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Denel and Treasury still at war over VR Laser deal

Aug 30 2016 07:48
Lameez Omarjee

Johannesburg  - The DA has welcomed the alleged plans by National Treasury to take state-owned enterprise (SOE) Denel to court.

This follows reports in the Sunday Times this past week that Treasury allegedly issued legal letters to the defence company to halt a deal with Gupta-linked VR Laser Asia.

Denel was mired in controversy over the past few months, following allegations that Denel had not secured a Section 54 application of the Public Finance Management Act (PFMA), which allows state-owned companies to launch partnerships and joint ventures

Sunday Times reported that Denel formed the VR Laser Asia partnership in December, without Treasury’s permission as required by the PFMA.

However, at a financial results announcement last week in Centurion, acting group financial director, Odwa Mhlwana said that the SOE had “closed its books” on the issue completely.

Previously, Fin24 reported that Mhlwana said the defence company believes its “vehicle” to access the Asian market was approved and that following thorough analysis with its shareholders it was agreed the company was not at fault.

He went on to say that if Treasury still has a problem, they can take it up with the Department of Public Enterprise.

Read: Denel's liquidity woes dampen positive financials

Asia is still a critical market for Denel and that competition in the Asian market was severe. “Asia is the biggest market outside US in terms of defence spending and growth of defence spending,” he said.

Denel’s interest in Asia will not be swayed for the time being. “We are focussing on what is best for Denel. And that is business in the Asian market.”

In a statement, the DA said it welcomed the move by Treasury to take legal action.

“I will be writing to the chairperson of the portfolio committee on public enterprises to request a combined meeting between Treasury, Denel and the Department of Public Enterprises to get to bottom of this joint venture once and for all,” stated Natasha Mazzone MP, DA shadow minister of public enterprises.

In its statement the DA highlighted that VR Lazer SA is 64.9% owned by a Gupta business partner, Salim Essa. It is partially owned by a company, Westdawn Investments, whose majority shareholders are Duduzane Zuma and Rajesh Gupta. VR Lazer Asia is 100% owned by Salim Essa.

“This joint venture therefore makes no strategic sense,” Mazzone added.

Fin24 is still awaiting response from Treasury.

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denel  |  vr laser  |  national treasury
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