Johannesburg - State-owned arms manufacturer, Denel, announced on Friday that it has ended its involvement with the Gupta-linked VR Laser Asia.
Denel and VR Laser Asia had been in a joint-venture in Asia, Denel Asia, but negative media scuppered the partnership. Denel said it exited the Asia joint-venture following a focus of negative attention from the media to the detriment of its brand, both locally and internationally.
"Denel conducted continuous assessments of the untenable atmosphere caused by the establishment of this JV and took a resolution to exit the Denel Asia JV and explore alternative marketing approaches to access the Asia Pacific market," Denel said in a statement.
"This therefore brings us to a point where we can officially report that Denel SOC has ended its involvement in the Denel Asia JV. We have exited the JV."
In January 2016, Denel announced that it wanted to partner with Asian-based business of VR Laser as a vehicle to penetrate the Asia-Pacific markets which has seen year-on-year increases in spending, in excess of 20 percent, making it one of the top spending regions on defence equipment in the world.
Salim Essa, a business associate of the Gupta brothers, is the sole shareholder of VR Laser Asia. The Gupta brothers have been fingered in a series of media reports alleging that they had undue influence in top government structures that saw their companies score massive tenders.
In May this year, former National Treasury’s director-general, Lungisa Fuzile, said in court papers that VR Laser SA was a technically insolvent company and did not appear to be in a position to raise the funds that would enable VR Laser Asia to establish the joint-venture with Denel.
Fuzile filed an affidavit with this claim in response to Denel’s high court bid to acquire approval for the joint venture, Denel Asia.
Denel Asia has not traded on instruction from the Public Enterprises Minister and Denel board to allow the engagement process with National Treasury.
Treasury had been opposed to the transaction because the business case might not have complied with all legislative governance processes.
On Friday Treasury spokesperson, Mayihlome Tshwete, said they "welcome" the withdrawal of Denel from the deal.
African News Agency