its assets at the year-end exceeded R5,1 billion. This means that, for every employee, Denel required assets of more than R700 000. For cost-efficient employment, the state could deploy its assets far more effectively than this. Yet it continues to argue that its demise would mean massive job losses.
Being owned by the state does not guarantee that Denel has a clean record. Like other arms companies it too has been accused of corruption. In 2005 it was widely reported India had cancelled a substantial contract because it believed Denel had violated contractual clauses by using undue influence and agents or agency commissions to win the contract. Despite reassurance from Denel that it would resolve its differences with the Indian government, it would appear that the issue has still not been resolved and Denel is yet to account to government for its alleged transgressions.
Denel cannot compete with the big arms dealers of the US, Britain, France and Russia in the world’s arms market, and also because of economy of scale difficulties, our Ministry of Defence ensures that the SANDF buys military hardware from Denel at uncompetitive prices. Denel’s continued existence therefore appears to be intimately linked to an SANDF that will absorb Denel’s expensive products.
It may be that government has finally realized what an albatross Denel is at a time when it should be investing more in service delivery or that it is embarrassed by the corruption allegations, but last year government rejected paying Denel the outstanding R1.7 billion of the R5.2 billion recapitalization Denel wants to implement its so-called turnaround strategy.

Over the years Ceasefire's campaign on this issue has included ongoing media advocacy pushing for responsible closure and greater transparency while highlighting the waste of taxpayers' money. We have held regular seminars and even tried engaging with the CEO at times. Unpacking the various components of the company and making the information accessible to laypeople has also been part of our strategy. The arguments that the closure of Denel could lead to job losses and the fact that the government sees the company as a strategic asset, have been difficult to counteract. This is despite the fact that Denel has very little regard for the environment, the concomitant pollution it generates its poor employment practices. Some workers having suffered long-term health consequences with very little compensation. We have also written to various ministers and provided them with the information we have managed to collect.

For more information:
http://www.ceasefire.org.za/