DISCUSSION AND EVIDENCE OF STATE CAPTURE: THE DENEL CASE - THE PEOPLE'S TRIBUNAL ON ECONOMIC CRIME - 7 FEBRUARY 2018 MR BEN THERON - CHIEF ...
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DISCUSSION AND EVIDENCE OF STATE CAPTURE:
THE DENEL CASE
THE PEOPLE’S TRIBUNAL ON ECONOMIC CRIME - 7 FEBRUARY 2018
MR BEN THERON – CHIEF OPERATING OFFICER
AGENDA • Background - the Denel Board • Criminal charges against the chairperson of Denel – Mr Lugisani Daniel Mantsha • Irregular joint venture between Denel and VR Laser Asia to establish Denel Asia
THE DENEL BOARD
A NEW BOARD FOR DENEL
• 24 July 2015
– New board appointed by Minister Lynne Brown;
– Minister Lynne Brown commended outgoing
board – referred to Denel as on a path to
positive sustainability;
– Daniel Mantsha appointed as non-executive director and chairperson of the board;
– The rest of the board was new, except Mr Johannes Motseki.
THE REALITY OF THE NEW BOARD
• Under the new board:
– Operational expenses went up from 1500
R939m to R1,483m;
ZAR Millions
1000
– Nett profit increased from R270m in 2015
500
to R 395m in 2016, but decreased to
R333m in 2017; 0
2014
2015
– When measured against operational 2016
2017
Financial Year
expenses, Denel was in financial
Operational Expenses
downward spiral.
Net Profit
THE REALITY OF THE NEW BOARD
• Mr Johannes Motseki
– Only “old” board member to be retained;
– Involved with the Gupta family in 2010;
– Mr Motseki’s company (he was the sole director) was allocated 1.3% in the
Gupta owned Shiva Uranium;
– Guptas sponsored a trip to Mumbai and Delhi in 2010;
– As treasurer of the MK Veterans Association he facilitated a donation of
R850,000 from the Guptas to fund a conference.
THE REALITY OF THE NEW BOARD • The list of new board members – not the original list prepared by DPE. • As the State Capacity Research Project notes, the new Denel Board “also lacked skills and experience: there was, for example, not a single engineer (Denel being a highly technical SOE) and most never served on a corporate board before”. • The chairperson appointment – Mr Daniel Mantsha – raised many questions.
THE REALITY OF THE NEW BOARD
• Mr Daniel Mantsha
– Shortly after his appointment, Mr Mantsha suspended the following Denel employees:
• CEO - Mr Riaz Salojee;
• CFO - Mr Fikile Mhlonto; and
• Company Secretary - Ms Elizabeth Africa.
– No formal reasons given for the suspensions at time.
– Subsequent charges were questionable.
– Strong suspicions that the three company managers were suspended to make way for
the Denel – VR Laser Asia deal.
DANIEL MANTSHA
DAN MANTSHA – GUPTA RELATIONSHIP
• #GuptaLeaks
– Evidence obtained from the email server of Sahara Computers shows improper
relationship between Mr Daniel Mantsha and the Guptas.
– The improper relationship was investigated.
– OUTA laid charges against Mr Mantsha in September 2017.
A full report on Mr Mantsha will be discussed and a written report will be submitted to the TribunalDAN MANTSHA – CORRUPTION & FRAUD CHARGES
• Background information:
– Mr. Mantsha is an attorney - obtained a B Juris in 1991 and LLB in 1993 both from the
University of Venda.
– Current director of Lugisani Daniel Attorneys and Lugisani Management.
– Became non-executive director and Chairperson of Denel Board in July 2015.
– Served as Minister Faith Muthambi’s legal advisor (Department of Communications).
– Mantsha was struck from the roll of practising attorneys in 2007.
– Re-admitted in December 2011.EVIDENCE - #GUPTALEAKS
AUTHENTICITY OF THE #GUPTALEAKS
• OUTA obtained #GuptaLeaks.
• Authenticity of the emails:
– Analysed by cyber forensic team.
– Authenticity of emails was confirmed through an analysis of metadata in
email headers.
