While Denel maintains there was “nothing wrong” in setting up the joint venture between one of its subsidiaries and VR Laser to create Denel Asia, the opposition Democratic Alliance (DA) believes differently.
The party’s shadow public enterprises minister, Natasha Mazzone, maintains in a statement “(National) Treasury is ready to go to court to stop this deal”.
She welcomed “this positive move” to bring this venture to a close adding she would write to the Public Enterprises Parliamentary Portfolio Committee to request a meeting between itself, Denel and the Department of Public Enterprises to “get to the bottom of this venture for once and for all”.
“This issue has dragged on and on without a resolution. It began in December last year, when Denel formed this venture with a Gupta-linked firm without permission from Treasury and the Minister of Public Enterprises, as is required by the Public Financial Management Act (PFMA).
“It simply cannot be ignored that VR Laser SA is 64.9% owned by a Gupta business partner, Mr Salim Essa, and partially owned (25.1%) by a company, Westdawn Investments, whose majority shareholders are Duduzane Zuma and Rajesh Gupta. Or the fact that VR Laser Asia is 100% owned by Mr Salim Essa. It also cannot be ignored that VR Laser Asia has no footprint or expertise in the Asian market. This joint venture therefore makes no strategic sense,” she said.
Denel acting chief financial officer Odwa Mhlwana last week said there was “nothing wrong” with the establishment of Denel Asia. He was speaking at the release of the state-owned defence industry conglomerate’s annual financial statements.
Mhlwana said Denel’s strategy is clear regarding growth, especially in the export market and the company needs to carefully select partners. “In every export market including Asia, we are pursuing a strategy of partnerships,” he said. Asia was emphasised as a critical market for growth as it is the biggest defenced market in the world outside the United States.