South Africa

DAYS OF ZONDO

Vague reasoning given to state capture commission on lack of disciplinary hearing for suspended Denel executives

Vague reasoning given to state capture commission on lack of disciplinary hearing for suspended Denel executives
Former Denel board chairperson, Daniel Mantsha. (Photo: Papi Morake/Gallo Images)

The question of why no disciplinary hearing was accorded to three top Denel executives, despite stating there was incontrovertible evidence they were guilty of serious misconduct, was the central question put to former Denel board chairperson Dan Mantsha by the Commission of Inquiry into State Capture on Friday.

Denel CEO Riaz Saloojee, CFO Fikile Mhlontlo, and company secretary Elizabeth Africa were suspended by the Denel board on charges of misconduct in September 2015.

All but one member of the non-executive board had been replaced less than three months previously following an announcement by then minister of public enterprises Lynne Brown on 24 July. Dan Mantsha replaced Martie Janse van Rensburg as board chairperson.

AmaBhungane, in 2016, reported that four sources who sat on the previous board, but asked not to be named, confirmed being told that a month before the new board took over, Saloojee was warned he would be pushed out. 

It was believed that the boardroom coup was to enable Gupta-aligned company VR Lazer to obtain lucrative contracts from the state-owned company.

Saloojee had already signed off on a R200-million deal with VR Lazer to build vehicle components for the ill-fated Project Hoefyster programme. 

The axing of top executives at Denel has echoes with the axing of top Eskom executives, allegedly due to Gupta influence.

Amidst this background, the Commission of Inquiry heard on Friday that instead of holding a disciplinary inquiry as soon as possible after Saloojee, Mhlontlo and Africa’s suspensions in 2015, they remained on full pay with no hearing ever taking place. In Saloojee’s case, the company paid him for a total of 17 months until his contract expired, and paid him an additional amount equivalent to six months full salary. 

This was despite requests conveyed via the attorney representing the suspended officials, that a disciplinary inquiry be undertaken as soon as possible. Had this taken place and the officials found guilty, Denel could have dismissed them and avoided having to continue paying their salaries.

Combined with assertions from Mantsha — who as a lawyer was employed by Zuma for two years — that there was no possibility a disciplinary inquiry would not have found them guilty, commission chairperson Deputy Chief Justice Raymond Zondo failed to understand why a disciplinary inquiry was not held. 

This, said Justice Zondo, supported Saloojee’s testimony that he and the other two executives were suspended “not because of proper grounds, but because of some other agenda”. 

Zondo noted that the evidence before the commission was that in December 2015, three months after their suspension, Denel offered to resolve the matter by paying them money. This offer was rejected, with a renewed insistence on a disciplinary taking place so they could prove their innocence.

Addressing Mantsha, Zondo said thereafter: “you proposed mediation, and at the mediation they insisted they wanted a disciplinary hearing to clear their names. That’s why the mediation failed.” 

Then, referring to letter from Mantsha dated 17 March 2016 presented by evidence leader advocate Paul Kennedy SC, in which Saloojee is informed his contract (which ran until January 2017) would not be renewed yet he would continue to be suspended on full pay until then, he pressed for why a disciplinary inquiry was not held.

“… yet the employees keep saying bring it on, let’s have the hearing.

“You could say come next week for a hearing, we have the evidence, we believe you will be found guilty, then we don’t have to pay you for ten months.”

This was despite claims that Denel had “strong evidence” of “serious misconduct”.

Mantsha did not provide a direct or concise answer, instead provided “context” that Saloojee was not suspended because he was an obstacle to Denel entering a R200m deal with Gupta-owned VR Lazer, as it was Saloojee who had brought VR Lazer to Denel.

Although brought back to the question of why a disciplinary inquiry was not held despite the insistence by the suspended executives, Mantsha again veered off to state Saloojee had a longstanding relationship with Gupta dealmaker Salim Essa and how VR Lazer was the only company black empowerment partner that “plays in the space” of Denel’s requirements.  Mantsha also that, while in London, Saloojee had “cried” and pleaded with him that he should not be fired after concluding a six-month bridging finance deal with Nedbank when such a financing facility had been approved by the ministers of finance and public enterprise for a five-year period.

It was this bridging finance deal outside the approval of the ministers, meaning Denel had to come up with R450m in six months, which formed the basis for the suspension, said Mantsha.

Again, Zondo brought him back to the central question of the lack of disciplinary proceedings, leading Mantsha to say that the lack of disciplinary proceedings did not mean there was not serious misconduct.

Zondo noted that the fact there was serious misconduct and Mantsha was adamant the executives would have been found guilty in a disciplinary inquiry only strengthened the case for holding a disciplinary inquiry without delay.

“The delay was not on the part of the board,” responded Mantsha, “the board acts through functionaries – human resources, company secretary, head of legal…”

Asked what steps the board then took against the Denel management who according to the board were not doing their job properly, Mantsha said they had to remove those employees who were acting in those positions at the time.

Mantsha’s testimony continued on Friday afternoon. DM

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