NEWS & ANALYSIS

Illegal Denel-VR Laser Asia joint venture must be cancelled - SACP

Party says deal followed shortly after suspicious appointment of new non-executive directors at SOE

South African Communist Party

"Illegal Denel-Gupta-linked VR Laser Asia joint venture must be cancelled; further investigation must get to the bottom of the matter" – SACP

The South African Communist Party (SACP) reiterates its call for a wide and thoroughgoing investigation into the phenomenon of corporate state capture. The stance taken by the Minister of Finance Comrade Pravin Gordhan that state owed corporations must not be treated as if they were personal toys from which private interests “can extract money whenever they feel like it” is absolutely correct. The Minister’s clarification that the state owned arms manufacturer Denel’s joint venture with a Gupta linked company VR Laser Asia is not legal and therefore unlawful calls for decisive action – preceded by cancellation of the dealing.

The Minister of Public Enterprises Comrade Lynne Brown’s confirmation that Denel had not applied for permission for the transaction establishing the joint venture in which Denel would hold 51% and VR Laser Asia 49% strengthens our call for investigation, decisive action and rescission of the decision establishing the joint venture. In terms of the Public Finance Management Act, state owned corporations must obtain permission from the Minister of Finance for particular transactions, including the creation of a new company or joint venture.  

What is even worrying about the Denel-Gupta linked VR Laser Asia joint venture is that it followed shortly after the 24 July 2015 appointment of new non-executive directors at Denel, one of whom happens to be the younger brother of North West Premier, Supra Mahumapelo. 

Two months later, the board suspended the Chief Executive Officer Riaz Saloojee, Chief Financial Officer Fikile Mhlontlo and Group Secretary Elizabeth Africa. The investigation must establish whether there is a connection between the new joint venture that was created between Denel and the Gupta-linked VR Laser Asia which reportedly is relatively new and does not have any track record in arms manufacturing.

The Gupta family have reportedly acknowledged that they partly own VR Laser, which appears to be a different company from VR Laser Asia, and that the former has done business with Denel. All family ties traceable or linked with the wheeling and dealing between Gupta-linked companies, state owned corporations, decisions made in the state or in state owned corporations and related appointments must be scrutinised. The defence of the actions of the Guptas by some politicians using their positions of leadership may not be innocent or detached from the messy web.

Statement issued by the SACP, 14 April 2016