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Tue Jul 26 18:08:36 SAST 2016

Treasury must reject ‘irregular’ Gupta-Denel deal‚ says DA

TMG Digital | 16 February, 2016 13:40
South African Minister of Finance Pravin Gordhan attends the inauguration ceremony of South African President Jacob Zuma at the Union Buildings in Pretoria
Pravin Gordhan
Image by: POOL / REUTERS

The National Treasury must reject the deal signed between the Guptas and the state-owned aerospace and defence technology conglomerate Denel‚ which deal is likely in contravention of the Public Finance Management Act (PFMA)‚ the Democratic Alliance says.

Failing this‚ the DA said it would request Parliament to summon Treasury to explain how this deal was allowed to go ahead “despite it being born of a fatal error in due process”.

Business Day reported on Tuesday that Gupta owned company VR Laser had partnered with Denel with the primary task of selling Denel assets in the Eastern market.

“VR laser has no presence in the Eastern market and they supply components for armour plate and armoured vehicle hulls‚ but their main focus is on steel cutting and processing. They are not a good strategic fit for Denel at all‚ other than being Gupta-linked.

“The big question on everybody’s minds is why should the Guptas be the primary beneficiaries of this deal‚” said DA spokesperson on public enterprises Natasha Mazzone.

“This deal has allegedly not been approved by Minister Brown or the Minister of Finance‚ Pravin Gordhan as is required by the PFMA with the application still being reviewed and processed. Denel still require a section 54 of the PFMA‚ that to be signed needs off by the Department and the Treasury‚ with a cost-benefit analysis and due diligence to be provided‚” Mazzone added.

She said the politicisation of state entities by deployment of cadres had become a growing trend that afflicted State-Owned Entities (SOE) which only further served to compound the financial pressures experienced by these sectors for self-interest.

“This news comes on the back of the Optimum mine controversy‚ where the Guptas have been involved in snapping up of coal mines on the cheap through assistance from the government.

The Gupta involvement was not mentioned at the announcement and the venture was concluded in the absence of Denel’s permanent Chief Executive‚ Chief Financial Officer and company secretary‚ all three of whom are on suspension. There is a strong suspicion that they were removed to clear the path for this deal.

“The Denel board appear to have acted outside their authority by announcing this deal prior to approval. Denel has been generating a profit over the last few years and should be stable and efficient enough to proceed with this venture without the help of short-term profit seekers‚” Mazzone asserted.

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