South Africa is in talks to sell a majority stake in state-owned arms manufacturer Denel to oil-rich Qatar, capitalising on rising Middle Eastern tensions.
The Sunday Times has been reliably informed that President Jacob Zuma and Qatar are also in negotiations for stakes in South African Airways and power utility Eskom, but this could not be confirmed by the Department of Public Enterprises or the Presidency.
Denel is in a precarious financial position. It is understood to be due to repay a R1-billion facility but does not have the money.Qatar Defence Minister Khalid Bin Mohammed Al-Attiyah discussed the proposed acquisition with Zuma during a state visit to South Africa earlier this month, the Sunday Times has established.
This is despite the Department of Public Enterprises, the National Treasury, the National Conventional Arms Control Committee and the cabinet having no knowledge of the deal. By law these departments would have to approve such transactions.
Qatar is treated as a pariah state by its neighbours, including the United Arab Emirates, Saudi Arabia, Yemen and Egypt over fears that it is harbouring terrorists aiming to foment instability in the region. The countries have severed diplomatic relations with Qatar to ensure "national security".
Denel has denied that it is selling any stake and Zuma's spokesman, Bongani Ngqulunga, downplayed the visit, saying the Qatar minister had "paid a courtesy call" to Zuma and that there was no discussion on the sale of Denel.
However, the Qatari government was quoted by its media as saying the "possibility that the Qatari armed forces invest in the Denel group for military manufacture" had been discussed.
The Sunday Times understands that Denel has also concluded a memorandum of understanding to supply Qatar with arms.Another state official with knowledge of the discussions said the deal would definitely jeopardise relations with Saudi Arabia, which was a key trading partner.
The controversy also puts the ANC at odds with its alliance partners ahead of the party's December elective conference.
Cosatu's Bheki Ntshalintshali was critical of the move. He said if the government went ahead with the sale, which amounted to privatisation, it would mean the ANC was not serious about consultation with its tripartite alliance partners.
Denel group chief executive Zwelakhe Ntshepe yesterday denied it was selling a stake in the company. He said the company's strategic intent was to "increase its global footprint and market itself in the defence and technology industries".
"This has resulted in the establishment of joint ventures with companies in foreign countries in the past and Denel will continue to explore and consider similar opportunities in the future," said Ntshepe.
Spokesmen for Finance Minister Malusi Gigaba and Private Enterprises Minister Lynne Brown had no knowledge of the Denel negotiations...