Gordhan’s criticism ‘unsubstantiated, baseless, unfounded’, says Denel

STATE-owned arms company Denel on Thursday responded to a scathing diatribe by Finance Minister Pravin Gordhan, saying the criticism was “unsubstantiated, baseless and unfounded”.

In what is set to escalate the war of words between Mr Gordhan and the company over a deal involving the politically-connected Gupta family, Denel said the board was “taken aback by the minister’s statements, which are a clear violation of the undertakings given by National Treasury and also a flagrant violation of chapter three of our Constitution”.

“We appeal to the minister to refrain from making such comments and allow the engagement between Denel and National Treasury to reach its finality,” Denel said in a statement.

On Wednesday, Mr Gordhan hit out at the “arrogance and belligerence” of some boards of state-owned companies, singling out Denel as an example.

In his final comments on the budget vote debate in the National Assembly, Mr Gordhan said the Treasury had in recent times spotted a tendency that when boards of state-owned companies engaged in acts they were not meant to “they display a level of arrogance and belligerence that did not befit the right kind of corporate governance”.

“The board at Denel needs to take that message to heart,” he said.

But in its statement on Thursday, the Denel board said it wished to “categorically deny that the Denel board or its executives are arrogant and belligerent”.

Denel’s dispute with the Treasury is centred on the company’s joint venture Denel Asia, which it established in partnership with Gupta-linked company VR Laser. Denel went ahead with the venture without first obtaining Treasury approval, as required by the Public Finance Management Act (PFMA). The Treasury has not made a final decision on the matter.

On Thursday, Denel added: “Denel executives have in recent weeks met with National Treasury officials twice, addressing the misunderstanding relating to the establishment of Denel Asia. During the two meetings, amongst other things, it was agreed that neither National Treasury nor Denel would unilaterally make public statements on these matters until such time discussions are concluded.”

Denel said its board would continue to observe the highest standards of governance, and would above all ensure that applicable legislation like the PFMA is complied to in full, not only its letter, but also its spirit.

“The establishment of Denel Asia was done in compliance with section 51(1) (g) and section 54 (2) and (3) of the PFMA,” said Denel.



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