Johannesburg – The Special Investigating Unit (SIU) has raised a red flag over the appointment of crime-accused Riaz Saloojee to head the turnaround plan of the state arms manufacturing company, Denel.
The SIU has told the state-owned enterprise that the evidence against him has been referred to the National Prosecuting Authority (NPA). But the Denel board brushed aside these concerns and Public Enterprises Minister Pravin Gordhan endorsed the decision to keep Saloojee even though the SIU warned that his continued service would violate the spirit of good governance.
According to a recording of a committee meeting of Denel board members in May, Gordhan’s department facilitated Saloojee’s appointment to head the restructuring of Denel, which led to confusion over his precise role in the company.
As a chief restructuring officer, Saloojee oversees the plan to sell off parts of the company, in an apparent bid to prevent the business from going belly up. Insiders at Denel had warned of a scheme to sell the company piece by piece to Gordhan’s cronies. However, the minister has dismissed the allegations as part of the state capture fightback.
In August, the SIU warned both Denel and Gordhan that Saloojee’s secondment to Denel should be withdrawn, as his docket was already in the office of the NPA for a decision to prosecute. Instead, Denel board chairperson Gloria Serobe dismissed the SIU’s concerns and Gordhan gave her a thumbs up.
National Director of Public Prosecutions Shamila Batohi has allegedly been sitting with the evidence that the SIU provided against Saloojee since August. Saloojee faced allegations of misappropriation of funds and maladministration during his first stint as Group CEO of Denel in 2014.
Both Batohi and SIU head Andy Mothibi – who previously worked with Gordhan at Sars – dismissed allegations that they were reluctant to take the necessary steps in the Saloojee case because of their alleged loyalty to the minister. In a letter dated 2 August, addressed to Serobe and copied to Gordhan, Mothibi stated that Saloojee and other former Denel officials “may have committed various offences at Denel and/or Denel Land Systems ('DLS') as a consequence of irregular and unlawfully approved procurement and acquisition of goods and/or services from a company styled VR Laser (Pty) Ltd”.
He said the transaction caused “huge financial loss and prejudice” to the company, which incurred irregular expenditure “as a result of the alleged unlawful conduct by Mr Saloojee and other former officials of Denel who were also involved in the repugnant appointment”.
“Furthermore and in this regard, the SIU referred evidence pointing to criminal offences to the NPA against Mr Saloojee and other former officials of Denel,” said Mothibi, adding that “Saloojee may be conflicted if he is placed, deployed, seconded and/or assigned to conduct any employment-related services at Denel and/or at any of Denel’s subsidiaries during the course of the SIU investigations into a number of contracts awarded and/or decisions taken during his tenure as the GCEO”.
NPA spokesperson Mthunzi Mhaga said last week that the Saloojee matter was “still under investigation” by the Independent Directorate after it was received from SIU in August.
“At this stage, no further comment will be made,” Mhaga said, adding that he would not “dignify with a response” the claims that Batohi was protecting Saloojee as a favour to Gordhan.
HOW SALOOJEE ARRIVED AT DENEL
Saloojee landed “like a ghost” at the Denel campus in Irene on 24 May, a source said. A day earlier he was granted dodgy access to the Denel ICT system, which was allegedly processed in his absence and without his signature. Someone signed on his behalf, said an insider.
One of his first activities as a chief restructuring officer was to attend a meeting of Denel’s audit and risk committee of the board. However, it was a mystery to board members what his role would be going forward. The board grappled with serious questions about whether he was a restructuring officer, a business rescue practitioner, or “will he be wearing two hats?”
In a recording of the meeting, the board members heard that his appointment was facilitated through the department of public enterprises (DPE) “and that has been effected … as you see Riaz sitting here through that appointment,” said former interim GCEO William Hlakoane.
Saloojee was allegedly kicked out of the meeting to allow for a discussion of his role. A committee member asked: “We agreed that the restructuring practitioner would be appointed through the DPE and seconded by DPE or SAA, something like that. And this is Riaz. That one has been done… contracting has been done by DPE to us as a secondment?” Correct, said Hlakoane, “that has been done”.
But what about the business rescue assessment? Hlakoane clarified: “Riaz was brought in to assist with the business plan, which then goes to the Cabinet. The restructuring, in the manner that he is coming, is in line with that. Riaz is not a specialist on business rescue….He cannot make that assessment. He is more likely to assist with the implementation of the strategy and prepare a business case that goes to Cabinet”.
BUT PRAVIN WASHES HIS HANDS OFF
Public Enterprises spokesperson Richard Mantu said Saloojee’s appointment was within the purview of the Denel Board, which didn’t require shareholder approval or noting. He said Gordhan was aware of the SIU letter directed to Denel Board and “the board’s legal opinion on the secondment of Mr Saloojee as the chief restructuring officer and satisfied with how the board dealt with the matter”. The Board formally responded to the SIU letter, he said.
“We welcome the SIU investigations into Denel to hold those responsible for the damage to the company to account for their actions. However, the department is alive to the reality that there remain forces inside the company that seek to undermine efforts to rebuild Denel to restore it to its place where it can positively contribute to South Africa’s economy.”
“To this end, the department encourages the Board, management and staff to focus their attention on the implementation of the new turnaround plan to ensure that Denel becomes a viable and sustainable business," said Mantu.
Instead of responding to questions, Denel spokesperson Pam Malinda on Sunday requested a copy of the story. Serobe and Saloojee also did not respond to questions sent directly to them.
SIU spokesperson Kaizer Kganyago said last week that Serobe did respond to Mothibi’s letter but “correspondence between SIU and State Institutions, including Denel, where investigations are conducted is confidential”.
Kganyago said the SIU also corresponded with the NPA on its referrals “and the content of such correspondence is confidential”.