SA, India to bury Denel hatchet

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South Africa’s Business Day newspaper reports Public Enterprises Minister Barbara Hogan and Denel chairman Sibusiso Sibisi used a visit last month by President Jacob Zuma to India to move forward on a six year-old dispute between the state arsenal and the Indian government.

The Johannesburg business daily says officials from the Department of Justice also formed part of the Zuma delegation and met representatives of the Indian government. Denel was blacklisted there
after allegedly paying commissions to an agent and not disclosing this fact to New Delhi. Following an arms scandal involving Bofors of Sweden in the 1980s, India created a tough regulatory environment that included restrictions on middlemen.

The paper says it has now emerged that the South African government has agreed to assist India with its criminal investigations against Denel, in order to bring the matter to a close. The blacklisting directly resulted in the company bleeding R2 billion in operating profit in 2005, Denel later said.

The Indian authorities have never publicly acknowledged that the company was in fact blacklisted from tendering in arms contracts, Business Day says. Zwelakhe Ntshepe, the Denel group’s executive for business development, told Parliament’s portfolio committee on public enterprises last year that Denel had been blacklisted even though the Indian government had not officially informed the company of such a step.

Denel told Business Day last week that it was keen to resolve the matter speedily and resume its business dealings in India. The country is among the worlds biggest spenders on weapons, the Stockholm International Peace Research Institute says.

Business Day understands that an Indian court has issued a letter of permission to Indian law enforcement agencies to visit SA to conduct further investigations. Tlali Tlali, Department of Justice spokesman, referred queries on the matter to the police and could not provide further comment .



Denel has undertaken to facilitate and co-operate on this matter,” Department of Public Enterprises spokeswoman Ayanda Shezi said. “Once the legal processes by Indian authorities have been finalised, we are hopeful that the trading relationship between the government of India and Denel can be normalised.” Shezi added once the criminal investigation by the Indian law enforcement agencies was complete, the government would decide whether to take any further action against Denel.