Johannesburg - The Zondo commission will continue to hear Denel-related testimony on Wednesday.
Former group supply chain management executive Mandlenkosi Dennis Mlambo, Xolani Mlipha and Phumlane Nkosi are expected to take the stand.
On Tuesday, Mlambo told the commission that the state-owned aerospace and military technology company manipulated supply chain processes to favour Gupta-owned company VR Laser.
He said he brought the matter to the attention of Denel’s then group chief executive Riaz Saloojee and group chief financial officer Fikile Mhlontlo.
He queried awarding the contract to VR Laser for 200 Badger armoured vehicles to Denel for the SA National Defence Force for more than R262 million while LMT Holdings, of which Denel owned 51% at the time, had quoted R165m.
According to Mlambo, there were huge price differentials between LMT Holdings and VR Laser.
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”It didn’t make sense that people would be so anxious to pay R100m more which would erode Denel Land Systems’ bottom line,” said Mlambo, adding that the deal was preposterous to him and defied logic.
Former Denel Land Systems (DLS) supply chain management executive Celia Malahlela on Tuesday told the commission her bosses favoured VR Laser in deals worth hundreds of millions of rand.
Malahlela testified that she wanted the contract to go out to open tender instead of appointing VR Laser to supply fabricated components to Denel for three years. She said VR Laser was appointed without her knowledge and that her direct boss never advanced any reason why he decided against the open tender route.
“It is not true that supply chain management supported the awarding of the contract to VR Laser,” Malahlela said. The submission was amended to reflect that supply chain management supported the award, she said.
She had highlighted her concerns to Mhlontlo and informed him that she was unhappy with how the matter was handled.
When she raised her concerns, she was told the agreement with VR Laser superseded Denel policies.
Commission chairperson Deputy Chief Justice Raymond Zondo said he found it quite strange that the agreement superseded the policies and the law. “The agreement is supposed to align with policies,” Justice Zondo said. Malahlela said nothing like this had happened before and she would have opposed it in any case.
The memorandum of understanding with VR Laser, Malahlela testified, conflicted with the company’s policy and she had informed Mlambo.
She said Mlambo refused to sign the document and approve the deviation retrospectively and had only scribbled at the back.
Malahlela asked former Denel Land Systems chief executive Stephan Burger to reconsider the agreements with VR Laser and terminate them.
She said she was concerned about the agreements with VR Laser as they failed to follow the proper processes.
The irregularities included that no request for proposals or open tender process had been followed and pleaded with Burger to carefully reconsider the relationship with VR Laser, according to Malahlela.
She said that in April 2016, VR Laser chief executive Pieter van der Merwe admitted there were ties between the company, the Guptas and former president Jacob Zuma’s son Duduzane.
Malahlela said Burger was negotiating with VR Laser, in a move she described as out of the ordinary.
She said she did not know what Burger discussed with VR Laser, but informed her he wanted the company to reduce its price. “I will discuss with them to reduce their price. I will discuss this outside the normal channels,” she recalled Burger telling her.
Malahlela agreed with Justice Zondo that Burger appeared very supportive of VR Laser being appointed.
Between 2003 and 2017 VR Laser had scored deals worth more than R516m from Denel Vehicle Systems, DLS and LMT Holdings.
Political Bureau