Denel boss Stephan Burger caves in, admits breaking rules to give R195m to ‘corrupt’ Zuma jnr

Stephan Burger, former Denel Land Systems CEO, willingly violated the company’s procurement policies so he could enter into an agreement with VR Laser, a company owned by Gupta lieutenant Salim Essa and Duduzane Zuma.

At the Zondo commission, Burger was grilled on his role in the 2015 tender saga which saw VR Laser walk away with a R195m contract. VR Laser was appointed over LMT, a company that was a subsidiary of Denel and quoted R100m less on the price offered by VR Laser.

Cecilia Malahlela, who was the supply chain manager of DLS, testified she had objected to awarding VR Laser the contract because of how the Guptas had been exposed for corruption in the media.

Malahlela became emotional as she spoke of how she helplessly lodged an objection as Burger pushed for VR Laser to receive the contract to produce platform hulls for a project commissioned by Armscor. At the centre of the saga was also the duration of the contract, according to standard procedure, it should have been three years but was increased.

Burger told the commission that at first, he saw no problem with flouting Denel’s policies.

“In my mind, at the time there was a policy and the custodian was the group CEO. What’s written here is not 100 per correct. Our resolution was there was a legal contract and it must be respected. There is a conflict between control and group policies, my understanding was group policies were an internal matter and changes can be accepted by next level authority.”

“We didn’t get into legal dispute but we knew we should get approval from our bosses that we can do this. We took a decision as a recommendation, there was a motivation that was written and sent to Denel corporate,” said Burger.

When Zondo questioned if Burger was not aware that government-owned entities are subject to rule of law including procurement policies and that a breach would nullify any contract, Burger responded he wasn’t aware. He did admit however to knowing it breached Denel procurement policies.

“The single source agreement was not some document kept in dark. Everybody knew about it, if we did something unlawful there should have been action…I knew about Malahlela’s concerns, she raised her objections.

“I got an instruction to form a single source agreement, it was minuted in meetings and I was under the impression it was approved. The person who signed the agreement also signed policy.

“I thought if there was a conflict, it is easier to deal with an internal matter then an external mater. For that reason, I supported that we should uphold the contract between us and VR Laser. At no time no one said, you are going against law, you’re not allowed. it was approved, I thought it wasn’t a problem,” said Burger.

In addition, Burger said (internal) policies were there for good decisions but there were exceptions. On insisting VR Laser should be awarded the contract, Burger stated there was a meeting held where concerns about the Guptas were raised but the whole committee agreed.

While the former CEO had seen the press around the Guptas had seen the negative press, he felt it was not his place to give an opinion.

“Your 138-page affidavit says how innocent you are, how terrible it is for you to go through the glare of the media. You protest your innocence repeatedly. Only now you admit it was in breach and that Mahlahela was correct,” said the evidence leader.

“I never realised she was that traumatised, I was hoping she felt apart of Denel. I accept all of that. Having looked at her and seen what she’s gone through, I feel deeply moved. I can sympathise, my situation was really similar.

“It was a bad decision, the mere fact that Denel is bankrupt shows that it was a bad decision,” Burger admitted.

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Watch former Denel Land System CEO Stephan Burger’s full testimony below.

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