News / South Africa

Gosebo Mathope
2 minute read
25 May 2017
3:44 pm

Minister told Denel board to dissolve VR Laser joint venture, says Treasury

Gosebo Mathope

The finance ministry has reiterated that the joint venture in its current form violates Treasury regulations, and Denel must withdraw its court case.

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

Treasury spokesperson Mayihlome Tshwete says he does not understand what the Denel delegation means when they say reports that the minister has asked them to dissolve VR Laser partnership are “fake news”. Denel made the “fake news” remark when answering questions from the portfolio committee this week.

The state-owned arms manufacturer on Tuesday told the media it was proceeding with its joint venture with VR Laser to penetrate the east Asian market.

Before he retired from the department, former director-general Lungile Fuzile filed court papers in which he said the Gupta-linked company was “technically insolvent … and did not appear to be in a position to raise the funds” required to establish the joint venture with Denel.

Fuzile was opposing VR Laser’s bid to acquire a court order that would force Treasury to approve the joint venture. The company is owned by Salim Essa, a businessman with close links to the Gupta family, together with Duduzane, President Jacob Zuma’s daughter, and Rajesh Gupta.

The next day the state arms manufacturer’s board and management told the portfolio committee on public enterprises that its commercial partnership with VR Laser was compliant with PFMA.

READ MORE: Denel contradicts Gigaba’s reported stance on VR Laser Asia

Denel chairperson Daniel Mantsha reiterated they would meet with Public Enterprises Minister Lynne Brown to discuss its failure to secure a Section 54 application for a joint venture.

Committee member Pravin Gordhan told the delegation the reports of underhanded dealings with the Gupta family must be explained.

Brown had earlier told media houses the joint venture had not been approved and was, therefore, in contravention of the PFMA.

Speaking to The Citizen last week, Tshwete said Finance Minister Malusi Gigaba had met with Denel representatives, in which he requested them “to withdraw the court case, as it was not in anybody’s interest for the state entity to take Treasury to court”.

He said the minister asked Denel to dissolve the partnership, as it was flouting Treasury regulations.

“There is no contradiction. There is no dispute that we met, and we are on the record that we opposed this deal and that they should withdraw their court proceedings against government,” Tshwete told The Citizen this morning.

He added the board of Denel and management “have committed to an amicable solution, and we will give them an ear based on that”.