Brown appointed a board that posed risk
FORMER public enterprises minister Lynne Brown has once again come under the spotlight at the Zondo Commission of inquiry, after she was accused of deliberately appointing an incompetent board to head Denel in 2015, despite warnings.
The board, under then chairperson Daniel Mantsha, has been accused of enabling the hijacking of the stateowned arms manufacturer by the Gupta family.
This included the controversial Denel Asia venture, which was devised to sell arms to India in a deal that would have seen the Guptas being the main beneficiaries through its company, VR Laser.
Yesterday, former Denel chairperson Martie Janse van Rensburg told the commission how Mantsha’s board quickly plunged the company into a financial crisis through the cancellation of ventures that were aimed at growing its revenue.
She said Brown removed almost the entire board that was put together in 2011 and replaced it with unskilled individuals and without a chartered accountant, which she said opened the organisation to risk.
“The 2011 board had been highly effective and there should have been no reason… for the removal of the full board. The 2011 board was in the midst of a successful turnaround strategy which included various projects… and its removal and replacement with members who had no knowledge of these projects jeopardised these projects,” she said.
Janse van Rensburg said the illfated Denel Asia joint venture between Denel and Gupta-owned VR Laser was not made to benefit Denel.
She said while Denel had previous joint ventures in other countries – including Tawazun Dynamics with Tawazun Holdings of the United Arab Emirates – the principles that underpinned them were markedly different and they were government linked.
Denel owns a 49% stake in Tawazun Dynamics.
“That was a company that Denel established offshore and it is in the United Arab Emirates. It was a joint venture and it was completed with the state-owned arms company for the UAE. The joint venture flowed out of a contract that was signed between Denel and the government of the UAE,” said Janse van Rensburg.
VR Laser was found to have been a local company which had no footprint in Asia or India. While Denel was set for a 49% stake in Denel Asia, the parent company would, however, sell the arms via a second venture, Denel India, where Denel’s stake was watered down to 25%.
The commission heard how, despite arriving in July 2015, Mantsha’s board was already sending pre-notifications to the Treasury and the Public Enterprises Ministry with regard to the venture by October.
Former VR Laser shareholder Benny Jiyane also told the commission how Gupta allies Salim Essa and Iqbal Sharma withheld the involvement of the family when he assisted them in buying shares in the company.
He said Tony Gupta and other associates soon arrived at the company and told staff that they must report to him, after which Jiyane sold the shares.