In September 2015, the CEO, CFO and company secretary of Denel were suspended. The three executives never saw it coming; it was a quick axing which was painfully executed by a board which was hasty to begin its mandate.
According to the Zondo commission, that mandate was to prepare for the Gupta brothers to spectacularly take over major deals which would see them pocket millions.
Nonyameko Mandindi was the first to testify on Monday at the state enquiry about Denel. According to her, she became concerned when a special board meeting was held in July to discuss the conduct of CEO Riaz Saloojee, CFO Fikile Mhlontlo and company secretary Elizabeth Africa.
The meeting was supposed to look at details around Land Systems South Africa (LSSA) and a contract awarded to them but the board members didn’t even discuss it. Instead, a charge sheet was drawn up by the audit and risk committee and served to the executives.
“I was greatly troubled and concerned when the events unfolded in the meeting the way they did. I felt that suspending or releasing senior members in the organisation has had to have serious allegations levelled against them.
“These things are very disruptive to entities and I just felt that we didn’t even have something…a report that is written as a board that we could apply our minds to. It just happened too fast from July to September, it was a bit too much.
“I wanted to objectively evaluate if it was a wise decision or not. It was communicated to the board at the meeting and LSSA deal was not discussed,” said Mandindi.
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Having served on the boards of companies in the private sector and being a skilled quantity surveyor, Mandindi was shocked at how process was not followed. Instead, the board compiled a report which was scant on information and high on the shortcomings of the executives.
“Disciplinary process was not yet finalised. There was an urgency to get them to leave. Without a thought for the running and governance of the entity. The recommendation for Tau Mahumapelo to act was bad judgement, he was part of audit and risk and his acting role as company secretary was a conflict of interest,” explained Mandindi.
Mahumapelo was the younger brother of former North West premier, Supra Mahumapelo. The ex-premier was a staunch supporter of Jacob Zuma and was influential in lobbying for Nkosazana Dlamini Zuma to succeed him at the ANC conference.
A key Zuma ally, Mahumapelo was appointed together with Zuma’s former lawyer, Lugisani Daniel Mantsha who took up the post of CEO. Their appointments were branded by former public enterprises minister Lynne Brown as part of a rotational board.
Mandindi wrote a letter to the chairman of the board, expressing her worries about how things were being handled. While her letter was ignored, she left after a year because she could no longer stand the board’s lack of structure.
Meanwhile, the Guptas had bought VC Laser, a company which already a long history of doing business with the state. Their acquisition of VC Laser was through a company owned by Salim Essa and Iqbal Sharma, a former Transnet executive.
Once VC Laser was firmly in the hands of the Guptas, a joint venture was announced between the company and Denel. Duduzane Zuma also held a stake in VC Laser, having bought into a company which held equity in the company.
Brown led the announcement, citing the 15 years of business the company had done with the state entity. However, the deal had to be approved by Minister of Finance Pravin Gordhan under the Public Finance Management Act. By that time, VC Laser had already secured three Denel contracts.
