Denel finally removed from Indian blacklist


India’s Ministry of Defence (MoD) has 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 Indian MoD on 6 September said the blacklisting was lifted after a settlement agreement signed on 19 July, following a South African delegation visit to the Indian MoD between 16 and 19 July ahead of the BRICS Summit.

The MoD in a statement said “it has been decided to remove the restrictions in dealing with procurement cases involving M/s Denel, South Africa, with immediate effect” after the Central Bureau of Investigations (CBI) could find no evidence of wrongdoing on Denel’s part and in line with the Settlement Agreement. “These instructions will be applicable to all the future procurement cases involving M/s Denel”.

According to India’s Economic Times, the terms of the Settlement Agreement saw Denel waive off nearly $100 million that 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 that 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. Available in 14.5 mm, 12.7 mm and 20 mm calibres, it has an effective range of approximately 2 000 metres.

Denel was hoping to bid for 155 mm artillery programmes in India as the ban on Denel stopped the Indian Army’s acquisition of 155 mm artillery as well as a project to install Denel’s 155 mm gun on Indian tank chassis.

India subsequently developed the DRDO Advanced Towed Artillery Gun System, a towed 155 mm/52 calibre howitzer for the Indian Army and recently unveiled the Ordnance Factory Board Dhanush 155 mm gun. India is also taking delivery of 145 M777 howitzers from the United States and recently signed an agreement with Larsen & Toubro/Hanwha Techwin to jointly produce K9 Vajra-T self-propelled howitzers for the Army.