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Denel fires suspended CEO, Gupta links questioned

Apr 18 2016 07:43
Erika Gibson and Fin24

Cape Town - Denel fired its suspended CEO - Riaz Saloojee - on Thursday without being found guilty of any misconduct, Netwerk24 revealed on Sunday.

Fin24 broke a story on 25 September 2015 that revealed that Saloojee, chief financial officer Fikile Mhlontlo and group company secretary Elizabeth Africa were suspended, while the board investigated a variety of issues, including recent business acquisitions made by the state-owned company (SOC).

However, the probe shifted this year, as Public Enterprises Minister Lynne Brown told the parliamentary portfolio committee on public enterprises two weeks ago that the three were being investigated for irregularities in the arms manufacturer’s profit statement.

Netwerk24/Rapport learnt that Saloojee was informed on Thursday that his employment contract was being terminated without any evidence or charges being brought against him.

Brown announced a new board for Denel in July last year. Six weeks later, Saloojee and two of his top officials – chief financial officer Fikile Mhlonto and company secretary Elizabeth Africa – were suspended.

Brown said there were discrepancies with a profit declaration previously. “The SOC said they made a R1bn clear profit, but it wasn’t. It was actually a large ring-fenced amount.

“The cash situation at Denel has however stabilised and the R850m note brought to the market in the fourth quarter of the last financial year was over-subscribed, which showed the market had confidence in Denel.”

READ: Minister reveals why Denel suspended execs

It is widely speculated that the suspension of the three is related to the influence of the Gupta family in Denel’s business.

Since the new board took over, Denel registered as a partner an Asian subsidiary, Denel Asia, in Hong Kong in January with VR Laser, a company with strong Gupta ties.

The company is owned by Gupta business partner Salim Essa, and one of the Gupta brothers’ sons sits on its board.

Finance Minister Pravin Gordhan said last week that the registration of Denel Asia was illegal and contrary to the Public Finance Management Act.

"The Minister of Finance is still considering this application, and further information has been requested from Denel," the Treasury said in a statement.

The joint venture, to be called Denel Asia and based in Hong Kong, would manufacture a variety of steel products for defence, mining, rail and transport industries and would be 51% owned by Denel and 49% owned by VR Laser Services, Reuters explained.

Rapport learnt that, before his suspension, Saloojee was repeatedly approached in 2014 and 2015 by other parties to become involved in arms deals, but he was not interested.

It was also learnt that there were attempts to put pressure on him to make “prescribed” appointments in Denel’s subsidiaries, and that his unwillingness to comply with these demands was the real reason for his suspension.

Saloojee is expected to fight back.

FULL STORY: Axing at Denel has Gupta link



denel  |  lynne brown  |  guptas
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