Denel Asia joint venture stopped by Finance Minister – report


Indications are the Denel Asia joint venture between VR Laser Asia and Denel has been halted by recently appointed Finance Minister Malusi Gigaba.

A report in the Sunday Times has it Minister Gigaba summoned Denel board chairman Dan Mantsha to Durban on Friday to, among others, express concern about National Treasury’s issues over the financial implications of the proposed joint venture. According to the Sunday Times, Gigaba was “hard” on Mantsha and instructed him to dissolve the joint venture with VR Laser Asia.

The weekend paper reported Mantsha as saying: “I can confirm the meeting with the minister (Gigaba), but I can’t comment about its details”. The meeting was also confirmed by Mayihlome Tshwete, spokesman for the Finance Minister.

In March, state-owned defence and technology conglomerate Denel defended the deal in the North Gauteng High Court after former finance minister Pravin Gordhan refused to approve the establishment of Denel Asia.

Denel Asia, a statement issued by Denel said, was “duly established after following and complying with all the relevant prescripts of the Public Finance Management Act (PFMA)”. Denel Acting CEO Zwelakhe Ntsehe said Denel acted lawfully and in accordance and compliance with the PFMA, “in concluding and forming the joint venture agreement”.

However, at a parliamentary briefing last year, Denel acting chief financial Odwa Mhlwana said Public Enterprises Minister Lynne Brown and National Treasury were told of the intention to establish Denel Asia in October 2016, and Denel submitted their application, but went ahead without approval after receiving no response after 56 days. “If you don’t hear from these departments you may deem that approval has been granted,” Mhlwana said.

At the time of the North Gauteng High Court application in March, Ntshepe said Denel Asia would create new business opportunities in the Asia/Pacific region – “an important market for our world-class products especially in the fields of artillery, armoured vehicles, missiles and unmanned aerial vehicles (UAVs)”.

The Denel Asia joint venture would link state-owned Denel with the Gupta associated VR Laser Asia, whose sole shareholder is Salim Essa, who is said by the Sunday Times to be a “Gupta business associate” and a director of VR laser RSA. This company is apparently owned by President Jacob Zuma’s son, Duduzane, and Rajesh Gupta, through an entity called Westdawn Investments. VR Laser RSA secured a contract for cutting and supplying steel to be used in the fabrication of the SA Army’s new infantry fighting vehicle, the Badger.

At the time of publication no response had been received from Denel on either the meeting between Gigaba and Mantsha or progress, if any, in the North Gauteng High Court application.