‘Entering into agreement with Gupta-owned VR Laser was wrong’

Former CEO of DLS, which is a subsidiary of Denel, Stephan Burger has conceded at the State Capture Commission in Johannesburg that entering into an agreement with Gupta-owned VR Laser without the board’s approval and procurement requirements were wrong.

The commission has heard that Denel irregularly awarded Gupta owned VR Laser a R200 million tender for the sourcing of armored vehicles. This is despite the fact that Denel’s own subsidiary company LMT holdings had quoted Denel R100 million less than VR Laser.

Burger says, “They did submit an unsolicited offer, at a time, that I did not have group approval. It went through the process and it was decided but I thought, at the time, that’s the only way to reduce the price, but I do accept that that should not have been done.”

State Capture Inquiry part 2:

Meanwhile, Denel Group CEO Talib Sadik says the Judicial Commission of Inquiry into allegations of State Capture, corruption and fraud in the public sector has contributed to the firm’s reputational damage.

Sadik made these comments after former CEO Zwelakhe Ntshepe conceded that he failed to act in the company’s best interest when he approved the awarding of a multimillion-rand 10-year contract to Gupta-owned VR Laser, in breach of Denel’s own procurement processes.

Sadik says, “It’s the financial challenges that, as a result of the poor leadership that we had in place, that we were not strong enough. State Capture definitely made a contribution to the reputation issues that we are suffering, not only locally but globally as well, because we operate in many countries across the globe. Locally, with our lenders as well, it has made them very nervous to be associated with Denel and to be providing funding as one stakeholder.”

State Capture Inquiry proceedings: