Businessman recounts sneaky Gupta acquisition of VR Laser

If things had gone according to plan, Benny Jiyane could have landed up in the same pound seats as the Guptas, courtesy of Transnet.

But, the Johannesburg businessman, a former director and shareholder of VR Laser Systems, had made a deal with a devil he didn’t know – and once he figured it all out, he pulled out, effectively handing the Guptas a ticket to a lucrative international partnership with Denel.

The joint venture between Denel and VR Laser has been the subject of major controversy and amaBhungane exposé going back to 2016.

In late 2013, on the sidelines of a defence exhibition in Abu Dhabi, Jiyani would meet Gupta kingpin, Salim Essa, for the first time.

He had been shopping around for a financier to help him pull off a R120-million shareholder buyout of VR Laser Services, a company in which he then held a 25% stake.

The local company at the time produced steel plate components for heavy vehicle bodies and, at the time, BAE Systems had all their products cut in SA for their local and US operations and VR Laser’s only competition were international companies.

Explaining events leading to his Essa encounter, Jiyane said he and two previous shareholders of the company were parting ways around 2012 subject to negotiations.

He was shopping for a financier for the buyout because he believed the company had a potential sovereign capability.

He wanted to ensure that VR Laser remained in South African hands so he chatted up three different Denel executives including then CEO, Riaz Saloojee, and Stephan Burger. Those executives, he testified, agreed with him about the importance of keeping the company in local hands in view of the hi-tech equipment, highly skilled staff and expertise, rarely found in South Africa.

As luck would have it, there was Essa – introduced to him by a different Denel executive in Abu Dhabi – who was now willing to chat about a partnership once they arrived back home in South Africa.

A few months later, Jiyane met Essa a second time, this time along with former Transnet board member, Iqbal Sharma. Essa and Sharma co-owned a company called Issar Capital at the time.

Months later, following a rigmarole of a process involving Ernst & Young and Regiments Capital, the deal was inked and Jiyane and Essa, through his company, Elgasolve, were partners.

Or so he thought. Jiyane told the commission how, soon after he entered into the partnership with Essa, the worried staff at VR Laser Services called him back to the office from festive season leave.

There were unknown characters in the office, describing themselves as the new owners.

He arrived at the factory to a welcome party comprising Rajesh “Tony” Gupta and a bunch of cohorts firing off questions, before some of them asked him to leave so they could address his staff.

“I was a bit upset, got a call from the financial manager when the company opened in January 2014. There were these gentlemen there saying they were the new owners of the company.

“I arrived there, found four gentlemen. I recognised two (JP Arora and Jacques Roux who had attended a meeting with him previously). The other two were Tony Gupta and a “Mr (Ravi) Nath”.

Jiyane testified that this agitated him because Sharma and Essa had allegedly not warned him about this. He contacted Sharma for an explanation.

“He said, ‘work with them, they represent the shareholder’.”

There was never mention of other parties and Jiyana told the commission that he had assumed the partnership involved Essa and Sharma only.

He said by then he knew of the Guptas through media reports but had no clue about Sharma or Essa’s ties to the family.

Ravi Nath and the Gupta brother left and, next, Arora and Roux asked him to leave the premises so they could talk to staff.

“I got worried,” he said.

“I met Ajay Gupta at one of the management meetings. This was the first time someone from the family came to address the VR Laser management team.”

There were meant to be two shareholders, Jiyane and Elgasolve, which was owned by Essa. But, he says, he never saw Essa again.

“There was no relationship. He just bought the shares.”

Jiyane immediately sensed “hostility” and became uncomfortable with the “new owners”.

He was director of the company and a shareholder and this, he testified, was now being eroded. He was not happy. “Not a little bit, I was really upset.”

A few weeks later he confronted Arora and Roux and told them he wanted out. He thought he had scope to pull out of the deal. They wouldn’t budge.

Jiyane said he felt betrayed and now he had to negotiate his exit and the selling of his shares with Arora.

There was an acrimonious argument over the course of several days and he sat his family down and explained that they should just sell and walk away.

He testified that he sold his shares in the company at a loss of around R8-million after he was initially threatened that he could walk without a cent for wanting to reverse the deal.

In this leg of the deal, things got interesting as his shares were now snapped up by an entity called Craysure Investments, then owned by Westdawn Investments, a company belonging to Tony Gupta and Duduzane Zuma.

The commission heard no further testimony about this part of the deal but Jiyane said he decided to linger in the company, now as a salaried executive; amaBhungane previously reported that he had in fact ceded his shares to Craysure subject to “certain confidential conditions” that would only materialise a year on.

And, staying on with the company after this share sale, Jiyane said he was allowed to accompany a VR Laser team on a visit to China South Rail to “explore” business opportunities.

Again, extensive reporting by amaBhungane has previously revealed that it was initially envisaged that VR Laser could be lined up as a local subcontractor in the multibillion-rand locomotive deal at Transnet.

Jiyane said he left VR Laser exactly a year after he sold his shares and has not had any dealings with the company since then. He told the commission he has no knowledge of VR Laser’s unsuccessful bid to partner with Denel either, as he had left by then.

The commission resumes on Wednesday with testimony by former Denel CEO, Riaz Saloojee. DM