Denel defended its establishment of Denel Asia in conjunction with VR Laser in Parliament yesterday in a meeting that was not attended by either finance or public enterprises ministers, causing opposition MPs to walk out.
Parliament’s Public Enterprises Portfolio Committee and senior representatives from Denel met yesterday at the behest of Democratic Alliance (DA) shadow public enterprises minister Natasha Mazzone, who called for Public Enterprises Minister Lynne Brown to “come out of hiding and address the chaos in SOEs (State-owned enterprises).”
The DA was seeking clarification on the establishment of Denel Asia; the animosity between Denel and Treasury; and the role of the current board in the establishment of Denel Asia.
Denel maintains there was “nothing wrong” in setting up Denel Asia. This Mazzone said was refuted by National Treasury which is “ready to go to court” to stop it becoming reality.
VR Laser is apparently close to 65% owned by a Gupta business partner, Salim Essa, with a further 25.1% owned by Westdawn Investments, whose majority shareholders are Duduzane Zuma and Rajesh Gupta.
Public Enterprises Committee chairperson Dipuo Letsatsi-Duba scheduled a joint meeting on Wednesday between both parliamentary committees from National Assembly and the National Council of Provinces and requested the presence of Finance Minister Pravin Gordhan and Public Enterprises Minister Lynne Brown. However, none of the ministers attended the meeting, prompting the DA and Economic Freedom Fighters (EFF) to walk out. Mazzone said “the DA will not be part of this cover-up” while the EFF said it would not take part in the “looting” of state owned enterprises.
Mazzone asked for the meeting to be rescheduled so Treasury and Public Enterprises could attend. “All of us arrived here in good faith and expected all the relevant departments to be here so that we can clear up rumours and the scandal that now exist regarding Denel Asia and VR Laser deal. I feel Denel has had their time wasted if Treasury and the ministers are not here. We need to hear both sides of the story from all parties in one meeting.”
Nevertheless, the meeting went ahead yesterday, during which Denel said it approached more than four potential partners before selecting VR Laser and that it was still talking to Treasury to clear up the legality of the establishment of Denel Asia as it had proceeded with the joint venture after notifying the Department of Public Enterprises but not before receiving official approval. This, Treasury maintains, is in violation of the Public Finance Management Act. Denel said time was critical in setting up the joint venture and conducting business.
Denel said it gave Public Enterprises and Treasury 30 days to approve the deal but went ahead when there was no response. Public Enterprises Director-General, Mogorake Seleke, said “The department cannot shy away from taking the blame on the part of the 30 days. Hence there was a direct acknowledgement on the part of the department that the company has met all the requirements and they have already indicated up front the urgency of this matter. Hence, I have also said that the Minister regularised the deemed approval, so on our part, we can safely say this matter is closed.”
Brown has prohibited Denel Asia from trading until the dispute over its legality is resolved.
In selecting VR Laser as a partner, Denel executives stated yesterday that, “VR Laser is familiar with the industrial landscape in the region and more specifically in India through non-defence business links. VR Laser Asia will be funding the operations and business development activities of the joint venture. Denel will provide its product technology through a manufacturing licence.”