Denel board to be quizzed
DENEL board members are due to be grilled in Parliament tomorrow on the rationale for establishing a joint venture, Denel Asia, with the Gupta-linked company, VR Laser Asia.
CAPE TOWN — Denel board members are due to be grilled in Parliament tomorrow over the rationale of establishing a joint venture, Denel Asia, with the Gupta-linked company, VR Laser Asia.
The Denel officials are scheduled to brief the portfolio committee on public enterprises “on recent developments” at the state-owned arms manufacturer.
Committee members want to be updated about the controversy surrounding the joint venture and the termination of the contracts of the three previously suspended executives — former CEO Riaz Saloojee, former chief financial officer Fikile Mhlontlo and group secretary Elizabeth Africa — before disciplinary proceedings were concluded.
Committee chairwoman Dipuo Letsatsi-Duba said as far as the committee was concerned, Mr Saloojee had done a good job turning around Denel. The committee had been promised a report on the disciplinary proceedings, but learnt the executives had been fired before it was submitted.
Ms Letsatsi-Duba said issues in the public space about Denel that the committee wanted to learn about include the relationship between the company and the Gupta family whose business empire is at the heart of allegations of state capture.
Denel has justified the joint venture as providing a vehicle to penetrate the Asia-Pacific market, but the Treasury has said the arms maker had not obtained permission as required by the Public Finance Management Act before it proceeded with the project.
This amounts to financial misconduct, which could warrant disciplinary proceedings.
Democratic Alliance spokeswoman on public enterprises Natasha Mazzone said the Denel board had to provide the committee with a timeline for the creation of the joint venture including when the applications for approval were sent to Public Enterprises Minister Lynne Brown and Finance Minister Pravin Gordhan.
She also wanted to probe possible conflicts of interest among those former Denel directors who had joined the Denel Asia board.
“There seems to be something very fishy going on,” she said.
According to Denel, VR Laser Asia is registered in Hong Kong with only one shareholder, Salim Essa, a close associate of the Gupta family. It is understood the family partly owns VR Laser in SA.
Last week, Ms Brown said the act required the Treasury to respond to applications within a reasonable time.
Her department had also not given its approval within the required 30 days, which meant that legally, Denel could establish the joint venture although it had to take the spirit of the law into account. She would discuss the issue with Mr Gordhan, Ms Brown said. Denel Asia had been asked not to trade until the issue had been resolved, she said.