Simnikiwe Hlatshaneni
Premium Journalist
2 minute read
24 May 2017
6:09 am

Denel maintains arms deal is above board

Simnikiwe Hlatshaneni

The joint venture is seen by Denel as a way into the lucrative Asian arms market.

A Badger infantry combat vehicle gives a demonstration of the vehicle's mobility on 19 November at the launch of the Badger at Denel Land Systems in Pretoria. The New Badger will be replacing the Ratel combat vehicle by October 2015. Denel Land Systems, the developer of the vehicle, said that the South African National Defence Force will have a full Badger fleet by 2022. Picture: Christine Vermooten

As the ongoing court battle between state arms maker Denel and National Treasury intensifies over the legality of the Gupta-related arms venture DenelAsia, the manufacturer says the deal was above board.

Denel’s application to have the courts declare the joint venture legal came a year after the state entity applied to have the deal signed off by its shareholder, the department of public enterprises and Treasury.

Treasury spokesperson Yolisa Tyantsi said the issue was a legal one and that there would be no further comments.

The joint venture is seen by Denel as a way into the lucrative Asian arms market.

But after the official launch of the venture in January, it emerged that VR Laser Asia, the Hong Kong-based company which would be joining forces with Denel, was owned by a close business associate of the Gupta family, Salim Essa.

The venture was one of the many government deals probed in then public protector Thuli Madonsela’s State of Capture report.

While Public Enterprises Minister Lynne Brown has given a provisional go-ahead for the venture, Treasury has yet to approve it.

Denel said yesterday it had complied with the Public Finance Management Act (PFMA) in establishing Denel Asia.

It added that further delays in the commencement of the venture would thwart lucrative opportunities for the country.

“The East Asia market, in particular India, is the fastest growing defence market in the world. This is an 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,” said acting group CEO of Denel Zwelakhe Ntshepe.

In former Treasury director-general Lungile Fuzile’s answering affidavit, he argued that the venture did not meet the conditions of the government guarantee issued to Denel.

He said Denel has to get the explicit approval of both the minster of public enterprises and the minister of finance in terms of section 54 of the PFMA.


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