Gupta-Denel: Treasury must reject irregular deal

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Treasury must reject the deal signed between the Guptas and Denel which is likely in contravention of the Public Finance Management Act (PFMA). Failing which the DA will request Parliament to summon Treasury to explain how this deal was allowed to go ahead despite it being born of a fatal error in due process. In so doing, Treasury must satisfy Parliament that the deal, in addition to following due process, was competitive and void of undue political considerations.

Today’s Business Day report revealed that  Gupta owned company, VR Laser has partner with Denel with the primary task of selling Denel assets in the Eastern market. VR laser has no presence in the Eastern market and they supply components for armour plate and armoured vehicle hulls, but their main focus is on steel cutting and processing. They are not a good strategic fit for Denel at all, other than being Gupta-linked. The big question on everybody’s minds is why should the Guptas be the primary beneficiaries of this deal.

This deal has allegedly not been approved by Minister Brown or the Minister of Finance, Pravin Gordhan as is required by the PFMA with the application still being reviewed and processed. Denel still require a section 54 of the PFMA, that to be signed needs off by the Department and the Treasury, with a cost-benefit analysis and due diligence to be provided.

The politicisation of state entities by deployment of cadres has become a growing trend that afflicts our State-Owned Entities (SOE) which only further serves to compound the financial pressures experienced by these sectors for self-interest.

This news comes on the back of the Optimum mine controversy, where the Guptas have been involved in snapping up of coal mines on the cheap through assistance from the government. The Gupta involvement was not mentioned at the announcement and the venture was concluded in the absence of Denel’s permanent Chief Executive, Chief Financial Officer and company secretary, all three of whom are on suspension. There is a strong suspicion that they were removed to clear the path for this deal.

The Denel board appear to have acted outside their authority by announcing this deal prior to approval. Denel has been generating a profit over the last few years and should be stable and efficient enough to proceed with this venture without the help of short-term profit seekers.

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