Denel’s links to the Guptas

Leaked e-mails show how arms manufacturer got their clutches into a dubious R100-billion deal

RIAZ Saloojee must have felt optimistic about the future when he stepped off the plane from London in September 2015, returning from the world’s largest arms bazaar with public enterprises minister Lynne Brown.

UnderSaloojee’s leadership weapons-maker Denel’s aggressive marketing forays into the Middle East and Latin America were beginning to bear fruit.

In 2012 he had taken over an ailing state entity that needed government bailouts to stay afloat. Since then Denel’s revenues had almost doubled, profits had grown close to seven-fold and its order book stood at a record R35-billion.

Brown was so pleased with Saloojee’s performance that she wanted him to stay on for another five years after his contract as chief executive expired in January 2016.

But back in Denel’s boardroom a shadowy cast of newly appointed directors had other ideas. Judging by the events that followed, their first task was to remove Saloojee (a former Umkhonto weSizwe commander) to pave the way for a dubious deal worth R100-billion between Denel, the Gupta family and their business partner, President Jacob Zuma’s son Duduzane.

The Guptas tried to hide their involvement by structuring it through a company registered in Hong Kong, VR Laser Asia, and setting up a secret subsidiary in India.

But e-mails leaked to the Financial Mail and other media provide evidence that the Guptas were behind the deal all along, with the full knowledge and participation of Denel’s top brass and possibly also key officials in Brown’s department.

Denel’s Gupta partnership has sparked a battle between the arms-maker and treasury, which says proper procedures weren’t followed.

Treasury has withheld approval, leaving the deal in limbo. But Denel appears determined to revive it.

In March this year Denel went to court in a bid to have the partnership declared lawful. On May 24 it told parliament it remained the best way to break into the Asian arms market, describing reports that Denel had been “captured” by the Guptas as “fake news”.

The same denials were repeated by the Guptas’ disgraced UK public relations firm, Bell Pottinger, to journalists around the world.

Last year Bell Pottinger’s Philip Peck wrote a threatening e-mail to online newsletter Asia Sentinel, complaining about an article it had published. Peck insisted VR Laser in SA was “an entirely separate entity” from VR Laser Asia, and that the Guptas were “not part of the joint venture with Denel”.

“Please can any mention of the Gupta family’s involvement in a joint venture with Denel be removed from the article,” said Peck. “We are currently seeking corrections to a number of news titles that have published false allegations and are pursuing legal action where appropriate.”

Denel’s state-capture denials were demolished four days after the parliamentary hearing when the Gupta-leaks storm broke, laying bare in pornographic detail just how compromised Denel’s top brass were.

The leaked e-mails also bolster a related case heard in court last week, brought by the Oppenheimer family. Judgment was reserved.

The Oppenheimers blame Denel for inducing Malusi Gigaba, (at the behest of the Guptas) to block their plans to offer international customs and immigration facilities at their luxury terminal at OR Tambo airport. Oppenheimer aviation company Fireblade leases the premises from Denel.

Gigaba, now finance minister, was home affairs minister at the time.

Fireblade argued in court papers that Denel’s dubious Asian partnership with the Guptas lay behind its sudden switch from enthusiastic supporter to implacable opponent of the project. They accuse the Guptas of wanting to hijack their airport terminal.

Denel has furiously denied this. Last year its acting chief financial officer, Odwa Mhlwana, told parliament the owner of VR Laser Asia “is certainly not a member of the family we are said to be captured with. There is no ownership of the Gupta family in this business”.

In an affidavit filed earlier this year Saloojee’s successor, Zwelakhe Ntshepe, denounced the accusations as “scandalous, vexatious, spurious, speculative [and] defamatory”.

“Denel,” Ntshepe declared under oath, “denies that it has at any time been involved in the establishment of a business with the Gupta family [and] has never entered into a joint venture with an ‘Indian entity’ as alleged”.

The leaked e-mails show this up as a lie, revealing that Ntshepe was intimately involved in facilitating the Guptas’ Indian arms-deal grab, which Denel is still determined to pursue.

To understand how the Guptas hijacked Denel’s Asian expansion strategy we need to rewind two years to July 24 2015.

Three weeks before Saloojee’s trip to London, Brown replaced virtually the entire Denel board. Many of the new directors were politically connected but had little or no comparable business experience or engineering expertise.

The only board member to keep his job was Nkopane “Sparks” Motseki, formerly treasurer of the ANC’s Umkhonto weSizwe Military Veterans’ Association (MKMVA), who has benefited personally from his association with the Guptas through shares he owns in one of their mines. He has also boasted of his friendship with Duduzane Zuma. The leaked e-mails show he was flown to Mumbai and New Delhi at the Guptas’ expense.

The MKMVA was also a direct beneficiary of Gupta largesse through various shareholdings and having its functions funded by the family.

Perhaps the most compromised candidate was Denel’s newly appointed chair Dan Mantsha, a shady lawyer from Limpopo who was struck off the roll of attorneys in 2007 for embezzling his clients’ funds, before being readmitted four years later.

Mantsha would play a key role as arms-deal fixer for the Guptas while they wined and dined him in Dubai and India.

He was joined on the new board by Thamsanqa Msomi. The Gupta leaks revealed that he had helped to fast-track visa applications for Gupta associates when he worked at home affairs. Msomi has said there was nothing unusual or untoward about the assistance he gave.

He has served as chief of staff or adviser in different portfolios to Gigaba, who has also been tainted by his association with the Guptas.

Earlier this year the EFF released letters showing Gigaba had bent over backwards to fast-track SA citizenship for the Guptas. The party has also laid corruption charges against Gigaba for his alleged role in a R50-billion locomotive contract from which the Guptas benefited. Gigaba has denied any wrongdoing and says the moves are part of a campaign to tarnish his name.

Either way, now that evidence has come to light that Denel was giving the Guptas preferential access to lucrative arms deals, it is clear that the relationship they enjoyed with key members of Denel’s top brass was highly inappropriate, if not corrupt.

Denel has previously said it would not comment on the leaked e-mails. Repeated attempts over four weeks to obtain responses to detailed questions from Denel, Mantsha and Ntshepe proved fruitless.

The Gupta family and Essa did not respond to detailed questions either.

This piece is an extract from The Financial Mail’s cover story headlined ‘Denel’s Smoking Gun’