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Denel denies acting illegally in joint venture with Gupta-linked company

Top officials from Denel denied acting illegally in forming a joint venture with VR Laser Asia.

One of Denel's products, the G6 155mm self-propelled artillery gun. Source: Denel.

CAPE TOWN - Top officials from state arms-maker Denel have denied acting illegally in forming a joint venture, Denel Asia, with a Gupta-linked company, VR Laser Asia.

Denel board members were today grilled by Members of Parliament's (MPs) Public Enterprises Oversight Committee to address concerns about the venture and the termination of the contracts of Denel's former CEO, its chief financial officer and the company secretary, after they'd been suspended.

Finance Minister Pravin Gordhan last week accused the Denel board of "belligerence and arrogance" after stating that it failed to get the permission required by law to form the new company.

VR Laser Asia is wholly owned by Salim Essa, the majority shareholder in VR Laser SA, in which Rajesh Gupta and President Jacob Zuma's son, Duduzane, have a 25 percent interest.

Denel officials have told MPs the idea for a joint venture to exploit the lucrative Asia-Pacific market was proposed by former CEO Riaz Saloojee at the new board's first meeting last September.

But it appears he did not suggest it join forces with VR Laser Asia.

Board chair Daniel Mantsha says Treasury did not respond to Denel's request for permission to launch the new company within 30 days and that the Public Finance Management Act allows for this to be taken as a green light to go ahead.

"The fact that some of the shareholders are either connected to some politicians or some of the shareholders of VR SA have got relationships with certain people - that matter was considered."

Mantsha told the committee Denel has proof Treasury received its application on 11 December.