Re­fut­ing claims that he planned Asia deal, Saloo­jee ques­tions why the board wanted him gone

CityPress - - News - SU­SAN COM­RIE and ERIKA GIB­SON in­ves­ti­ga­tions@city­

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.

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