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Court must dismiss Denel bid with costs, says Treasury

May 16 2017 19:10
Lameez Omarjee, Liesl Peyper and Matthew le Cordeur, Fin24

Johannesburg – National Treasury asked the North Gauteng High Court to dismiss Denel's application with costs, after the state-owned arms manufacturer asked the court to force Treasury's hand in approving its joint venture with Gupta-linked VR Lazer Asia. 

The responding affidavit was received by the court on Friday, a week after Finance Minister Malusi Gigaba met with Denel board chairperson Daniel Mantsha in Durban, where the minister demanded the company withdraw its court application, according to the Sunday Times.

Fin24 has a copy of the 112-page responding affidavit signed by former Treasury director general Lungisa Fuzile. It was one of his final acts in that role, as he bid farewell to staff on Monday, after resigning from the post in April. 

"The legal position set out in (section 51.1.g of the Public Finance Management Act)... is clear and unambiguous," he said.

"There can be no reasonable doubt about the proper interpretation of this section.

"In these circumstances, in exercising its discretion under section 21 (1)(c) of the Superior Courts Act 10 of 2013, this court should decline to grant the declaratory relief sought by the applicant.

"l submit that the application falls to be dismissed with costs, such costs to include the costs consequent upon the employment of two counsel," he explained.

The affidavit comes as Denel said on Tuesday that it would engage with National Treasury to avoid misunderstandings about its proposed joint venture in Asia.

READ: Gigaba halts Denel's deal with Gupta-linked firm – report

Denel confirmed that Mantsha had met with Gigaba in Durban to discuss the proposed deal.

According to the report, Gigaba told Mantsha to withdraw a court application it had lodged against Treasury, after former finance minister Pravin Gordhan refused to authorise the VR Laser Asia deal.

Gigaba had raised concerns over the financial implications of the deal, his spokesperson Mayihlome Tshwete confirmed to the Sunday Times.

Denel will meet with the minister again, as well as Public Enterprises Minister Lynne Brown to discuss "relevant issues". The company reiterated that the Asia-Pacific region was important for Denel’s growth prospects.

VR Laser Asia is owned by Salim Essa, a business associate of the Guptas.

ALSO READ: Denel fires suspended CEO, Gupta links questioned

Denel recently fired its suspended CEO Riaz Saloojee, without any evidence of misconduct on his part. He was one of the executives, including chief financial officer Fikile Mhlonto and company secretary Elizabeth Africa, who was suspended in July 2016.

There is speculation that the suspension of the three was over the influence of the Gupta family on Denel’s business, Fin24 reported. However, last year Brown indicated that there were discrepancies related to profit declared. 

Subsequently, this year Brown told a parliamentary portfolio committee on public enterprises that the three were being investigated over irregularities in the group's profit statement.

Read Fin24's top stories trending on Twitter:

denel  |  vr laser  |  malusi gigaba  |  gupta  |  lynne brown  |  industrial


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