Denel engages with Treasury to avoid ‘misunderstandings’

State arms manufacturer Denel says it will continue to engage National Treasury to ensure that "misunderstandings" about the Asia joint venture is resolved.

This follows a Sunday Times reports that Finance Minister Malusi Gigaba had met with Denel board chairman Daniel Mantsha in Durban and demanded that the company withdraw its court application against Treasury. The newspaper also reported that Gigaba had insisted Denel Asia be dissolved.

Denel has lodged an application with the High Court in Pretoria in a bid to have its joint venture with Gupta-linked VR Laser Asia approved, despite the Treasury, under former finance minister Pravin Gordhan, not giving it permission, as required by the Public Finance Management Act.

On Tuesday, Denel confirmed that Mantsha met with Gigaba but did not divulge what was discussed.

It is still not clear if Denel will withdraw the court application. The company said there would be a follow-up meeting between Mantsha, Gigaba and Public Enterprises Minister Lynne Brown to discuss relevant issues.

"Denel will continue to engage with the National Treasury directly to ensure that any misunderstanding between Denel and the National Treasury about the Denel Asia joint venture is resolved amicably," the company said. "Denel still maintains that the Asia-Pacific region is an extremely important region for Denel to expand its business and find new markets for our world-class products, especially in the fields of artillery, armoured vehicles, missiles and unmanned aerial vehicles."

Denel Asia is a joint venture between Denel and VR Laser Asia, owned by Gupta family associate, Salim Essa.

Denel submitted a formal application for approval for Denel Asia under the Public Finance Management Act in December 2015. When it did not get a response within 30 days, it registered the joint venture company in Hong Kong in January 2016. This resulted in a stand-off between Denel’s board and Gordhan.

Brown has approved Denel Asia, but has told the company it is not allowed to trade until the approval of the Treasury has been obtained. The company maintains that Denel Asia’s establishment complies with the relevant prescripts of the Act.