• Authenticity of contents can be tested in court.TIMELINE OF ACTIVITIES (EVIDENCE)
Date Description
3 August 2015 Ashu Chawla applies for a 3 month tourist visa for Mantsha. The visa applications
clearly show that the Guptas are planning to take Mantsha on trips to Dubai and India,
presumably to promote their Denel/Denel Asia plans.TIMELINE OF ACTIVITIES (EVIDENCE)
Date Description
3 August 2015 Mantsha’s office (info@lugisanimantshaattorneys.co.za) sends an e-mail to Ashu Chawla with a
copy of his municipal account attached. The message in the mail reads “For urgent attention”.TIMELINE OF ACTIVITIES (EVIDENCE)
Date Description
6 August 2015 Mantsha was flown to India, in the Gupta’s jet (ZS-OAK). He was accompanied on this flight by Mrs
Angoori Gupta, Mr Rajesh “Tony” Gupta, Mrs Arti Gupta, Mr Sashank Singhala, Mr Amankant
Singhala, Mr Salim Essa and the Gupta body guard Mr Gysbert van den Berg.
8 August 2015 Mantsha was a passenger on the Gupta owned Jet (ZS-OAK) that flew back from India (Mumbai –
Delhi) to South Africa on 9 August 2015.TIMELINE OF ACTIVITIES (EVIDENCE)
Date Description
6 – 8 August Mantsha stayed at the Club ITC in India. The invoice is made out to Mr Mantsha with Sahara’s
2015 South African address as the reference address and as reference to SES Technologies, a Gupta
owned company in India. It clearly shows that the invoice was for Sahara’s South Africa address.TIMELINE OF ACTIVITIES (EVIDENCE)
Date Description
29 September Mantsha’s office (info@lugisanimantshaattorneys.co.za) sends an e-mail to Ashu Chawla with a
2015 copy of his passport attached. Ashu Chawla send the copy of Mantsha’s passport to Halima
Allana at Travel Excellence (Travel Agency) with an instruction to apply for a Dubai visa.TIMELINE OF ACTIVITIES (EVIDENCE)
Date Description
28 November Mantsha received a mail from Marietjie Strydom from Denel. Attached to this mail is a PFMA
2015 Section 54(2) Pre-notification on the Proposed formation of Denel Asia, from Lynne Brown,
Minister of Public Enterprises. The letter from the Minister is clearly marked “Confidential”. On
the same day, Mantsha forwarded this notification to Ashu Chawla.TIMELINE OF ACTIVITIES (EVIDENCE)
Date Description
30 September 2015 Travel Excellence received the Dubai visa for Daniel Mantsha and forward it to Ashu Chawla
and confirm the booking for Mantsha to fly back from Dubai to South Africa on 6 October
2015 and attached the electronic ticket.TIMELINE OF ACTIVITIES (EVIDENCE)
Date Description
30 September 2015 Ashu Chawla send a mail to the Oberoi Hotel informing them that Mantsha will be a guest
there together with Duduzane Zuma. Hours later the Oberoi Hotel confirm the booking for
Mantsha from 3 Oct to 9 Oct. Chawla informs the Oberoi that Mantsha will check out on the
6th of October 2015 and the Oberoi confirms that the Mantsha booking has been changed as
instructed.TIMELINE OF ACTIVITIES (EVIDENCE)
Date Description
6 October 2015 After his stay in the Oberoi Hotel, Mantsha flies back from Dubai to OR Tambo on flight SA7163
with a ticket booked and paid for by the Gupta company – Westdawn Investments (Pty) Ltd. The
amount paid for the flight ticket - R33,280.00.TIMELINE OF ACTIVITIES (EVIDENCE)
Date Description
31 October 2015 Mantsha sends a letter that was prepared and sent to the Minister of Finance to Ashu Chawla.
The content of the letter is Denel’s PFMA Section54(2) pre-notification for the proposed
formation of Denel Asia.TIMELINE OF ACTIVITIES (EVIDENCE)
Date Description
23 November Mantsha received an email from Keromamang Mhlongo from the Department of Public
2015 Enterprises. The annexure to the email was Minister Brown’s response to Denel’s notification
to her regarding the proposed tie up of the Denel joint venture. The email was marked
confidential and was meant to advise the government and the Denel executives in their
dealings with the Gupta’s.TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 28 November Mantsha forward the confidential letter he received from the Minister on 23 November 2015, 2015 to Ashu Chawla. He used his law firm’s email address to send this information to the Guptas.
