Positive words about Denel having doors open to it in India following last week’s presidential visit should go a long way to dispelling remaining rumours regarding the State-owned defence conglomerate’s alleged illegal involvement in the sub-continent.
International Relations and Co-operation Minister Lindiwe Sisulu was one of several Cabinet ministers who accompanied President Cyril Ramaphosa to India. She was reported by City Press as saying India had lifted sanctions on Denel.
“One of the biggest industries in our country was Denel and when they were not able to deal with India it began to suffer losses. Now that we are putting all our energy into reviving Denel because of its capacity in Africa, we are looking to India for support.
“India has agreed to remove the barriers they had all along. They refused to trade with us through Denel, but now they have put together a package for Denel. That will be necessary for the state-owned industry to get back on its feet,” Sisulu, who was Defence and Military Veterans Minister from 2009 to 2012, is reported as saying.
She told the City Press newspaper that problems at Denel “preceded” what has become known as the “state capture period”.
“When I was minister of defence in 2009, we already had problems with Denel. It looks like it preceded the state capture period. The Indian government decided they did not think Denel was trading with integrity and so they clamped down on us.”
Denel’s “problems” have seen it lose two chief executive officers as well as a chief financial officer amid a number of complaints from suppliers and sub-contractors regarding non-payment.
The state-owned enterprise, which reports to Public Enterprises Minister Pravin Gordhan, is in the process of “stabilisation” according to Denel board chair Monhla Hlahla. This has seen the appointment of Danie du Toit as new group chief executive and Wim de Klerk as interim chief financial officer.
In September 2018 India’s Ministry of Defence (MoD) finally removed Denel from its list of aerospace and defence companies it barred from doing business in India, 13 years after the defence conglomerate was first blacklisted over allegations of corruption.
The move came after a settlement agreement signed on 19 July, following a South African delegation visit to the Indian MoD.
According to India’s Economic Times, the terms of the Settlement Agreement saw Denel waive off nearly $100 million it would have been entitled to after arbitration proceedings following Denel’s expulsion from the Indian market.
Denel was blacklisted in India in 2005 after allegations it paid kickbacks to Vara Associates, a company based in the Isle of Man, to help secure five deals between July 1999 and April 2005, to supply the Indian Army with 1 000 anti-material rifles and over 300 000 rounds of ammunition. No irregularities were found during investigations in South Africa, the Isle of Man, Switzerland and the UK.
After eight years of investigation by the Central Bureau of Investigations (CBI), Denel was expected to be cleared in 2014 but the process dragged on for four more years. Apparently Denel’s continued blacklisting was due in part to legal cases that arose from the blacklisting.
By the time Denel was blacklisted in 2005, 400 NTW-20 anti-materiel rifles had been delivered. The contracts with India involved the supply of 700 NTW-20 rifles, knock-down kits for another 300 rifles and 398 000 rounds of ammunition.
After the Denel deal fell through, India’s Ordnance Factory Tiruchirappalli began manufacturing the locally developed Vidhwansak multi-calibre anti-materiel rifle, which bears many similarities to the NTW-20.