AXED DENEL BOSS SPEAKS
Refuting claims that he planned Asia deal, Saloojee questions why the board wanted him gone
It appears that from the moment Denel presented three of its most senior executives with a long list of allegations, the state arms manufacturer wanted them gone. In September last year, Denel chief executive officer Riaz Saloojee was blindsided when he was called to a meeting with Denel’s new audit and risk committee, and accused of 17 counts of serious misconduct relating to the R855 million acquisition of Land Systems SA from BAE Systems.
“I went away to a defence exhibition in London with the minister [of public enterprises, Lynne Brown],” Saloojee told City Press yesterday, breaking his silence.
“While we were there, the new audit and risk committee were continuously asking the company secretary [Elizabeth Africa] for documents on the Land Systems deal. We told them that when we were back from the UK we would give them a more comprehensive briefing.”
Instead, Saloojee, Africa and chief financial officer Fikile Mhlontlo were individually called in to meetings, presented with the list of allegations and given 24 hours to respond or face suspension.
At 5pm the next day, they were called in and told that they were being suspended because the relationship of trust had irrevocably broken down.
“It was [Denel chairman Daniel] Mantsha’s board who verbally told me on September 10 last year that my contract will, without a doubt, be extended for another five years. Two weeks later, he suspended us,” Saloojee told Rapport in an interview on Friday.
“At that time, I did not even know the new board members, but they apparently knew enough about us to suspend us.”
Saloojee told City Press: “They accused us of being belligerent and withholding information ... They said, ‘We will give you three months salary if you resign.’”
Saloojee said that at the time, they had only had one formal meeting with the board.
All of this happened just six weeks after Brown gutted the Denel board, replacing all but one nonexecutive director.
Brown chose to retain only Johannes “Sparks” Motseki, an Umkhonto weSizwe veteran and minority shareholder in Shiva Uranium, a mining company majority-owned by the Gupta family.
“It was inexplicable, replacing the entire board. I had some misgivings. For corporate governance it would have been better if some of the previous board was maintained. The skills set [of the new board] was not really up for understanding the complexity of Denel’s business.”
After the executives were suspended, Denel hired law firm Dentons to investigate allegations of misconduct in the Land Systems SA deal. The report has still not been made public.
Since the September suspensions, speculation has been rife that the trio’s removal was related to the controversial Denel Asia joint venture, a deal struck with close Gupta family associate Salim Essa (see box and graphic).
Denel and Brown have denied this, saying that the three were suspended because the Land Systems deal placed Denel in a financially precarious position – an allegation denied by Saloojee and former Denel board chairman Martie Janse van Rensburg.
Saloojee was unwilling to comment on speculation that his axing was orchestrated to allow the Denel Asia joint venture to go through unimpeded.
He did, however, say that he was concerned about the effect their suspensions would have on corporate governance at Denel.
“We were the custodians of governance, and they have taken the three custodians out of there.”
On Wednesday, Denel’s acting chief financial officer, Odwa Mhlwana, assured Parliament’s Portfolio Committee on Public Enterprises that good corporate governance was paramount to Denel’s board, especially as the company tries to move into new Asian markets.
The Denel Asia joint venture has pitted Denel’s new board against Treasury, which has accused the board of acting without authorisation in terms of the Public Finance Management Act.
During Wednesday’s appearance in Parliament, Mhlwana tried to blame Saloojee for the Denel Asia debacle, saying it was his decision to form Denel Asia.
He vehemently denied this: “I ... told the board we were still busy with a feasibility study to determine a strategy. There was no entity like Denel Asia on the table, much less any possible partners.”
The joint venture deal, concluded while the three senior executives were on suspension, has left Saloojee with a lot of questions: “This kind of business practice is not normal. Why Hong Kong? What value are these people going to add? It is not done.”
Last month, the board informed Saloojee that his contract, which runs until January 2017, was being terminated – despite him not being found guilty of misconduct. He is now discussing his options with his lawyers.
Mhlontlo and Africa remain suspended.