TIMELINE OF ACTIVITIES (EVIDENCE)
Date Description
3 January 2016 Mr Ashu Chawla confirmed travel arrangements for Mr Mantsha. Mantsha was booked into
the Oberoi Hotel in Dubai from 3 – 6 January 2016. Chawla arranged a concierge service for
Mantsha to the exclusive housing estate in Dubai, L35 Emirates Hill, where the Guptas reside.
Mantsha arrived from OR Tambo International at the Dubai airport on flight EK768 at 19:20.
During this time, 4 – 5 January 2016 Matshela Koko of Eskom also stayed at the Oberoi Hotel on
the Gupta’s expense.CHARGES
• On 30 August 2017 OUTA laid criminal charges of Corruption and Fraud against Mr Mantsha.
• Remarks:
– Mantsha is an attorney and served as Minister Faith Muthambi’s legal advisor at the
Department of Communications.
– With his qualifications and professional experience -should have known better as to accept
favours from the Guptas.
– Sharing confidential documents and accepting favours from a company who wants to partner
with a SOE, was unethical, irregular and criminal.
– As a lawyer and a former advisor for a minister he should have known that he was grossly
violating the regulations of the PFMA.IRREGULAR JOINT VENTURE TO ESTABLISH DENEL ASIA
DENEL ASIA – JOINT VENTURE • Mr Mantsha oversaw conclusion of the Denel Asia joint venture between Denel and VR Laser Asia. • VR Laser Asia - wholly owned by Salim Essa (known Gupta business partner). • Mr Essa has an associate company of VR Laser Services, a South African steel cutting business. • Westdawn Investments (t/a JIC Mining Services) has a 25% stake in VR Laser Services, and Salim Essa has a 75% stake (Duduzane Zuma and Tony Gupta control Westdawn Investments).
DENEL ASIA – JOINT VENTURE
• VR Laser Services is registered to Sandton Office Park where Gupta businesses are based.
• VR Laser Services has three directors:
– Salim Essa, Pushpaveni Govender (a director of other Gupta companies) and Kamal
Singhala (family).
• 10 December 2015:
– Day after Des Van Rooyen appointed as Minister of Finance,
– Mantsha submitted Denel’s application to National Treasury for approval of the Denel Asia
joint venture. The venture was formally announced in January 2016.
– The joint venture was concluded by Denel without approval from the Minister of Finance or
the Minister of Public Enterprises, as prescribed by the Public Finance Management Act.DENEL ASIA – JOINT VENTURE
• The incentive - allegedly a US $4 billion tender to deliver long range artillery to the Indian army.
• The terms of the deal were weighted heavily in favour of the Guptas.
• Drafts of the joint venture agreement forwarded to the Guptas and Mr Richard Seleke (DG of
Public Enterprises) show Denel gave up its intellectual property to Denel Asia.
• Done for a promise of a R100 million marketing contribution from VR Laser Asia treated as an
interest- bearing shareholder’s loan to the company by VR Laser Asia.
• Denel Asia proposed joint venture with an Indian investment company controlled by Anil Gupta
and Adani Enterprises allowing the Indian investment company right of first refusal to
manufacture any products that Denel SOC Ltd. had licenced Denel Asia to manufacture or sell.DENEL ASIA – JOINT VENTURE
• In the 2015/16 Denel Annual Report Mr Mantsha in his capacity as the Chairperson of Denel said
the following in an attempt to justify the Denel – VR Laser joint venture:
– “Denel still sees massive potential for growth in the Asia-Pacific region which will soon
command more than half of global defence procurement outside of the United States. At a
time when defence budgets are contracting in many countries, Asia-Pacific is expanding and
opportunities are opening up for Denel to find new markets for our world-class products,
especially in the fields of artillery, armoured vehicles, missiles and unmanned aerial vehicles.
The establishment of Denel Asia as a joint venture in Hong Kong was done to create a
stronger foothold in this region. We are currently looking at various options to address this
market”.You can also read
