Denel’s proposed venture to the Far East in conjunction with a Gupta aligned company is not a done deal.
National Treasury is still considering the application, submitted last December, to establish Denel Asia, a joint venture between the State-owned defence industry conglomerate and VR Laser, an Ekurhuleni-based company which has connections to the Gupta family. Denel Asia would be 51% owned by Denel and 49% owned by VR Laser Services.
In a statement issued this week, National Treasury said: “Denel submitted its application in terms of the Public Finance Management Act (PFMA). Prior to Denel submitting its application, National Treasury had outlined the information that would be required to comprehensively assess the application. The Minister of Finance is still considering this application and further information has been requested from Denel.
“More significantly, Denel is also required to comply with Section 51(1) (g) of the PFMA, which is unequivocal in its requirement that the board of Denel obtain approval before establishing a company.”
In terms of the conditions attached to the R1.85 billion in guarantees that have been provided by government to Denel, any significant transactions that Denel enters into require the approval of both the Ministers of Finance and Public Enterprises, said Treasury.
In February it was reported that Public Enterprises Minister Lynne Brown had requested an explanation of the establishment of Denel Asia in view of a number of conditions being set prior to her giving her approval. These include a cost-benefit analysis and due diligence investigation.
VR Laser serves the mining, transport and defence sectors and is it reported that 25% of its total shareholding belongs to the Gupta family and President Jacob Zuma’s son, Duduzane.
In January Denel issued a statement to the effect it planned to extend its footprint in the Asia/pacific region with the establishment of a joint venture company based in Hong Kong.
“Denel Asia is a partnership between Denel and VR Laser, a company with 20 years of experience in South Africa’s defence and defence technology sectors,” the statement said.
Acting Denel chief executive Zwelakhe Ntshepe is on record as saying Denel “needs a foothold in the region and the establishment of Denel Asia with headquarters in Hong Kong will give us a strong presence and the ability to pursue opportunities”.