VR Laser, the company with which Denel entered into a joint venture, has been doing business with the state-owned company for the past 15 years, Public Enterprises Minister Lynne Brown said on Tuesday.
During a media briefing after her budget vote in parliament, Brown was responding to questions about Denel’s joint venture with VR Laser – a company with close ties to the Gupta-family and President Jacob Zuma’s son, Duduzane.
The formation of the VR Laser-Denel joint venture was announced in January this year, but the deal was mired in controversy – not only because of the interested parties – but also because the partnership was in contravention of the Public Finance Management Act.
Denel, as a state-owned company, was obliged to secure a Section 54 application before it could launch partnerships and joint ventures.
Brown said she would be meeting with Finance Minister Pravin Gordhan before she could comment further on whether Denel still needs to get approval for the deal.
“The spirit of the law needed to be taken into account when looking into the joint venture. The things we looked at are: were they right or wrong? Did the issues go through the proper processes and can they stand up in a court of law?”
She refuted allegations that former Denel CEO and the board were dismissed to “clear the way” for the venture with VR Laser. “In fact, the CEO brought the deal to the board’s attention three months into their tenure.”
Former Denel CEO Riaz Salojee and his colleagues, chief financial officer Fikile Mhlontlo and group secretary Elizabeth Africa, were suspended pending an investigation into irregularities with the BAE Land Systems Deal, Denel said in a statement a few days ago.
Salojee’s services has since been terminated “because his contract with Denel came to an end”, according to the state-owned company.
Brown said that Denel and VR Laser wouldn’t be trading until the matter has been resolved.
“The question is: are we doing business with people who have been found guilty and people who are of interest? Unless the parties are violating laws other than public sentiment, I can’t act. I have to be fair to the companies.”