Former public enterprises minister Lynne Brown.
- The State Capture Commission has found that former Denel chairperson Daniel Mantsha, appointed by former public enterprises minister Lynne Brown, played a key role in capturing the state company for the Guptas.
- Mantsha and other board members in 2015 who supported the suspension of three top performing executives are “unfit” to be directors of a company, according to the commission.
- The commission further recommends that law enforcement agencies investigate Mantsha and other board members for breaching the Public Finance Management Act.
Former Denel chairperson Daniel Mantsha and board members who were instrumental in the ousting of executives at the company to aid capture for the Guptas should be investigated by law enforcement agencies, the State Capture Commission recommends.
The commission, led by acting Chief Justice Raymond Zondo, on Tuesday handed over the second part of its report to the Presidency. The report, split in two volumes, covers findings on state rail and freight company Transnet and Denel.
The commission highlighted that state technology company Denel was once “highly regarded internationally” but is now “almost on its knees”, largely due to a lack of quality leadership. This is a problem not unique to Denel, but the appointment of board of directors and executives at state-owned enterprises on the whole is a “serious concern”, the report read.
At Denel, central to this is former public enterprises minister Lynne Brown’s appointment of the board.
Denel between 2011 and 2015 had a board that performed their duties well, the commission noted, citing Brown’s testimony. This board, however, was not asked to serve a second term by Brown, which the commission has questioned.
Denel’s chief executive officer at the time, Riaz Saloojee, also “performed excellently”. While the former board intended for Saloojee’s term to be extended, the newly appointed board, led by Mantsha, suspended him and two others – chief financial officer Fikile Mhlontlo and company secretary Elizabeth Africa – over a contract awarded to Land Systems South Africa which allegedly breached the Public Finance Management Act (PFMA).
Without the former board and these executives at the helm, Denel had spiralled into an entity associated with “liquidation and business rescue,” the report highlighted.
The commission critiqued Brown’s appointment of Mantsha as board chairperson. He was an attorney who had been previously struck off the roll of attorneys, due to a long list of acts of misconduct, the report read. Mantsha had previously represented former president Jacob Zuma. He was stuck off the roll in 2007 and reinstated in 2011, Fin24 previously reported.
According to the report, Mantsha and the other directors who support his “campaign” against the three executives had shown themselves to be “unfit” to be directors of a company. Denel, the Department of Public Enterprises, and the Companies and Intellectual Property Commission all have standing to bring “appropriate proceedings” against Mantsha and the former Denel board members who supported the former board chairperson in his efforts to “capture” Denel for the Guptas, the report read.
According to the commission, Mantsha and the board members who supported him failed to carry out their fiduciary duties in the way they handled the suspension of the three executives. They failed to ensure disciplinary inquiries were held in reasonable time for the matter to be resolved without undue delays.
“If the expedited process that the executives proposed was accepted, there was a serious risk that they would be found innocent and would have to be allowed back at work and the Guptas’ agenda would be thwarted,” the report read.
“All the directors who supported Mr Mantsha in his corrupt endeavour to get the three executives out of the way are similarly probably culpable.”
The commission also wants Mantsha and related board members to be investigated by law enforcement agencies for pushing settlement agreements to force the executives out the company.
According to the commission, this may in breach of the PFMA and may be grounds for criminal prosecutions.
According to the report, Saloojee signed a settlement of R2.6 million while Mhlontlo took a settlement of R8.4 million.
The commission also recommended that the Legal Practice Council be made aware of the findings against Mantsha in order to conduct its own investigations to determine whether he is “fit and proper” to practise as an attorney.
Brown is also not blameless.
According to the commission, Brown participated in state capture by “using the powers of her office” to install members on the Denel board that would facilitate or not oppose the Gupta state capture scheme.
“She had failed to use the powers of her office when asked to exercise those powers to cur the manifest injustice of the scheme to oust the three Denel executives.”
The commission said it was clear that the appointment of boards of directors and executives at SOEs cannot be left to politicians solely, as the appointees have failed to lead the institutions successfully. “They are all going down one by one, quite often, they depend on bailouts.”
The commission recommend a body be established to identify, recruit and select the “right kind of people” for boards, and as executives.
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