National Treasury maintains Denel Asia joint venture cannot be approved


A proposed meeting, at which the ministers of Finance and Public Enterprises will discuss the thorny question of the Denel Asia joint venture, will be in the shadow of National Treasury’s insistence that the proposed joint venture should not go ahead.

This is the gist of a responding affidavit submitted to the North Gauteng High Court by former National Treasury director general Lungisa Fuzile. The document was, according to Fin24, one of Fuzile’s final tasks before leaving the Finance Ministry after resigning in April, soon after the sudden axing of former Finance Minister Previn Gordhan by President Jacob Zuma.

The affidavit forms part of National Treasury’s submission to the Pretoria court in support of its counter-claim against Denel, the state-owned defence and technology conglomerate. In March Denel said it was approaching the court for an order declaring approval had indeed been obtained for the establishment of Denel Asia, a joint venture with VR Laser Asia.

The former National Treasury director general is reported as stating in the affidavit: “The legal position set out in the Public Finance Management Act is clear and unambiguous. There can be no reasonable doubt about the proper interpretation of this section. In these circumstances, in exercising its discretion under the Superior Courts Act, this court (the North Gauteng High Court) should decline to grant the declaratory relief sought by the applicant.
“I submit that the application fails to be dismissed with costs, such costs to include the costs consequent upon the employment of two counsel,” Fuzile’s affidavit states.

The affidavit was reportedly received by the court last Friday (May 12), a week after Finance Minister Malusi Gigaba met with Denel board chairman Daniel Mantsha to demand both the withdrawal of the court application and the dissolution of the joint venture with the Gupta family-linked VR Laser Asia.

Denel has consistently indicated the joint venture is a necessity if it is to expand its business in the Asia-Pacific region where it sees potential markets for its artillery, armoured vehicle, missile and unmanned aerial vehicle products.

The Denel Asia joint venture was, according to Mantshe’s report in the last Denel annual report, established in Hong Kong on 29 January 2016 via a strategic partnership with VR Laser Asia.

The sole shareholder of VR Laser Asia is said to be Salim Essa, claimed by the Sunday Times to be a “Gupta business associate” and a director of VR Laser RSA, apparently owned by Zuma’s son, Duduzane, and Rajesh Gupta through Westdawn Investments. The South African VR Laser operation has secured a contract to cut and supply steel for use in the fabrication of the Badger, the SA Army’s new infantry fighting vehicle.