SIU: 74% of Denel’s advance payment under Chad contract remains unaccounted for — TimesLIVE
In South Africa, the Special Investigating Unit (SIU) reported the improper use of an advance payment received by state-owned defence company Denel Land Systems from the government of Chad under a contract to supply Casspir armoured vehicles. As TimesLIVE reports, the SIU found that 74% of the advance payment remained unaccounted for.
The contract was renewed in late 2017 after the original 2015 order was suspended due to Chad’s financial difficulties. Under the new terms, Denel was to manufacture and deliver 40 Casspir vehicles worth $18 million, or about 300 million rand. Chad transferred a 40% advance payment of $7.2 million.
Payments to suppliers
According to the SIU, Denel directed 39.7 million rand from this advance payment to three suppliers. The unit said their appointments were highly irregular, while the work performed was minimal or absent. In particular, on January 29, 2018, the company transferred 15 million rand to VR Laser, which was involved in Casspir production because Denel believed that the company owned the intellectual property rights to these vehicles.
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The SIU found that VR Laser demanded the settlement of debt related to projects unrelated to the contract. After receiving the money, the company provided no services under the Chad contract and did not sign the relevant purchase order, the unit said. VR Laser is owned by Salim Essa, whom TimesLIVE describes as a key figure in the Gupta network linked to state capture cases.
ENNE7 contracts and further action
Another 15 million rand of the advance payment went to ENNE7 under a 40 million rand contract for the supply of a Sino truck and a donor vehicle from China. The SIU said the company misled Denel by presenting itself as the sole distributor of such equipment in South Africa. The unit found that ENNE7 delivered two vehicles worth about 2 million rand and retained the remaining 13 million rand. ENNE7 director Sandy Chudayen said that the company fulfilled its contractual obligations and that Denel was required to pay the outstanding balance before delivery.
The SIU also found the appointment of a technical adviser unlawful and irregular. The adviser was paid 9.7 million rand on December 19, 2017, for facilitating negotiations between Denel and Chad. The unit referred materials concerning Denel’s former group chief executive and four former Denel Land Systems officials to South Africa’s National Prosecuting Authority. The SIU is also assessing the possibility of civil recovery of 15.6 million rand from the supplier and a possible civil claim regarding the technical adviser’s contract.
