SIU investigating misappropriation of IP at Denel


The Special Investigating Unit (SIU) is looking at the ‘serious crime’ of the misappropriation of intellectual property (IP) by Denel, which apparently sent missile data packs to Saudi Arabia and the United Arab Emirates.

The SIU on 3 March briefed parliament’s Standing Committee on Public Accounts (SCOPA) on its investigation into Denel. With regard to the misappropriation of IP, the SIU said this was done criminally “to abet foreign state companies”, namely Saudi Arabia Military Industries (SAMI) and Barij Dynamics in the United Arab Emirates (UAE).

“With regard to [the] SAMI investigation, the SIU findings confirms that certain data packs that belongs to Denel Dynamics were unlawfully downloaded from Denel’s server to other devices. These data packs are for Mkhonto, Ingwe and Mokopa missiles.”

A data pack is a list of documents and drawings relating to a project. Depending on its contents, a data pack could include the full set of blueprints and specifications to enable someone to produce something themselves.

Lead SIU investigator Zodwa Xesibe told SCOPA that the SAMI group was interested in certain South African missiles and forwarded a business proposal to Denel for those missiles. Subsequent to that business proposal a meeting was arranged between the Denel and SAMI and it took place on 19 February 2018. The same meeting collapsed due to SAMI’s failure to sign a non-disclosure agreement (NDA) which was a condition before any information could be shared.

“Instructions were later given to junior members to download information and information was shared with SAMI,” the SIU said, adding that three former senior officials including the Denel Dynamics CEO resigned and joined SAMI and are implicated in the process.

The SIU, National Prosecuting Authority and Hawks are trying to retrieve all information from companies and institutions, Xesibe said. There are five criminal referrals possible in this instance. “We intend to invoke extradition treaties [for them] to face charges in the Republic of South Africa,” she said.

The SIU is also probing Barij Dynamics, a joint venture between Denel Dynamics (49%) and Barij Dynamics (51%) – the latter became Halcon, part of the UAE’s Edge group of companies.

“The P2 and P3 missiles were the subject of the investigation that the IP was unlawfully transferred to Halcon, a company that succeeded Barij in the JV,” the SIU said. “This was done under a disguise of letter signed by former member of Denel Dynamics who was involved in the stealing of data packs for the SAMI.

“Another official at Denel signed off the Board minutes of Barij Dynamics Board that authorizing (sic) the transfer of the P2 and P3 missiles to Halcon. This member did this without board authority and executive Denel authority.”

defenceWeb understand that the P2 and P3 were developed and paid for by Barij, which is the reason why Denel did not retain the intellectual property on these weapons. The P2 is a low-cost medium-range guided munition initially designed for use aboard Seeker 200 and 400 unmanned aerial vehicles. The P3 (Sejeel) guided bomb kit was developed in South Africa and produced in the UAE. It adds a guidance kit to Mk 81 and Mk 82 bombs. The Sejeel has been in production since 2017 for the UAE armed forces, but is being promoted for export as well.

Xesibe said the SIU is looking at three possible criminal referrals and one disciplinary against a person at Denel. “This is a serious crime against the state,” she said of the IP transfer.