Cape Town – A joint venture with Denel which has attracted controversy because of its links to the influential Gupta family is not yet a done deal, the Department of Public Enterprises
“There are still other conditions to be met before final approval can be granted,” Colin Cruywagen, spokesperson for Public Enterprises Minister Lynne Brown, told Fin24.
The state-owned entity announced in January that it had launched a joint venture, Denel Asia, in Hong Kong. However, Brown’s office said the partnership was in contravention of the Public Finance Management Act.
Denel had failed to secure a Section 54 application which allows state-owned companies to launch partnerships and joint ventures.
But on Tuesday, the ministry left the door open for Denel to comply in its deal with VR Laser.
In 2014, Fin24's sister publication City Press reported that President Jacob Zuma’s son Duduzane and Rajesh “Tony” Gupta stand to benefit from a multiyear infantry combat vehicle contract with Denel worth billions, which would kick off within the next two years (in 2016).
The pair have a 25.1% stake in VR Laser through Craysure Investments, which in turn is wholly owned by Westdawn Investments.
Company records show Gupta and Zuma are directors of Westdawn, and both Westdawn and Craysure share a registered office in Midrand.
Brown had given pre-approval, but had not officially sanctioned the deal, said Cruywagen.
“The minister gave pre-approval with strict conditions that included a viability study and a due diligence on the transaction,” he said.
Denel is among six state-owned enterprises that reported a profit in the 2014/15 financial year and Cruywagen said that in the light of this, Brown was happy with the current leadership, despite saying in December that many SOEs were “in distress”.
“The minister is comfortable with the progress and stability at the six SOEs that report to her.”
* Fin24 reached out to Denel for comment, but the company failed to respond by the time of publication.
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