Former Denel CFO spills the beans on R12.7m bailout to cash-strapped company
Pieter Knoetze, the former chief financial officer of Denel Land Systems (DLS), an armoured vehicle manufacturer, admitted that his company gave the cash-strapped Land Mobility Technologies (LMT) a bailout of R12.7 million in April 2010.
Knoetze was testifying before the Commission of Inquiry into State Capture on Monday.
His appearance forms part of the Commission's leading evidence of how the Gupta family allegedly took control of Denel through its company, VR Laser.
Knoetze told of how the DLS board took a “unanimous decision” to bail out LMT which experienced financial difficulties in 2010.
The payment, he said, was made ahead of the DLS acquisition of 51% shareholding in LMT in 2012.
According to Knoetze, the payment of R12.7m was to guarantee supplies from LMT, adding it was a risk-free payment.
“The advanced payment was to secure certain assets of LMT and to minimise the risk that could be suffered by DLS. It was seen as a short-term solution to the problems experienced by LMT. LMT was also due to receive funding from the Industrial Development Corporation,” Knoetze said.
He was adamant that the entire board supported the move to acquire 51% shares at LMT, saying the move was to ensure that both entities supported each other in the armoured vehicles manufacturing industry.
However, Knoetze could not assist the commission in its probe about the involvement of Gupta-linked VR Laser in the affairs of Denel, saying he was no longer involved in that project.
In 2012, Denel awarded LMT a contract to design and manufacture the Hoefyster project, which was supposed to generate an estimated income of R100m a year for a period of 10 years, with Denel funding the full operations.
Apparently, trouble began in 2015 when VR Laser was allegedly awarded the remaining Hoefyster project. That prompted LMT to approach the North Gauteng High Court in July 2016, in which it accused Denel of having reneged on its promise.
The hearing continues.