Denel pulls out of deal with Guptas
STATE arms maker Denel has announced it is cancelling its partnership with the Guptas.
At its annual results briefing at the weekend Denel said it was exiting Denel Asia, its 51% partnership with the Guptalinked VR Laser Asia.
It cited reputational damage “both locally and internationally” caused by “negative attention from the media”.
It will also withdraw its high court proceedings to have the deal, which was opposed by Treasury, declared lawful.
Denel’s acting chief executive, Zwelakhe Ntshepe, continued to deny its partnership was with the Guptas because VR Laser Asia was wholly owned by Salim Essa, a close Gupta associate, and not directly by the Gupta family.
“We made a JV [joint venture] with a company, and the company in my understanding was not owned by the Gupta family,” he said.
He declined to comment on evidence in the GuptaLeaks showing the Gupta family secretly controlled the joint venture. “We do not have those emails so we cannot comment on them.”
Leaked e-mails show the Saxonwold family would control Denel’s foray into the Asian arms market through a secret subsidiary in India part-owned by Anil Gupta, brother-in-law of Tony, Atul and Ajay Gupta.
Denel Asia was chasing arms deals worth R100-billion in India, the world’s largest arms importer, and expected to break even in a year.
Denel’s Asian adventure with the Guptas has dented its image in the Indian arms market, after working for a decade to overturn a blacklisting from alleged kickbacks paid to an offshore entity to secure a rifle deal in 2005.
Adani, the Indian company that would hold a stake in Denel Asia’s Indian subsidiary, said earlier this year it had pulled out of the deal because it wasn’t comfortable with the partners.
The leaks also show that around the same time that the Guptas were setting up the deal with Denel, chairman Dan Mantsha sent the Guptas his utility bills and flew to India on their private jet.
The leaks show the Guptas flew Mantsha to Mumbai on August 6 2015, sharing a flight with Tony Gupta and Essa, and put him up at the ITC Maratha hotel in Mumbai for two nights.
Denel’s previous misadventure in India cost taxpayers R500-million with nothing to show for it.
Denel said the Denel Asia debacle had resulted in an opportunity lost and the company would look at “alternative marketing approaches to access the Asia Pacific market”.
No money had been spent on Denel Asia, “which has not traded due to differences of opinion with the National Treasury”. Ntshepe said the partnership had complied with all legislative and governance processes, a view that was not shared by Treasury.
Denel’s Gupta partnership has sparked a bruising battle with Treasury, which said proper procedures weren’t followed and withheld approval.
In court papers Ntshepe had laid the blame on former finance minister Pravin Gordhan for blocking the deal because of his personal animosity towards the Gupta family.
Ntshepe accused Gordhan of waging “a personal and public war” against any entity perceived to be Gupta-linked, “such as VR Laser Asia through its shareholder, Salim Essa, who is perceived to be associated with the Gupta family”.