DISCUSSION AND EVIDENCE OF STATE CAPTURE: THE DENEL CASE THE PEOPLE’S TRIBUNAL ON ECONOMIC CRIME - 7 FEBRUARY 2018 MR BEN THERON – CHIEF OPERATING OFFICER AGENDA • Background - the Denel Board • Criminal charges against the chairperson of Denel – Mr Lugisani Daniel Mantsha • Irregular joint venture between Denel and VR Laser Asia to establish Denel Asia THE DENEL BOARD A NEW BOARD FOR DENEL • 24 July 2015 – New board appointed by Minister Lynne Brown; – Minister Lynne Brown commended outgoing board – referred to Denel as on a path to positive sustainability; – Daniel Mantsha appointed as non-executive director and chairperson of the board; – The rest of the board was new, except Mr Johannes Motseki. THE REALITY OF THE NEW BOARD • Under the new board: – Operational expenses went up from 1500 R939m to R1,483m; 1000 – Nett profit increased from R270m in 2015 500 to R 395m in 2016, but decreased to Millions ZAR R333m in 2017; 0 2014 2015 2016 – When measured against operational 2017 expenses, Denel was in financial Financial Year downward spiral. Operational Expenses Net Profit THE REALITY OF THE NEW BOARD • Mr Johannes Motseki – Only “old” board member to be retained; – Involved with the Gupta family in 2010; – Mr Motseki’s company (he was the sole director) was allocated 1.3% in the Gupta owned Shiva Uranium; – Guptas sponsored a trip to Mumbai and Delhi in 2010; – As treasurer of the MK Veterans Association he facilitated a donation of R850,000 from the Guptas to fund a conference. THE REALITY OF THE NEW BOARD • The list of new board members – not the original list prepared by DPE. • As the State Capacity Research Project notes, the new Denel Board “also lacked skills and experience: there was, for example, not a single engineer (Denel being a highly technical SOE) and most never served on a corporate board before”. • The chairperson appointment – Mr Daniel Mantsha – raised many questions. THE REALITY OF THE NEW BOARD • Mr Daniel Mantsha – Shortly after his appointment, Mr Mantsha suspended the following Denel employees: • CEO - Mr Riaz Salojee; • CFO - Mr Fikile Mhlonto; and • Company Secretary - Ms Elizabeth Africa. – No formal reasons given for the suspensions at time. – Subsequent charges were questionable. – Strong suspicions that the three company managers were suspended to make way for the Denel – VR Laser Asia deal. DANIEL MANTSHA THE SHOPPING LIST 20/11 (DPE PRESENTATION TO PARLIAMENT) • Energy: R174bn in Government Guarantees total R350bn (Eskom Build program) • Broadband: Infraco launched Commercial offering • Defence: R1.85b was secured as interim support to Denel. • Forestry: The Department initiated work on SAFCOL’s future • Transport: Contract between Transnet and GE. 90 of the 100 locomotives in RSA, Richards Bay Coal Terminal and Sishen Saldanha. SAA took delivery of A330-200 • Mining: Alexkor land mining rights transferred to Richtersveld Mining Company • Cross-cutting Initiatives: A policy for Programmatic and Transactional Procurements for Loco fleet DAN MANTSHA – GUPTA RELATIONSHIP • #GuptaLeaks – Evidence obtained from the email server of Sahara Computers shows improper relationship between Mr Daniel Mantsha and the Guptas. – The improper relationship was fully investigated. – OUTA laid charges against Mr Mantsha in September 2017. A full report on Mr Mantsha will be discussed and a written report will be submitted to the Tribunal DAN MANTSHA – CORRUPTION & FRAUD CHARGES • Background information: – Mr. Mantsha is an attorney - obtained a B Juris in 1991 and LLB in 1993 both from the University of Venda. – Current director of Lungisani Daniel Attorneys and Lungisani Management. – Became non-executive director and Chairperson of Denel Board in July 2015. – Served as Minister Faith Muthambi’s legal advisor (Department of Communications). – Mantsha was struck from the roll of practising attorneys in 2007. – Re-admitted in 2011 (OUTA could not ascertain the reason for his readmission. Requested his file from the Law Society). EVIDENCE - #GUPTALEAKS AUTHENTICITY OF THE #GUPTALEAKS • OUTA obtained #GuptaLeaks on 30 May 2017. • Hard drive delivered anonymously to OUTA offices. • Authenticity of the emails: – Analysed by cyber forensic team. – Authenticity of emails was confirmed through an analysis of metadata in email headers. • Authenticity of all hard drive contents will be tested in court. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 3 August 2015 Ashu Chawla applies for a 3 month tourist visa for Mantsha. The visa applications clearly show that the Guptas are planning to take Mantsha on trips to Dubai and India, presumably to promote their Denel/Denel Asia plans. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 3 August 2015 Mantsha’s office ([email protected]) sends an e-mail to Ashu Chawla with a copy of his municipal account attached. The message in the mail reads “For urgent attention”. