State-owned defence industry conglomerate Denel has gone on the offensive against National Treasury saying any court action in connection with the Denel Asia joint venture is “political, sheer opportunism and grandstanding”.
In a statement issued late on Tuesday Denel said: “Any litigation will be a violation of Chapter Three of the Constitution and it will be vigorously opposed”.
Explaining this approach the statement goes on to say: “National Treasury was served with a pre-notification by Denel on 29 October 2015, in which Denel indicated to the National Treasury that it intended to establish Denel Asia”.
“When Treasury did not respond Denel convened a meeting with both the Treasury and the Department of Public Enterprises on December 9, 2015. In that meeting, Denel indicated to both Treasury and the DPE it was going to submit the PFMA application.
“Denel also raised concerns with regards to National Treasury’s silence since the submission of the pre-notification and stressed the urgency with which the application needed to be dealt with. National Treasury was represented by more than two officials at that meeting and neither Treasury nor the DPE raised any objections to either the pre-notification, or the PFMA application which Denel indicated would be submitted on December 11, 2015.
“Neither of the two departments represented at the meeting raised any concerns as regards to the urgency of the matter nor their ability to speedily attend to the application. The importance of this meeting with National Treasury and DPE on 9 December 2015 was to ensure the urgency of the PFMA application was well understood and adhered to.
“Despite the fact that both National Treasury and DPE attended the December 9 meeting where the urgency of the Denel PFMA application was discussed, they failed to reply to the PFMA application as submitted. Neither National Treasury nor DPE, as allowed by the Treasury guidelines, requested an extension of the 30 day period or reasonable time to consider. No concerns or objections were ever received from National Treasury in this regard.
“It was only when the name Gupta was mischievously linked to Denel Asia, that National Treasury sent a letter to request further information from Denel. This was done on February 5, 2016 and purely motivated by a hidden agenda. National Treasury’s engagement with Denel in this regard has always been political, grandstanding and making malicious utterances against Denel in the media. The Denel board was called ‘arrogant and belligerent’ by the Minister of the National Treasury who is unable to back such allegations.”
Denel then goes on to urge what it calls “the incumbent at National Treasury” (presumably Finance Minister Pravin Gordhan) to put the country and the economy first by engaging with it through Constitutional means.
“Treasury claims to be concerned about the financial well-being of state-owned entities, yet it does not respond to a PFMA application to enable Denel to grow its business and generate revenue for the state. It is strange that Treasury is frustrating the Denel Asia joint venture when Denel is not putting up a capital investment. Only VR Asia is putting up R100-million to fund the business with Denel to share 51% of the profit. In 2014 Treasury approved that Denel borrow R855-million from commercial banks to acquire business while fully knowing that such debt will burden Denel.”
The statement adds that allegations of Denel being captured by the Guptas are unfounded and politically motivated.
“The Gupta family has no business joint venture with Denel and none of the Gupta family members or relatives are shareholders in Denel Asia.”
The statement ends by saying “a progressive National Treasury and Minister of Finance will not waste taxpayers’ money by engaging in fruitless and unconstitutional litigation against another organ of state to hide their failure to respond timeously to business challenges of state-owned companies and gross negligence in dealing with PFMA application from state-owned companies.
To date there has been no word from Public Enterprises Minister Lynne Brown on Denel going back as far as the September last year suspension and subsequent dismissal of former chief executive Riaz Saloojee and the suspension of the chief financial officer and company secretary, both apparently still not back at work.
This prompted Natasha Mazzone, the Democratic Alliance’s (DA) shadow minister of public enterprises, yesterday to ask “where is Minister Brown?”
“She has not uttered a single word nor made efforts to present a plan of action regarding the impending crises at State-owned enterprises,” Mazzone said adding the Minister must “urgently provide clarity on whether Denel has presented tangible evidence that the joint venture with Gupta-linked VR laser was approved by her department”.