- Former Denel chair Mantsha told the Zondo Commission that the board made the right decision when suspending two former executives in 2016.
- He said a non-executive board member expressed misgivings on the procedure at the time, but he believed he did the right thing.
- He said Denel remains in a precarious financial position, which includes owing Absa and Nedbank R4 billion.
Former Denel chairperson Daniel Mantsha said his decision to oust certain board members in 2016 in the midst of a controversial deal for the state-owned entity - albeit in haste - was the best decision at the time.
Mantsha was testifying before the Judicial Commission of Inquiry into State Capture chaired by Deputy Chief Justice Raymond Zondo on Thursday evening. Mantsha served as chairperson of Denel from 2015 to 2018, when he resigned.
When he appeared before the inquiry last year, he denied the charge of being an accessory to the state capture project at the arms producer. At issue, for much of Mantsha's evidence, was a series of transactions that left Denel financially strained, owing Nedbank and Absa R4 billion.
Evidence leader Paul Pretorius asked Mantsha about the misgivings of another board member, Nonyameko Mandindi, who had raised concern about the handling of the suspension of former CEO Riaz Saloojee, former CFO Fikile Mhlontlo, and former company secretary Elizabeth Africa - and their eventual exit.
Mantsha told the commission that the suspended officials were served with a letter which charged them to explain whether they misled the board and the minister of public enterprises about a contract awarded to Land Systems South Africa (LSSA), in which the guidelines of the Public Finance Management Act were found to have been breached.
Mantsha acknowledged that while he did not recall receiving a letter from former non-executive board member Mandindi, he agreed that she was concerned that the speed with which it took place - with no opportunity to thoroughly consider it - was concerning.
"That is what is raised in the letter. Can I just say just a little bit, just about Mandindi, she contributed a lot to the board. If you look at the line [in the letter], she said she left the meeting early and she did not get the benefit of all the discussions," said Mantsha.
Mantsha said Mandindi did not feel like she was taken seriously regarding her misgivings on the suspension of the executives. He said the board had spoken and that while it would have been ideal for Mandindi to remain in the meeting that made the final decision, he respected her opinion.
"Under the circumstances, the board handled the situation correctly. Boards work on a democratic basis and she was likely absent to see how the board came to that decision. The majority members who remained took a decision and I am still convinced that that decision was correct," Mantsha said.
Mantsha elaborated to say that he believed that there was enough evidence against Saloojee and Mhlontlo to "fire them on the spot".
Pretorius asked Mantsha why the board chose to pay Saloojee and Mhlontlo off, to which Mantsha responded that the two were guilty of gross mismanagement and any justification for their decisions that they presented to the board were disingenuous.
"These were serious violations. This was not by any chance a smokescreen to try and get these people out. They were dealing with this transaction and both Absa and Nedbank were not willing to find the transaction, to the point where asked for a security of R400 000 and Nedbank converted the loan for a six-month period," he said.
Mantsha justified the decision to offer a pay off to the executives by saying that Denel was "trying to pick the better devil" as the company was faced with financial situations which would have made a prolonged impasse with executives untenable.
"On the other hand, we were talking to the bankers to develop arrangements. It was always in the interests of the board to have a quick resolution. So, when we went to the disciplinary, we needed to be able to continue negotiating with the banks and investors in a stable environment," he said.
The session was adjourned late on Thursday evening, with a date for the continuation of Mantsha's evidence to be determined after consultation between the legal teams.