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I had the power to break rules, says former Denel chief over deal with Gupta-linked firm

Ernest Mabuza Journalist
Deputy chief justice Raymond Zondo heard evidence from former Denel group CEO Zwelakhe Ntshepe on Wednesday.
Deputy chief justice Raymond Zondo heard evidence from former Denel group CEO Zwelakhe Ntshepe on Wednesday.
Image: Alon Skuy

Former Denel group CEO Zwelakhe Ntshepe said he believed he had the power to deviate from the company's supply chain management policy to approve a single-supplier contract between Denel Land Systems (DLS) and Gupta-linked company VR Laser.

Ntshepe was testifying at the state capture commission on Wednesday.

He was being questioned on why he overruled a decision by Denel group executive for supply chain management, Dennis Mlambo, who had refused to approve the single-supplier contract between Denel subsidiary DLS and VR Laser.

Evidence leader Paul Kennedy told Ntshepe that a former contracts manager at DLS, Celia Malahlela, had indicated that Mlambo had refused to approve the request in 2015.

This was because a Denel supply chain policy required that approval be obtained from Mlambo for a deviation of the normal rule that single supplier contracts should be kept in-house or be given to an inside supplier unless there were good business reasons to procure from outside.

Kennedy told Ntshepe that had Mlambo refused to give that approval and said proof was needed that Denel's internal entities Denel Vehicle Systems (DVS) and LMT could not meet the requirements.

Ntshepe approved the transaction between DLS and VR Laser even though DVS and LMT did not supply proof they could not satisfy the DLS's requirements.

When asked to explain why he overruled Mlambo, Ntshepe said what was urgent was for work to be done.

“If Mr Mlambo really wanted to find out exactly why DVS and LMT did not submit any proof that it cannot do this work, it was upon him to find that information.”

Ntshepe said there was an urgent request that a vehicle be prepared for a demonstration and that the parts that were going to be used were specialised fabrication parts - and VR Laser was at that time the company which was able to supply those parts.

“When this request came to me, it came to me urgently to say that we really need this thing, otherwise we will not be able to have this vehicle for the demonstration. I approved it based on that.”

Ntshepe said he believed he took the right decision to approve the agreement.

“Denel, though it is a state-owned enterprise, is an enterprise which competes with private enterprises. If you are not able to deliver a product at a certain point, you will pay the penalty either financially or by losing the sale or by losing the opportunity to demonstrate your capability.”

Kennedy asked Ntshepe whether he was aware that if Denel wanted to procure goods from outside the organisation, it needed to have a good business case and it had to be approved by Mlambo. Ntshepe said he was not totally aware of it.

Ntshepe said he believed he needed to expedite the work of Denel and be able to have this demonstration vehicle ready on time.

“Are you saying because it was urgent, you had the right to deviate from the procurement policy?” Kennedy asked.

Ntshepe said deviation from supply chain management made sense because there was urgency to make sure the vehicle was ready.

Kennedy said even if there was urgency to ensure the demonstration vehicle was ready, Ntshepe needed to comply with the law.

“I complied with the law. I might not have complied with Mr Mlambo,” Ntshepe said.

Kennedy told Ntshepe that there was a legal obstacle which prevented him from approving the transaction because of the procurement policy.

“With due respect, I would beg to differ. I believe I had the authority to approve this,” Ntshepe said.

Asked where he got that authority from, Ntshepe said he got this as acting group CEO of Denel.

Ntshepe finished his evidence on Thursday.