Denel, Treasury head to court over Asian venture dispute
This after the legality of Denel's joint venture with VR Laser Asia, which would see the establishment of Denel Asia, was cast into doubt.
Minister of Finance Pravin Gordhan arrives with members of the National Treasury to present his 2016 Budget Vote Speech in the National Assembly on February 24, 2015 at Parliament in Cape Town, South Africa. Gordhan that he will be cutting government expenditure while still making R870-billion available for infrastructure development. (Photo by Gallo Images / The Times / Ruvan Boshoff)
Denel has applied to the North Gauteng High Court for an order declaring it had obtained approval to form a joint venture with VR Laser Asia, which has resulted in the establishment of Denel Asia.
“In spite of the company’s numerous attempts to work with National Treasury to explain the legal processes followed in establishing the Denel Asia joint venture, this matter remains unresolved and continues to unfairly cast doubt on Denel’s reputation and governance regime,” Denel’s acting group chief executive officer, Zwelakhe Ntshepe, said.
“We have always maintained and still maintain that Denel Asia was duly established after following and complying with all the relevant prescripts of the [Public Finance Management Act],” Ntshepe said.
Finance Minister Pravin Gordhan and the Treasury are the first and second respondents in the affidavit, which was lodged in Pretoria on Friday.
Ntshepe claimed Denel acted lawfully and in accordance and compliance with the PFMA, “in concluding and forming the joint venture agreement”.
“The doubts that have been cast over Denel Asia’s legal standing have led to negative perceptions about Denel from various stakeholders, clients and potential clients, which has impeded the company’s ability to do business effectively,” he said.
“The Asian-Pacific region is an extremely important region for Denel to expand its business and find new markets for our world-class products, especially in the fields of artillery, armoured vehicles, missiles and unmanned aerial vehicles.”
Ntshepe said research showed that by 2018, the Asia-Pacific nations will command more than half of global defence procurement outside of the United States and two-thirds of non-US defence markets. Ntshepe argued for a firm foothold in this region in the form of the establishment of Denel Asia.
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