Public enterprises deputy director general Kgathatso Tlhakudi told the Zondo commission of inquiry into State capture on Monday that the appointment of the 2015 Denel board, chaired by Daniel Mantsha, drove the arms company's performance to the brink.

Tlhakudi was testifying before inquiry chair Deputy Chief Justice Raymond Zondo in Parktown, Johannesburg.

Tlhakudi told the commission that he joined Denel in 2012 when Malusi Gigaba was public enterprise minister.

After the 2014 general elections Gigaba was replaced by Lynne Brown.

"One of the things that Brown emphasised very strongly when she arrived at the department is that she is the shareholder representative and that as officials, literally, we should know our place and we cannot act without her directive," said Tlhakudi.

Tlhakudi said that prior to the new board being appointed in 2015 the business was doing well, although it was still fragile.

Denel losses blamed on board

"Denel's performance was very pleasing – year-to-year they were exceeding the corporate plan," he told the commission.

But things quickly took a turn when the new board took over. In the first year of the new board being in control of the entity the corporate plan was not met.

The board dropped in performance on its own mandate and Denel was experiencing losses, he said.

Tlhakudi described this new board as an "ill-equipped board which continued to make poor decisions".

He told the commission that the process of finding a new board happened earlier than expected in 2014.

He said he was told that the ministry would take over the process of identifying possible board members but that it was not clear why Brown decided to do things differently.

Mantsha a 'constant' on the list

Tlhakudi said around November 2014 he was presented with a list of board members approved by the minister.

"It came with a decision memorandum and a Cabinet memorandum. The list had these names which I didn't obviously know," Tlhakudi said.

"In October that year, we had sent out an advert to refresh the list, as we would normally do," he said. He said the two names that were constant were Thamsanqa Msomi and Mantsha's.

"I had to consider the fact that as things were unfolding, it's my career that's on the line. I would have wished at that point to have been a lot stronger in my position, but I wasn't."

Tlhakudi also told the commission that at some point Mantsha was struck from the roll of attorneys. However, by the time Mantsha became chairperson he was back on the roll. 

The hearings continue on Tuesday.