Another Gupta “partnership” targeted by Treasury as Denel in its crosshairs

Now that the gloves are off, South Africa’s National Treasury is starting to unravel the astonishingly deep network of influence which the immigrant Gupta family enjoy within State-owned enterprises. The phoney war between Finance Minister Pravin Gordhan and Gupta ally, SA President Jacob Zuma, ended with this week’s hard-hitting statement by Treasury on Eskom. The Guptas have substantial commercial relationships with the electricity utility and a powerful presence in the boardroom through their hired gun Mark Pamensky. Hard on its heels comes an equally abrasive attack on State-owned arms manufacturer Denel because of alleged “agreements” with the family. Denel and the Guptas claim there is no relationship between the parties. Treasury doesn’t buy that story. For context, in 1994 the Guptas from dusty Saharanpur in Northern India arrived in SA with just over R1m in capital and zero knowledge of the mining, computer and media sectors. The value of their interests in those complex sectors now runs into billions. They claim the wealth was accumulated through their business brilliance. Others, including National Treasury are not so sure. Some senior ANC members claim the Guptas offered them positions in SA President Jacob Zuma’s cabinet. The family says it has been victimised by the media and has announced it is selling up and leaving the country, presumably in their private jet to regroup at the family’s R500m home in Dubai.  – Alec Hogg 

By Vernon Wessels and Xola Potelwa

(Bloomberg) — Denel SOC Ltd., the South African state-owned arms maker, said it will fight National Treasury’s efforts to block a deal to market its products in Asia with a company that has been tied to the Gupta family, who are friends with President Jacob Zuma.

“Denel views the threat by the National Treasury to bring a court action to stop the Denel Asia joint venture as political, sheer opportunism and grandstanding,” the Pretoria-based company said in an e-mailed statement on Tuesday. “Denel will vigorously oppose it.”


The state defence company had informed Treasury in late October that it planned to create a unit in Asia and held meetings with the ministry and Department of Public Enterprises in December about its intentions, without receiving objections to the proposal or any reply to its application, Denel said.

It was only in February, when it emerged that the Guptas were involved, that Treasury sent a request for further information, the company said.

Denel in January entered a joint venture agreement with VR Laser Services, in which the Gupta family investment vehicle holds a minority stake, the family’s spokesman said on Feb. 6. Salim Essa, a business partner of the Guptas, is a director of VR Laser. The company’s objections to the Treasury’s actions follow a week of political and market turmoil after reports Finance Minister Pravin Gordhan could face arrest.

Opposition parties and analysts have speculated that Zuma, whose son is in business with the Guptas, may use a police investigation into Gordhan to install a more compliant head of the Treasury. Treasury this week said that state-owned utility Eskom Holdings SOC Ltd. is resisting its efforts to review coal-supply contracts with Tegeta Exploration & Resources Ltd., also part-owned by the Gupta family, and ignores the department.

The Gupta family announced Aug. 27 that they plan to sell all shareholdings in South Africa by the end of the year. The Treasury didn’t immediately respond to an e-mailed request for comment outside of normal business hours.

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