The Zondo commission has heard how Denel declined to share information on its technical requirements for combat vehicles so other companies could bid for project Hoefyster.
Armscor, the state weaponry enterprise had issued a tender to have 200 combat vehicles built. Denel won the contract on the basis that it had created the design specifications for the vehicles.
While it was instructed by Armscor to release the specifications to other tender bidders, it appears it kept that information to itself, effectively leaving other bidders at a disadvantage.
According to Sipho Mkwanazi, acting group executive of acquisitions and supply chain management at Armscor since 2015, the Hoefyster contract required 200 combat vehicles.
Since the contract was awarded in 2012, Denel had experienced delays in fulfilling the contract. Some of the challenges include a change in executives since the CEO, CFO and company secretary were fired in 2015, subcontracting of the tender to Gupta owned VR Laser and a lack of accountability by officials.
Upon hearing Denel still had not completed the contract and supplied the 200 combat vehicles since 2012, judge Ray Zondo became visibly upset and lashed out at Mkwanazi.
“It’s just completely unacceptable. How can something that has been required in 2012 and had been promised to be delivered in 2012, eight years later, have not been delivered?”
“Why is this situation allowed to continue? Has anybody been fired for not doing their job? Has anything happened? It’s just unthinkable.
“It’s like there’s nobody who supervises that ministers do their job, DGs do their job, heads of SOEs do their job, people under CEOs do their job, boards of SOEs do their job. How can this kind of situation be allowed to happen?” said Zondo.
Mkwanazi’s testimony further revealed the dire situation Denel finds itself in;
- The company has been financially distraught in the last five years since a Gupta aligned board was appointed five years ago.
- That board and executives in Denel appointed VR Laser, a company owned by Gupta associate Salim Essa and Duduzane Zuma.
- VR Laser was awarded a tender to assist in manufacturing platform hulls for the Hoefyster project at R100 million than Land Mobility Projects (LMT), a subsidiary of Denel Land Systems (DLS).
- Armscor has submitted penalities worth R200m on Denel for failing to deliver on time.
- A total of R1.5 billion has been spent on Hoefyster by Armscor
- Denel is seeking a R3.8 billion bailout from government to become fully operational again.
The article was first published on Biznews, and republished here with permission.