Denel says it will engage with Treasury to resolve any misunderstanding over joint venture

State-owned armaments manufacturer Denel says it will continue to engage with the National Treasury to ensure that any misunderstanding between them about the Denel Asia joint venture is resolved amicably.

Denel was quoted in reports last week as saying it had established a joint venture with VR Laser Services‚ a company said to be partly owned by the Gupta family. The joint operation‚ to be called Denel Asia‚ would be based in Hong Kong.

The Treasury said on Wednesday that Denel’s directors would face charges of financial misconduct if the board formed a new joint venture without the permission of Finance Minister Pravin Gordhan.

The Treasury confirmed in a statement that it had received an application from Denel on December 10 to set up the joint venture but that it had requested further information.

“More significantly‚ Denel is also required to comply with Section 51(1)(g) (of the Public Finance Management Act)‚ which is unequivocal in its requirement that the Board of Denel obtain approval before establishing a company. Section 51(1)(g) requires the accounting authority of an entity to ‘promptly inform the National Treasury on any new entity which that public entity intends to establish or in the establishment of which it takes the initiative‚ and allow the National Treasury a reasonable time to submit its decision prior to formal establishment’.

“The National Treasury received a section 51(1)(g) from Denel on 10 December 2015. The application is still under consideration and no decision has yet been made‚” the Treasury stated.

It pointed out that state-owned companies were required to obtain approval from relevant government departments‚ including the finance ministry‚ before making major financial transactions.

Denel said on Thursday it had noted the reports with regards to the National Treasury (NT) views on the new venture company Denel had entered into as a vehicle to penetrate the Asia-Pacific markets.

“Chapter 3 of the Constitution enjoins all spheres of government‚ including organs of state like the NT and Denel SOC‚ to co-operate with one another in mutual trust and good faith. That includes an expectation to always deal with matters of mutual interest internally and underpinned by principles of cooperative governance and inter-governmental relations.

“Denel SOC will continue to engage with NT directly to ensure that any misunderstanding between Denel and the NT about the Denel Asia joint venture is resolved amicably‚” the armaments manufacturer said in statement.


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