It has been reported that Denel’s joint venture with VR Laser Asia is not legal as Denel has not received the permission of Finance Minister Pravin Gordhan to proceed with the transaction.
The national treasury warned on Wednesday that appropriate disciplinary proceedings would be initiated against state-owned arms manufacturer Denel over its alleged dealing with the Indian Gupta family.
The treasury said it has noted media reports that Denel may have entered into a joint venture to form a company that will operate from a jurisdiction in Asia. It said it is currently engaging directly with Denel on the matter.
The Business Day newspaper reported on Tuesday that Denel’s joint venture with VR Laser Asia is not legal as Denel has not received the permission of Finance Minister Pravin Gordhan to proceed with the transaction.
This is in direct contradiction to a Denel statement last week that the controversial joint venture had gone ahead and that “all applicable legal processes have been followed”.
The treasury said its regulations specify that such allegations must be investigated by the Executive Authority and, if confirmed, appropriate disciplinary proceedings must be initiated.
State-owned entities are required to obtain approval from the minister of finance and/or minister of public enterprises before establishing companies, in terms of the Public Finance Management Act (PFMA), said the Treasury.
In terms of the conditions attached to the R1.85-billion in guarantees that have been provided by the government to Denel, any significant transactions that Denel enters into require the approval of both the minister of finance and the minister of public enterprises, said the Treasury.
Earlier, the opposition Democratic Alliance (DA) urged Parliament to conduct an investigation into the Gupta family’s “illicit dealings with the state”, citing Denel’s reported dealing with the family.
The DA said it is imperative to uncover the full extent of the Gupta family’s influence over state-owned companies.
With close ties with President Jacob Zuma and the ruling African National Congress (ANC), the Gupta family has been accused of exerting undue influence on Zuma’s appointments of cabinet ministers, and engaging in illicit dealings with state-own companies. – Xinhua (African News Agency)