Denel cans R80m tender after legal threat

Johannesburg - State-owned arms manufacturer Denel has allegedly cancelled an R80m tender that was issued under the auspices of a company that does not exist.

Denel canned the contract, which was awarded to a Portuguese company, after a losing bidder threatened to take it to court.

Segers Corporation SA recently sent Denel a lawyer’s letter requesting that the tender be scrapped or the arms manufacturer would face an urgent court interdict.

The letter, which was also sent to Public Enterprises Minister Lynne Brown, Armscor CEO Kevin Wakeford and Small Business Development Minister Lindiwe Zulu, lists a number of alleged irregularities relating to the tender.

The tender is for the overhaul of engines.

The lawyer’s letter, which City Press has seen, said Denel Aeronautics issued the tender as a subsidiary of Denel SA and not a division.

A Companies and Intellectual Property Commission search revealed no existence of Denel Aeronautics as a subsidiary of Denel.

“Denel Aeronautics is a subsidiary of Denel (Soc) Ltd, the largest manufacturer of defence equipment in South Africa …” read part of the initial advised tender.

Denel spokesperson Pamela Malinda confirmed that the company was sent the letter, but refused to answer further questions relating to the matter.

“We are not able to reply to the questions raised as they appear to be based on a lawyer’s letter received by Denel from one of the participants in a tender.

"Denel will, in due course, reply to the letter from the tenderer and would prefer not to respond through the media,” she said.

Segers spokesperson Theunis Crous said the company also suspected that there were a number of irregularities regarding the tender.

“Denel decided to give a tender award to a foreign company rather than a South African level 1 small, medium or micro-sized enterprise.

"It’s a very sad situation when a foreign firm is preferred over a local, black-owned one,” he said.

“We suspect tender fraud as we now know the company that won the tender did not submit its tender by 2.30pm on the closing date.

"Also strange for AB Logistics, the company mandated to transport the engines, was that Denel awarded the tender on a Thursday and, by Friday, they already had a permit to move the engines. To get a permit normally takes a week at the best.

"We suspect the tender process was just to show that they followed procedures.

“They had long ago negotiated this deal with Ogma, the Portugal company. We have lost a potential R80 million order, and so has Denel. All because of the greed of their officials and people behind this bizarre tender award,” said Crous.

He said that, when the company discovered Denel was lodging a complaint, they blocked the email line on which complaints about tenders could be sent.

“Just look at the bizarre tender document and terms. It’s like it was written to accommodate one company. We reserved our right in the matter,” Crous said.