Denel approached more than four potential partners before settling on VR Laser Asia as a partner for a joint venture to penetrate the Asian market‚ the state-owned arms manufacturer said in a written presentation submitted to Parliament on Wednesday.
The key criteria in the partner selection was to avoid or minimise financial and reputational risk‚ the company said in its submission to Parliament’s two public enterprises committees.
The debate among MPs became very heated‚ with portfolio committee chairman Dipuo Letsatsi-Dube threatening at one stage to call security when she could not bring the meeting to order.
Denel chairman Daniel Mantsha‚ acting group CEO Zwelakhe Ntshepe and acting group chief financial officer Odwa Mhlwana were present and ready to give their side of the story in the ongoing saga of its joint venture with VR Laser Asia.
The committees were hoping Treasury would attend the meeting. However‚ this was not to be and opposition MPs objected to the meeting proceeding without Treasury officials.
MPs from both the DA and EFF walked out of the meeting when Letsatsi-Dube ruled that it would proceed.
They insisted a proper probe of Denel’s joint venture could take place only with the involvement of Treasury officials and called for the meeting to be postponed so they could be present. Both parties said they would not participate in a “cover-up“.
In the past several months there has been a rift between Treasury and Denel over the legality of the establishment of Denel Asia‚ a joint venture between Denel and VR Laser Asia‚ a company owned by a close associate of the Gupta family‚ Salim Essa.
The newly created joint venture company is registered in Hong Kong.
In their submission‚ Denel executives said the arms company was still engaging with Treasury through the Department of Public Enterprises to clarify its legal compliance in establishing Denel Asia.
“VR Laser is familiar with the industrial landscape in the region and more specifically in India through nondefence business links‚” the executives said.
“VR Laser Asia will be funding the operations and business development activities of the joint venture. Denel will provide its product technology through a manufacturing licence.”
VR Laser had offered R100m to support business development activities and operations of the joint venture; along with market and industry knowledge as well as steel cutting and fabrication capabilities.
They said Denel wanted to grow its export market which‚ contributed 52% of turnover in 2015-16. The East Asian market‚ particularly India‚ was the fastest-growing defence market in the world.
Treasury has argued that the joint venture was unauthorised and illegal‚ while Denel claims it obtained the go-ahead from the Department of Public Enterprises. The row has been very vocal and very public‚ with each side making stinging attacks on the other.
Finance Minister Pravin Gordhan has described Denel’s directors as “arrogant and belligerent” while Denel has slammed Treasury as “grandstanding” for allegedly wanting to go to court over the matter.
Denel has argued that because Treasury did not respond timeously to its application for approval for the venture‚ it was entitled to go ahead with it.
The company’s directors have also maintained that the joint venture was formed in compliance with the Public Finance Management Act and was needed to enable Denel to penetrate the lucrative Asian market.
Public Enterprises Minister Lynne Brown prohibited Denel Asia from trading until the dispute was resolved.
Denel has several joint ventures with large international firms. Its executives said it also has a business relationship with VR Laser — a SA-based company majority owned by Essa (65%) — with which it has been doing business for more than 15 years.
The first contract awarded to VR Laser SA‚ on the Badger vehicle project‚ was in 2013‚ with its share amounting to R400m.
Regarding the suspension of group CEO Riaz Saloojee in September 2015‚ the executives said the Denel board had decided not to recommend to Brown that his contract of employment be renewed when it expired at end-January 2013.
“The board is also considering a damages claim against the group CEO‚” the submission said.
Denel defends VR Laser Asia venture in tense Parliamentary meeting
Denel approached more than four potential partners before settling on VR Laser Asia as a partner for a joint venture to penetrate the Asian market‚ the state-owned arms manufacturer said in a written presentation submitted to Parliament on Wednesday.
The key criteria in the partner selection was to avoid or minimise financial and reputational risk‚ the company said in its submission to Parliament’s two public enterprises committees.
The debate among MPs became very heated‚ with portfolio committee chairman Dipuo Letsatsi-Dube threatening at one stage to call security when she could not bring the meeting to order.
Denel chairman Daniel Mantsha‚ acting group CEO Zwelakhe Ntshepe and acting group chief financial officer Odwa Mhlwana were present and ready to give their side of the story in the ongoing saga of its joint venture with VR Laser Asia.
The committees were hoping Treasury would attend the meeting. However‚ this was not to be and opposition MPs objected to the meeting proceeding without Treasury officials.
MPs from both the DA and EFF walked out of the meeting when Letsatsi-Dube ruled that it would proceed.
They insisted a proper probe of Denel’s joint venture could take place only with the involvement of Treasury officials and called for the meeting to be postponed so they could be present. Both parties said they would not participate in a “cover-up“.
In the past several months there has been a rift between Treasury and Denel over the legality of the establishment of Denel Asia‚ a joint venture between Denel and VR Laser Asia‚ a company owned by a close associate of the Gupta family‚ Salim Essa.
The newly created joint venture company is registered in Hong Kong.
In their submission‚ Denel executives said the arms company was still engaging with Treasury through the Department of Public Enterprises to clarify its legal compliance in establishing Denel Asia.
“VR Laser is familiar with the industrial landscape in the region and more specifically in India through nondefence business links‚” the executives said.
“VR Laser Asia will be funding the operations and business development activities of the joint venture. Denel will provide its product technology through a manufacturing licence.”
VR Laser had offered R100m to support business development activities and operations of the joint venture; along with market and industry knowledge as well as steel cutting and fabrication capabilities.
They said Denel wanted to grow its export market which‚ contributed 52% of turnover in 2015-16. The East Asian market‚ particularly India‚ was the fastest-growing defence market in the world.
Treasury has argued that the joint venture was unauthorised and illegal‚ while Denel claims it obtained the go-ahead from the Department of Public Enterprises. The row has been very vocal and very public‚ with each side making stinging attacks on the other.
Finance Minister Pravin Gordhan has described Denel’s directors as “arrogant and belligerent” while Denel has slammed Treasury as “grandstanding” for allegedly wanting to go to court over the matter.
Denel has argued that because Treasury did not respond timeously to its application for approval for the venture‚ it was entitled to go ahead with it.
The company’s directors have also maintained that the joint venture was formed in compliance with the Public Finance Management Act and was needed to enable Denel to penetrate the lucrative Asian market.
Public Enterprises Minister Lynne Brown prohibited Denel Asia from trading until the dispute was resolved.
Denel has several joint ventures with large international firms. Its executives said it also has a business relationship with VR Laser — a SA-based company majority owned by Essa (65%) — with which it has been doing business for more than 15 years.
The first contract awarded to VR Laser SA‚ on the Badger vehicle project‚ was in 2013‚ with its share amounting to R400m.
Regarding the suspension of group CEO Riaz Saloojee in September 2015‚ the executives said the Denel board had decided not to recommend to Brown that his contract of employment be renewed when it expired at end-January 2013.
“The board is also considering a damages claim against the group CEO‚” the submission said.
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