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Salim Essa, a man now credited with having successfully stolen public funds from Eskom and Transnet, set his sights on Denel in 2015. Essa’s modus operandi was simple, partner of a powerful family with political connections, in this case, the Guptas and Jacob. Zuma’s son, Duduzane. Then take over an existing company like VR Laser that’s knee-deep in government bidding and pump up contract offers for a hefty payout. Along with Rajesh Gupta and Zuma, Essa allegedly influenced the firing of Denel’s CEO, CFO and company secretary to appoint officials who would bypass the acquisition processes in favor of VR Laser. The rot runs deep, as Denel executives have testified that they did not know who the true shareholders of VR Laser were. It was only after insisting that the directors share their identities for the bid evaluation that Zuma, Gupta and Essa came forward, did she hear the commission from Zondo: Bernice Maune.
A Denel project called for a company that could manufacture and supply platform helmets. LNT, an in-house vendor that was majority-owned by Denel, was the logical choice to provide the helmets for the platform. He already had a stellar reputation and could easily manufacture the products. However, it had to go through a closed tender that would pit it against two other bidders, one of which was VR Laser.
Although it was not a young competitor (VR Laser had been doing business with Denel for 15 years) it had a new owner and had no experience in making platform hulls.
When bids were submitted for the contract, VR Laser traded R100m higher than LNT, which set its price at R195m. However, Stephan Burger, then CEO of Denel Land Systems, intended to award the contract to VR Laser. The group’s former supply chain management executive Dennis Mlambo told Judge Ray Zondo that it was clear Burger wanted no one but VR Laser.
Also read: How Denel served Guptas on a tray after firing three #Zondo executives
His statement was also confirmed by Cecelia Malahlela, Denel’s procurement department manager. Malahlela said Burger would check in with her every day to find out how the procurement process was working. This was strange, since a person who was roughly two levels than their superior would not directly follow.
“It just didn’t make sense why people were so eager to pay 100 million rand more, which would actually erode DLS’s bottom line. It was ridiculous for me.
“There was a conflict of interest between the property and the adjudication team. VR Laser was a 100% black-owned company, but they didn’t question that the people were not specified, ”Mlambo said.
When asked to submit a document with the list of directors, VR Laser provided one that was not certified by the CPIC.
“The document presented was supposedly a list of directors. It was not a valid CPIC document. In my opinion, it was a fake document. The people who had a conflict of interest were not really the shareholders. It was the director of operations for VR Laser, Mr. Arora. The other people who were critical, people like Salim Essa, had not submitted a declaration of interest ”.
Read more: Eskom state capture investigation: curious case of Salim Essa, also known as Lynne Brown’s advisor #Zondo
Mlambo says he only learned of all shareholders after seeking out VR Laser’s chief operating officer for full details of all shareholders. He was surprised to find that Essa owned 75% and the other 25% was held by Zuma and other associates. There was a claim that the company was owned by a black woman, but there was no proof. Also, LNT was ignored for the contract even though it was cheaper, because it scored lower.
“It actually defied logic that the companies that had never made platform helmets received a higher score, while the other company had a lower score. It later turned out that they relied on unrelated aspects to rate the company.
“VR Laser obtained a higher maximum technical score. Forty-five points was the maximum number of points, but VR Laser scored 50 points. I told myself this is a real sham. What infuriated me was that the DLS leadership was willing to pay 100 million rand more, ”said Mlambo.
Powerless to prevent the contract from being awarded, Mlambo says his office would never have allowed VR Laser to even make an offer. He asked for an independent consultant to evaluate the bidding process, but his calls were ignored because Burger said it was a fair and objective process.
According to Mlambo, negotiations with VR Laser were taking place during the bidding process, which was also suspicious and against supply chain policy.
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