Why Denel ‘needs’ Gupta link
VR Laser Asia will sell Denel technology so that it can be manufactured in India
Denel Asia, the controversial Gupta-linked joint venture that has seen open war between the state-owned arms company and the treasury, is necessary to get back into the lucrative Indian market, the company said this week — even as that country actively courts South Africa.
Denel Asia LLC was established in Hong Kong “subsequent to finalising due approval processes”, Denel chair Daniel Mantsha wrote in the company’s 2016 report, which it published on Monday after inquiries by the Mail & Guardian.
The treasury has argued that the company, a joint venture with VR Laser Asia, in which Gupta partner Salim Essa is the sole shareholder, was illegal for lack of authorisation. Public Enterprises Minister Lynne Brown banned Denel Asia from doing business until that was settled.
That sequence of events makes no appearance in the company’s extensive annual report, however. Instead it focuses on the benefits Denel Asia will bring, especially in India.
“The partnership brings access to markets in a region where Denel had been blacklisted for more than a decade,” Mantsha said.
Denel was blacklisted in India in 2005, amid allegations of bribery that were never substantiated. Insiders later claimed this had been part of nies such as Denel, Indian defence experts say, because it has been looking for new suppliers to take part in a “Buy & Make India” initiative, which demands 50% Indian input in major projects.
In recent months at least two Indian delegations have visited South Africa to make clear the country’s eagerness to have Denel return. But under the “Buy & Make India” rules Denel would literally have to go to India, with major manufacturing to take place in that country.
That fits with Denel’s own expectations. Denel would provide a manufacturing licence for its technology, the company told Parliament earlier this month, and VR Laser Asia would fund business development.
VR Laser Asia has no manufacturing capacity, which suggests it will hawk Denel technology to Indian manufacturers in return for 49% of any profits made.
On Wednesday the communications department for Oakbay, which acts on behalf of the Gupta family, described as “an inaccuracy” linking Denel Asia to the family.
“No member of the Gupta family are shareholders in Denel, Denel Asia or VR Laser Asia. Through Oakbay Investments the Gupta family has an indirect minority stake in VR Laser (South Africa) only,” the Oakbay communications desk said.
It did not respond to questions on Salim Essa’s relationship with the Guptas.