Denel says it chose VR Laser Asia for its resources

Denel chose Gupta-linked VR Laser Asia as a joint venture partner to exploit opportunities in the Asia-Pacific defence market because the company is willing to commit substantial resources and has access to the required defence capability.

This was the explanation given on Wednesday to MPs serving on the public enterprises committee by the stateowned arms manufacturer’s acting chief financial officer, Odwa Mhlwana.

Mhlwana and Denel acting chairman Daniel Mantsha were grilled by MPs about whether the state-owned company had been captured by the Guptas.

It seemed to be the case, they said, because of its partnership with VR Laser Asia to create the joint venture Denel Asia. VR Laser SA and VR Laser Asia are owned by Salim Essa, a close associate and business partner of the Guptas.

Mantsha rejected the accusation, saying only a small part of Denel’s R5bn procurement budget went to black-owned companies generally and VR Laser in particular. “VR Laser is not getting the lion’s share of Denel

procurement spend,” he said, adding that perceptions were not based on fact.

VR Laser SA was brought in as a supplier for Denel in 2013, before the term of office of the current board and acting executives. Denel Asia, established in 2015, has not yet traded because its establishment was not approved by the Treasury.

Former finance minister Pravin Gordhan challenged the Denel representatives to reply to the accusation that the entity was captured by the Guptas. He referred to a due diligence report by ENSafrica on the establishment of Denel Asia.

ENSafrica told Gordhan that great care needed to be taken with regard to the joint venture because of the risks involved. These risks related to the proximity of the company to “politically exposed persons” and the company’s solvency.