Communications and digital technologies minister Khumbudzo Ntshavheni is standing by her decision to suspend and eventually fire three former executives of state-owned company Denel.
This, after the second part of the report of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector found Ntshavheni participated in the decision to suspend and fire the three Denel executives in 2015.
Ntshavheni was a non-executive director at the company from 2015 to 2018.
The Zondo report notes the decision to dismiss the three executives – CEO Riaz Saloojee, chief financial officer Fikile Mhlontlo and group company secretary Elizabeth Africa – was flawed as the trio were not given a chance to go through a disciplinary hearing process.
It adds that by firing the three, this enabled the state-owned company to be captured by the Gupta enterprise.
The Zondo Commission recommended the former Denel board members, including Ntshavheni, be investigated by law enforcement.
Transparency, completeness of facts
Ntshavheni issued a statement on Twitter last week addressing the allegations.
Says the minister: “The Presidency’s release of the second volume of the report by the Commission of Inquiry into allegations of State Capture elicited interest from the media and other sectors about my role of the dismissal of the then chief executive officer, chief financial officer and company secretary when I was non-executive director at Denel.
“I have noted the commission has recommended that the board of directors of which I was a member between July 2015 and March 2018 must be investigated (where possible) for failure to carry out its fiduciary duties as it relates to the suspension and ultimately dismissal of the three executives.”
She notes that as a law-abiding citizen who supports the good work of the commission in investigating corruption and fraud maleficence, she will fully co-operate with such an investigation.
“Whilst we await a decision on such an investigation, and given the media coverage on this matter, it is necessary that I make this public statement.
“In the interest of transparency and completeness of facts, I have decided to make public my affidavit submitted to the commission on 27 August 2021. My submission clearly provides reasons for the board’s alleged failure to hold a disciplinary inquiry, or expeditiously conclude the disciplinary process of the then three executives.”
The brief summary of the submission, according to the minister, is as follows:
- The then head of legal and company secretary of Denel, who was responsible for assisting the board to process the matter, deliberately frustrated any efforts to the board to proceed with the disciplinary action against the three executives (I deal with extensively on pages 17 to 19 of my submission).
- As a leader who embraces sound corporate governance, with the benefit of hindsight and all the facts at my disposal, I would still support the decision to dismiss the three executives.
- The failure by these three executives to exercise their fiduciary duties put Denel in a precarious financial position.
- Mr Talip Sadik, who was appointed as a board member of Denel in 2018 and subsequently acting group CEO, during his testimony at the commission regarding the Land Systems South Africa (LSSA) transaction, supported the decision of the 2015 board to suspend and ultimately dismiss the three executives.
- Mr Sadik testified at the commission that the findings of the draft Dentons Report approved by the 2018 board would be 95% similar to the final report (refer to pages 44 to 45 of Mr Sadik’s testimony which is attached for ease of reference).
- Mr Sadik’s testimony before the commission inter alia stated the following: (a) “Denel has not fully complied with the approvals received from the ministers (departments of public enterprises and finance) in terms of the conditions and with one particular condition related to the funding arrangement of the transactions becom(ing) more onerous to Denel. (b) Denel has to revert to minister to inform the minister on the changing of the funding mechanism and that did not happen. (c) The original PFMA application process stated that the loan with Nedbank will be a five-year loan but in fact once the acquisition was busy being concluded, Nedbank had changed the loan terms to five months, as a bridging finance. So that was quite a substantial change in the funding arrangement and in terms of the conditions that Denel had received in the PFMA (approval), we had (to) revert to the ministers on the change, which we had not done.”
According to Ntshavheni, Sadik’s testimony reflects similar points she made in her submission to the commission regarding the LSSA transaction.
“With the balance of the evidence, I would have expected the commission to, amongst other things, recommended a speedy and further investigation of the LSSA transaction where Denel lost almost a billion rand (R855 million, excluding interest).
“More so, when Denel’s acting GCEO indicated the company had briefed senior counsel on its options. As a committed patriot, I will be taking legal advice on how to progress this investigation because that LSSA transaction contributed to the current financial challenges that continue to haunt Denel.”
Discharging fiduciary responsibilities
She adds that the contracting of the VR Laser Company within Denel, in most instances, preceded her tenure as a non-executive member of the board of directors.
“On the two occasions the contracts were signed during my tenure, the DVS / VR Laser transaction was never brought to the board or any committee which I served.
“The other transaction that was concluded during my tenure which the commission did not seek my evidence on, is the Denel Asia joint venture, which I briefly dealt with in my submission (see page 15).
“As indicated in my submission, the Denel Asia joint venture was first introduced by the suspended GCEO Mr Salojee to the board at its first meeting the 10 September 2015.
“Regrettably, the minutes of the Denel board are classified and thus I cannot release them for public record. However, as a board member, I ensured the sad decision was taken in compliance with the law and taking in to account the evidence of the Department of Public Enterprises.
“I wish to put it on public record, as I have recorded it with the commission, that I have never met any of the Gupta brothers or any of their associates. I was never lobbied for the decision I supported or opposed as a non-executive member of the Denel board of directors.
“In conclusion, during my tenure as non-executive member of the Denel board, I always acted in the best interests of the company. I discharged my fiduciary responsibilities with rigour, integrity and in line with the required legislative and regulatory prescripts. I have never been party to any alleged acts of fraud, corruption, maladministration and state capture.”
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