Denel and the City of Johannesburg

24 October 2018

Johannesburg Mayor Herman Mashaba has again resorted to reduce a professional and sound relationship between the City of Johannesburg (CoJ) and Denel, a State-Owned Company reporting to the Department of Public Enterprises (DPE), to petty political point-scoring.

The facts of the loan from the CoJ, via Regiments Capital, to Denel in 2012:

Was concluded by a previous city administration and a previous Denel board

Regiments Capital has since been identified as a Gupta-linked company that was retained by the CoJ – not by the DPE or Denel

The CoJ should investigate whether the contractual relationship between itself and Regiments was properly entered into – that is the CoJ’s responsibility

Furthermore, based on information provided by Denel, the loan was properly and lawfully entered into. In response to a written question to me in Parliament:

I further explained that the in 2007/08, the National Treasury and the Department of Public Enterprises approved a Domestic Medium Term Note for R2.2 billion that allowed for both secured and unsecured loans. The DMTN was duly registered with the Johannesburg Stock Exchange Securities.

The Denel board approved the R290 million facility on 4 September 2012, at a time when Denel was a profitable state owned company with a healthy balance sheet.

Based on historical records, there are no indications that any breaches were committed in corporate governance rules or in Treasury’s public finance management regulations.

Despite a decent and professional discussion in June this year, Mayor Mashaba saw it fit to attack the integrity and the reasonable arrangements with the City on two occasions:

My correspondence with him was leaked to the media in full, with the explanation that I had “begged Mashaba’s indulgence” not to liquidate Denel.

[Please see News24.

His latest public statements that I am being “economical with the truth”, by explaining the legality and details of the City of Johannesburg’s R290 million loan facility to Denel imply that I have misled or lied to Parliament.

[Please see Politicsweb.

I strenuously reject these insinuations.

I maintain that my written response to the Parliamentary question was correct. The loan facility between the CoJ and Denel was legal.

If the city finds that its relationship with Regiments was improper, we will completely support any corrective action the city wishes to take.

Issued by Adrian Lackay on behalf of Department of Public Enterprises, 24 October 2018