News

Axing at Denel has Gupta link

2016-04-18 07:00

Suspended Denel CEO Riaz Saloojee was axed unexpectedly on Thursday without being found guilty of any misconduct.

Saloojee and two of his top officials were suspended eight months ago, pending an investigation into “serious irregularities”.

Public Enterprises Minister Lynne Brown told the parliamentary portfolio committee on public enterprises two weeks ago that the three were being investigated for irregularities in the arms manufacturer’s profit statement.

But City Press’ sister newspaper, Rapport, has learnt that Saloojee was informed on Thursday that his employment contract was being terminated without any evidence or charges being brought against him.

Saloojee’s five-year contract with the arms manufacturer ended in January, but he received confirmation last year, before his sudden suspension, that his contract would be extended by another five years.

Jack Loggenberg, trade union Solidarity’s sector co-ordinator in the defence industry, says he does not expect Saloojee to accept the suspension of his contract without objection.

“I know Riaz. He will not take this lying down,” Loggenberg said.

Brown announced a new board for Denel in July last year. Six weeks later, Saloojee and two of his top officials – chief financial officer Fikile Mhlonto and company secretary Elizabeth Africa – were suspended.

It is widely speculated that the suspension of the three is related to the influence of the Gupta family in Denel’s business.

Since the new board took over, Denel registered as a partner an Asian subsidiary, Denel Asia, in Hong Kong in January with VR Laser, a company with strong Gupta ties.

The company is owned by Gupta business partner Salim Essa, and one of the Gupta brothers’ sons sits on its board.

Finance Minister Pravin Gordhan said last week that the registration of Denel Asia was illegal and contrary to the Public Finance Management Act.

Rapport also learnt that, before his suspension, Saloojee was repeatedly approached in 2014 and 2015 by other parties to become involved in arms deals, but he was not interested.

It was also learnt that there were attempts to put pressure on him to make “prescribed” appointments in Denel’s subsidiaries, and that his unwillingness to comply with these demands was the real reason for his suspension.

According to Loggenberg, who has been involved in labour negotiations with the manufacturer for 15 years, the treatment of Saloojee is shocking.

“Denel had clean audits under his guidance, while it was one of the few public companies that showed a decent profit.

There was a clear announcement to the unions last year that his contract would be renewed when it expired,” Loggenberg said.

“He has, therefore, been thrown to the lions without having done anything wrong.”

Loggenberg said he had heard that Saloojee had already appointed a top legal team to clear his name.

It is understood that disciplinary action is ongoing against Mhlonto. Sources close to the situation told Rapport that Africa was in negotiations with Denel last week over a settlement.

Saloojee did not respond to requests for comment.

Brown’s spokesperson, Colin Cruywagen, referred enquiries about the three suspended officials to Denel.

Denel did not respond to requests for comment.

Earlier, however, it said that staff negotiations were regarded as an internal matter.

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June 25 2017