Cape Town - The subcontract Denel awarded to VR Laser for cutting steel for the army’s new combat vehicles amounted to R238.6m as of the end of April, Public Enterprises Minister Lynne Brown said on Wednesday.
She was responding to a parliamentary question posed by Natasha Mazzone of the Democratic Alliance, following a media report that the Gupta-associated company scored a lucrative deal from the state-owned arms manufacturer.
VR Laser, partly owned by Ajay Gupta’s eldest son, Kamal Kant Singhala, registered a joint venture with Denel Asia in Hong Kong. The deal is currently the subject of controversy, as National Treasury declared it illegal.
Denel’s board and management, however, insist due process was followed when the joint venture was established.
The original contract to manufacture 238 Badger combat vehicles, called Project Hoefyster, was awarded to Denel in November 2013.
The second part of Mazzone’s question was to ascertain whether Brown approved the subcontract awarded to VR Laser.
“I do not approve subcontracts,” Brown responded. “The awarding of contracts is a business operational matter within the mandate of Denel’s management and board of directors.”
She added that the awarding of the contract in question was done “in line with Denel’s procurement prescripts”.
“The contract was awarded to VR Laser as it presented the best value proposition to Denel for the services required,” Brown said.
City Press earlier reported that the subcontract with VR Laser was causing concern among employees of Denel Vehicle Systems, which is going through a restructuring process because it does not have enough work.