Denel runs to Guptas: Arms group head ‘gave them top-secret info’

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GRAEME HOSKEN, SIKONATHI MANTSHANTSHA, GENEVIEVE QUINTAL and KYLE COWAN | 2017-06-05 06:02:45.0

The information was about a major transaction the group was working on that involved setting up a joint venture in Hong Kong. Mantsha’s contact with the Guptas began soon after his appointment to the Denel board on July 24 2014.

A tranche of e-mails has revealed what appears to be highly damaging correspondence between Mantsha and the Gupta family about the establishment of Denel Asia, a joint venture between the group and associates of the Guptas.

Mantsha, who failed to respond to numerous calls to his cellphone, or to Telgram and SMS messages sent yesterday afternoon, is ultimately in charge of oversight and governance at Denel.

A spokesman for the groupreferred requests for comment to the Department of Public Enterprises. Its spokesman, Colin Cruywagen, last night responded: ”I don’t think it is wise at this point to comment on emails of uncertain origin.”

Other damning e-mails show Mantsha sending the Gupta family his personal bills. It is not known if they were paid.

Having met resistance from national Treasury now for more than a year, the joint venture would have been 51%-owned by Denel, with 49% held by VR Laser Asia, a company in which Oakbay Investments has a strategic alliance through associate Salim Essa.

Oakbay is the Guptas’ holding company which owns a minority stake in VR Laser SA. But, for it to go ahead with the investment, Denel needed the approval of the finance minister.

Nhlanhla Nene was fired as finance minister nearly three weeks after Mantsha’s correspondence with the Guptas. His replacement, Des van Rooyen, only lasted four days. Denel asked for approval on the Friday that Van Rooyen was appointed.

Earlier this year Denel took finance minister Pravin Gordhan to court, in a bid to force the minister to approve the joint venture. He was fired at the end of March.

In an opposing affidavit in May 2017, former Treasury director-general Lungisa Fuzile said VR Laser SA did not appear to be in a position to finance its contribution to the joint venture.

“VR Laser SA runs its business operations and capital commitments through loan-financing raised from its shareholders. The shareholders have been identified as politically exposed persons,” Fuzile said.

Leaked e-mails show that on November 23 2015, at 2.30pm, Mantsha received an e-mail from Keromamang Mhlongo, of the Department of Public Enterprises, whose minister, Lynne Brown, has political oversight of Denel.

Titled “PFMA Section 54(2) Pre-Notification on the Proposed Formation of Denel Asia,” the e-mail is Brown’s response to Denel’s notification to her of the proposed tie-up. The e-mail is marked “confidential” and is meant to advise both Denel executives and the government in their dealings with the Guptas.

Five days later, on November 28 2015 at 2.59pm, Mantsha forwards Brown’s e-mail, using his law firm’s address, to Ashu Chawla, CEO of Sahara, another Gupta entity.

In her e-mail, Brown agrees with Denel that the Pacific Asia defence market “will remain on an upward trajectory for the foreseeable future”.

However, she warns that the Asian market is likely to be “daunting” for the new entrant [Denel Asia]. She goes on to instruct the Denel board to protect Denel’s status as the holding company.

Brown asks for a comprehensive due diligence report on the financial, legal and regulatory implications for setting up a joint-venture company in Hong Kong.

She asks for an explanation of how Denel chose VR Laser as a partner, about the structure proposed for the new entity and for a breakdown of estimated operational costs with a five-year budget, indicating cost allocations for both parties.

It is not only the Denel information that Mantsha appears to have shared with the Guptas.

On August 3 2015, Mantsha sent his municipal rates bill of R14 238 for his Randburg home, dated June 11 2015, to Sahara’s Chawla, saying: “Please find the attached document for your urgent attention.”

Other correspondence shows that Mantsha flew first class from Dubai to Johannesburg on October 6 2015. The ticket was sent by a travel agent to Chawla, with the subject line “Rajesh/Mantsha”.

This weekend the Sunday Times said Public Enterprises director-general Mogokare Richard Seleke was involved in passing confidential government correspondence to the Guptas, a claim he denies.

Defence analyst Helmoed-Romer Heitman said the VR Laser-Denel Asia idea made no sense.

“The company was to be based in the Chinese territory of Hong Kong. China is enemy number one in Asia.

“One needs to ask why any of these countries would want to buy military equipment from a South African company based in China.

“Those behind this idea did not bother to think – unless they did not plan to sell anything.”

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