Denel views the threat by the National Treasury to bring a court action to stop the Denel Asia joint venture as political, sheer opportunism and grandstanding. Such litigation will be a violation of Chapter 3 of the Constitution, and Denel will vigorously oppose it.
The National Treasury was served with a pre-notification by Denel on 29 October 2015, in which Denel indicated to the National Treasury that it intended to establish Denel Asia.
When the Treasury did not respond Denel convened a meeting with both the National Treasury and the Department of Public Enterprises on 9 December 2015. In that meeting, Denel indicated to both the National Treasury and the DPE that it was going to submit the PFMA application. Denel also raised concerns with regards to the National Treasury’s silence since the submission of the pre-notification and stressed the urgency with which the application needed to be dealt with.
National Treasury was represented by more than two officials at that meeting and neither the Treasury nor the DPE raised any objections to either the pre-notification, or the PFMA application, which Denel indicated would be submitted on 11 December 2015.
Neither of the two departments represented in the meeting raised any concerns with regards to the urgency of the matter, nor their ability to speedily attend to the application. The importance of this meeting with National Treasury and DPE on 9 December 2015 was to ensure the urgency of the PFMA application was well understood and adhered to.
Despite the fact that both National Treasury and DPE attended the meeting of the 9 December 2015 where the urgency of the Denel PFMA application was discussed, they failed to reply to the PFMA application as submitted. Neither National Treasury nor DPE, as allowed by the Treasury guidelines, requested an extension of the 30-day period or reasonable time to consider. No concerns or objections were ever received from National Treasury in this regard.
It was only when the name of Gupta was mischievously linked to Denel Asia, that National Treasury sent a letter to request further information from Denel. This was done on 5 February 2016 and purely motivated by a hidden agenda. National Treasury’s engagement with Denel in this regard has always been political, “grandstanding” and making malicious utterances against Denel in the media. The Denel board was called “arrogant and belligerent” by the Minister of the National Treasury, who is unable to back such allegations.
Denel urges the incumbent at National Treasury to put the country and the economy first by engaging with Denel through constitutional means. National Treasury claims to be concerned about the financial well-being of state-owned entities, yet it does not respond to a PFMA application to enable Denel to grow its business and generate revenue for the state. It is strange that the National Treasury is frustrating the Denel Asia joint venture when Denel is not putting up a capital investment. Only VR Asia is putting up R100 million to fund the business, with Denel to share 51% of the profit. However, in 2014, National Treasury approved that Denel borrow R855 million from the commercial banks to acquire business from the commercial banks while fully knowing that such debt would burden Denel.
The allegations that Denel is “captured by the Guptas” are unfounded and politically motivated. The Gupta family has no business joint venture with Denel and none of the Gupta family members or relatives are shareholders in Denel Asia.
A progressive National Treasury and Minister of Finance will not waste taxpayers’ money by engaging in fruitless and unconstitutional litigation against another organ of state to hide their failure to respond timeously to business challenges of state-owned companies and gross negligence in dealing with PFMA application from state-owned companies.
Denel has always followed the PFMA processes and has not transgressed any laws.
