The Gupta name and the words \u201cstate capture\u201d are back. This time, it\u2019s one of Denel\u2019s minority shareholders who claims its parent company is moving all its eggs to the Gupta basket.<\/p>\n
However, Denel has hit back, saying the minority shareholder has teamed up with a politician to loot shares in the state-owned arms manufacturer.<\/p>\n
LMT Holdings founder Stefan Nell \u2013 who let Denel buy 51% of its shares for R100 due to financial stress in 2012 \u2013 filed an urgent application in the Pretoria High Court that alleged a R1bn contract had been moved over to Gupta-owned VR Laser.<\/p>\n
Nell said that “the conduct of [Denel] in this regard can only be described as state capture by proxy”, according to TimesLive.<\/p>\n
However, Denel spokesperson Vuyelwa Qinga said \u201cDenel categorically deny that it is captured by the Gupta family\u201d in a statement on Thursday.<\/p>\n
The purpose of the court challenge was to seek a ruling in favour of business rescue on an urgent basis. However, Denel said there was more at play.<\/p>\n
\u201cDenel is aware that a certain politician is attempting to loot Denel shares at LMT, the attempts by the said politician to hijack Denel shares using business rescue proceedings via Mr Nell will be vigorously opposed and will not succeed,\u201d said Qinga.<\/p>\n
In his application, Nel said Denel awarded the remaining Hoefyster contracts to VR Laser, even though they had been promised to LMT.<\/p>\n
“It has become patently clear that (Denel) not only reneged on its promises, electing instead to further the interests of a politically connected family in the Guptas, but that it may have also misrepresented its intentions, not only to (the shareholders), but also various government departments,” he said.<\/p>\n
Qinga rejected the claims on Thursday, explaining that Denel has been \u201csingle handedly loaning money to LMT to fund its operations despite the obstructionist conduct of Mr Stefan Nell\u201d.<\/p>\n
\u201cNell alleges that he has investors who are prepared to invest vast amounts of monies in the business, but yet he does not want to disclose such persons,\u201d said Qinga.<\/p>\n
He said the awarding of the contracts to VR Laser occurred before the appointment of the current minister, board and the acting executives.<\/p>\n
He said the executive directors of Denel who were board members of LMT \u201care no longer in Denel’s employ or have been suspended\u201d.<\/p>\n
The matter was set down to be heard in court on July 26, according to Business Day.<\/p>\n
VR Laser has been doing business with Denel for the past 15 years, Public Enterprises Minister Lynne Brown said in April.<\/p>\n
The formation of the VR Laser-Denel joint venture was announced in January this year, but the deal was mired in controversy \u2013 not only because of the interested parties \u2013 but also because the partnership was in contravention of the Public Finance Management Act.<\/p>\n
Denel, as a state-owned company, was obliged to secure a Section 54 application before it could launch partnerships and joint ventures.<\/p>\n
She refuted allegations that former Denel CEO and the board were dismissed to \u201cclear the way\u201d for the venture with VR Laser. \u201cIn fact, the CEO brought the deal to the board\u2019s attention three months into their tenure.\u201d<\/p>\n
VR Laser, partly owned by Ajay Gupta\u2019s eldest son, Kamal Kant Singhala, registered a joint venture with Denel Asia in Hong Kong. The deal is currently the subject of controversy, as National Treasury declared it illegal.<\/p>\n
The Guptas, close friends of President Jacob Zuma, have been in the spotlight this year over allegations of state capture.<\/p>\n
While no criminal proceedings have yet been brought against the Guptas, the Public Protector last week was promised half of its R3m by Treasury to start its investigation into government state capture. In addition, the Hawks are busy with an inquiry into three affidavits brought to them by the Democratic Alliance, Cope and MP Vytjie Mentor regarding the Guptas and state capture.<\/p>\n
The Guptas have often welcomed an investigation, saying they have done nothing wrong.<\/p>\n
Ajay Gupta told the SABC last month he believes the idea of state capture is an imaginary concept created by the media. \u201cIt is mind capture, it is media capture,\u201d he said.<\/p>\n
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