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 6 August 2015 Mantsha was flown to India, in the Gupta’s jet (ZS-OAK). He was accompanied on this flight by Mrs Angoori Gupta, Mr Rajesh “Tony” Gupta, Mrs Arti Gupta, Mr Sashank Singhala, Mr Amankant Singhala, Mr Salim Essa and the Gupta body guard Mr Gysbert van den Berg. 8 August 2015 Mantsha was a passenger on the Gupta owned Jet (ZS-OAK) that flew back from India (Mumbai – Delhi) to South Africa on 9 August 2015. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 6 – 8 August Mantsha stayed at the Club ITC in India. The invoice is made out to Mr Mantsha with Sahara’s 2015 South African address as the reference address and as reference to SES Technologies, a Gupta owned company in India. It clearly shows that the invoice was for Sahara’s South Africa address. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 29 September Mantsha’s office ([email protected]) sends an e-mail to Ashu Chawla with a 2015 copy of his passport attached. Ashu Chawla send the copy of Mantsha’s passport to Halima Allana at Travel Excellence (Travel Agency) with an instruction to apply for a Dubai visa. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 28 November Mantsha received a mail from Marietjie Strydom from Denel. Attached to this mail is a PFMA 2015 Section 54(2) Pre-notification on the Proposed formation of Denel Asia, from Lynne Brown, Minister of Public Enterprises. The letter from the Minister is clearly marked “Confidential”. On the same day, Mantsha forwarded this notification to Ashu Chawla. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 30 September 2015 Travel Excellence received the Dubai visa for Daniel Mantsha and forward it to Ashu Chawla and confirm the booking for Mantsha to fly back from Dubai to South Africa on 6 October 2015 and attached the electronic ticket. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 30 September 2015 Ashu Chawla send a mail to the Oberoi Hotel informing them that Mantsha will be a guest there together with Duduzane Zuma. Hours later the Oberoi Hotel Confirm the booking for Mantsha from 3 Oct to 9 Oct. Chawla informs the Oberoi that Mantsha will check out on the 6th of October 2015 and the Oberoi Confirms that the Mantsha booking has been changed as instructed. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 6 October 2015 After his stay in the Oberoi Hotel, Mantsha flies back from Dubai to OR Tambo on flight SA7163 with a ticket booked and paid for by the Gupta company – Westdawn Investments (Pty) Ltd. The amount paid for the flight ticket - R33,280.00. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 31 October 2015 Mantsha sends a letter that was prepared and sent to the Minister of Finance to Ashu Chawla. The content of the letter is Denel’s PFMA Section54(2) pre-notification for the proposed formation of Denel Asia. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 23 November Mantsha received an email from Keromamang Mhlongo from the Department of Public 2015 Enterprises. The annexure to the email was Minister Brown’s response to Denel’s notification to her regarding the proposed tie up of the Denel joint venture. The email was marked confidential and was meant to advise the government and the Denel executives in their dealings with the Gupta’s. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 28 November Mantsha forward the confidential letter he received from the Minister on 23 November 2015, 2015 to Ashu Chawla. He used his law firm’s email address to send this information to the Guptas. TIMELINE OF ACTIVITIES (EVIDENCE) Date Description 3 January 2016 Mr Ashu Chawla confirmed travel arrangements for Mr Mantsha. Mantsha was booked into the Oberoi Hotel in Dubai from 3 – 6 January 2016. Chawla arranged a concierge service for Mantsha to the exclusive housing estate in Dubai, L35 Emirates Hill, where the Guptas reside. Mantsha arrived from OR Tambo International at the Dubai airport on flight EK768 at 19:20. During this time, 4 – 5 January 2016 Matshela Koko of Eskom also stayed at the Oberoi Hotel on the Gupta’s expense. CHARGES • On 30 August 2017 OUTA laid criminal charges of Corruption and Fraud against Mr Mantsha. • Remarks: – Mantsha is a qualified attorney and served as Minister Faith Muthambi’s legal advisor at the Department of Communications. – With his qualifications and professional experience -should have known better as to accept favours from the Gupta’s. – Sharing confidential documents and accepting favours from a company who wants to partner with a SOE, was unethical, irregular and criminal. – As a lawyer and a former advisor for a minister he should have known that he was grossly violating the regulations of the PFMA. IRREGULAR JOINT VENTURE TO ESTABLISH DENEL ASIA DENEL ASIA – JOINT VENTURE • Mr Mantsha oversaw conclusion of the Denel Asia joint venture between Denel and VR Laser Asia. • VR Laser Asia - wholly owned by Salim Essa (known Gupta business partner). • Mr Essa has an associate company of VR Laser Services, a South African steel cuttinG business.