The former CEO of Denel Land Systems (DSL) on Tuesday admitted that, in hindsight, breaching policy to award contracts to a company linked to the Guptas and former president Jacob Zuma’s son Duduzane was a “mistake”.
Stephan Burger was testifying at the state capture inquiry regarding irregularities in contracts awarded to VR Laser. Instead of going out on open tender, DSL awarded a 10-year contract to Gupta-owned VR Laser.
“VR Laser was a good company to have as a single-source supplier. It was a bad decision considering where we are now. If only I had had a crystal ball and could look into the future,” Burger told the commission.
VR Laser was favoured for a steel components contract, where DLS employed the “sole-supplier” approach to avoid going out on open tender.
This was done despite concerns raised by former contracts manager at DLS, Celia Malahlela, who previously testified at the state capture inquiry that the Gupta family captured the state-owned company, detailing irregularities including no RFQs [requests for quotations] or tenders issued for the awarding of the contract.
“I passionately felt that the decision to give a contract to VR Laser was the right decision because I felt at the time it was the best company to do the job,” said Burger. “The passion and beliefs I had then I still have today. I cannot speak on behalf of the Guptas, I don’t know them,” he said.
Burger told the commission that the decision to appoint VR Laser was not entirely his and there was ample consultation within DLS.
“The contract was supported by all the senior people at DLS and I have e-mails to prove that. The single-source agreement was approved by all the executives because they thought it was the right thing to do at the time. Yes, concerns were raised, but at the time we really thought that was the best thing. It was the opinion of all the executives,” said Burger.
He told the commission that an executive committee meeting, which he chaired, supported the proposal of getting a single-source contract instead of going out on tender and a joint resolution was approved by the committee.
“I am the chairperson and everybody gets an opportunity [to speak]. In this resolution it is not minuted that Miss Malahlela raised objections about the resolution. Her inputs were acknowledged, but not followed. After a discussion among exco, I formulated the consensus.
“It was a committee decision. I supported that we should uphold the contract with VR Laser and at no point did anyone stand up and say this is illegal. There were good business reasons for it. I thought the group CEO could override policy but I was under the impression it was for good business reasons,” he said.
However, Burger admitted that there was constant “political pressure” on former CEO Riaz Saloojee, which he was always conscious of.
“Over a long period I accepted the idea, wrongly, that Mr Saloojee was under political pressure and he needed to be supported. He had to conform to pressures but I did not see it as pressure from the Gupta family, that I should be giving favourable treatment to VR Laser because they are politically connected.”
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