The Gupta-linked mission to snatch South African-government owned intellectual property held by Denel through an offshore joint venture was masterfully engineered.
Lynne Brown had been installed as the Minister of Public Enterprises. A few months later there was a new director-general at the department. In between, a radical overhaul of the Denel Board, stripped of top-notch expertise, made way for the likes of a controversial lawyer, Daniel Mantsha, as the new chairman.
Testifying at the State Capture Commission on Monday, deputy director-general, Kgathatso Tlhakudi, lifted the lid for the first time on how Brown allegedly disregarded internal opinion about a new board.
This board would later actively pull strings to aid the Denel/VR Laser deal, one featuring Gupta kingpin, Salim Essa, Rajesh Gupta and Duduzane Zuma.
The changes were all perfectly timed and culminated in the appointment of Des van Rooyen as the new finance minister in December 2015.
The architects of this grand plan hadn’t bargained on the outcry over former president Jacob Zuma’s sacking of Nhlanhla Nene on 9 December 2015, Van Rooyen’s shafting four days later, and the return of Pravin Gordhan.
Having sent paperwork for the Denel deal to Public Enterprises on 10 December, it landed on the desk of the returning Gordhan, on Christmas Eve.
The formation of a joint venture between Denel and VR Laser Asia, a company acquired by the Guptas, was announced in January 2016. The deal triggered major controversy, among other things because the state-owned company had failed to secure Section 54 approval from the Minister of Finance in terms of the Public Finance Management Act.
The state-owned entity was sitting on R1.85-billion in government guarantees that necessitated Treasury scrutiny of its spending plans.
Denel was to make a significant contribution via intellectual property it owns on behalf of the government – essentially handing the country’s silverware in the arms manufacturing space over to a Hong Kong company with no discernible track record.
Tlhakudi detailed how Brown allegedly disregarded internal opinion on the deal and took over the process of appointing the new Denel Board.
He said she had arrived at DPE with the mission.
“She emphasised that she was the shareholder representative and that as officials, we should know our place.”
Sitting in a room for a meet and greet with the new minister shortly after Brown’s May 2014 appointment, Tlhakudi said, he had assumed this would be a chance for each of them to tell the minister who they were, and what their duties were.
But at that first meeting with senior staff, Brown allegedly gave them a “dressing down”, telling them: “You’re all captured.”
Tlhakudi then explained how a system of filtering candidates for board appointments was then removed from him when a colleague collected the file from his office.
He said he had been told his involvement was no longer necessary and that Brown would handle it herself.
But, despite having gone through a lengthy process of advertising for candidates and filtering the list to synchronise it with the expertise required for the Denel board, the next day, he said, he was simply presented with an “unrecognisable list of names”.
A quick Google search immediately flagged the chairman-designate, Daniel Mantsha – he has appeared for Zuma at the State Capture Commission – and Tlhakudi said his office sent a “polite” warning to the ministry. Nothing came of that.
The appointment of the “Manthsa board” triggered momentum for Denel’s Gupta-linked joint venture and the only person Brown retained for purposes of “continuity” was Johannes “Sparks” Motseki. The state-owned arms manufacturer had planned to enter into a joint venture agreement with VR Laser Asia, owned by Salim Essa, to enter the Asia-Pacific markets.
A strange choice, said Tlhakudi, as Motseki was one of the “weaker” members of the previous board.
The Public Protector’s State of Capture report released in late 2016 revealed that Motseki, in fact, held an interest in an entity that had acquired a stake in the Guptas’ Shiva Uranium mine.
“I did not hear anything about the process until a new list came out, along with a Cabinet memorandum that was later withdrawn.
“Seeing the memo on my desk, to sign, I was quite reluctant to get involved because I had had nothing to do with that process.
“I understood that the list emanated from the Minister,” Tlhakudi testified.
Next to go was a group of Denel executives, including then-CEO, Riaz Saloojee and CFO, Fikile Mhlontlo – suspended pending an investigation into alleged irregularities involving a deal with BAE Land Systems.
Tlhakudi told the commission that this new board had set off a snowball effect that resulted in declining performance by the parastatal.
He briefly sketched an overview of a graph showing Denel’s financial performance for the period 1999 to 2018. While there had been significant growth between 2011 and 2016, the tenure of the board that Brown replaced, revenue almost halved by 2017.
And, said Tlhakudi, the current Denel board is still dealing with the “repercussions of that Mantsha board”.
He also testified to how Seleke, since unmasked for his cushy Gupta-linked ties, allegedly told a group of staff at a meeting that they would be “thinned out”.
Seleke, he said, had called him to a meeting to draft a DPE memo on the VR Laser joint venture, allegedly done with input from Mantsha. This collaboration would have been highly irregular as DPE oversees Denel.
When he objected to Mantsha’s presence, Seleke allegedly settled him down, proceeded to wrap up the document and then went off with Mantsha to “see” the minister about it, Tlhakudi said.
He told the commission that he had burnt his fingers before in trying to speak out against irregularity. During his time at Armscor previously, he and a colleague drafted a memo to the executive to raise concerns about board involvement in procurement as they feared it would create fertile ground for corruption.
He was suspended and returned to work after then minister of defence, Lindiwe Sisulu, intervened.
However, as soon as Sisulu left following a Cabinet reshuffle, Tlhakudi said he was suspended a second time. That incident, he said, had left quite a mark on him.
“You also don’t want to become known as a troublemaker.”
But, he said, he wants to speak up for those who have been subjected to victimisation for daring to speak out.
“Some of them were much braver than myself.”
They have been removed from their jobs, lost their livelihoods and their homes.
“Now that we have a new minister, people are more confident to come forward.”
The commission resumes on Tuesday with testimony by former Denel board chairperson Martie Janse van Rensburg. DM