Denel’s never-ending delays at Project Hoefyster reflect disaster, says judge

It is “unthinkable” and “unacceptable” that state arms manufacturer Denel is more than eight years behind on key deliverables in Project Hoefyster, a multibillion-rand deal to manufacture combat infantry vehicles for Armscor, State Capture Commission of Inquiry chairperson Raymond Zondo said on Monday.

Zondo expressed his shock during the testimony of Armscor’s Sipho Mkwanazi, acting group executive for acquisition and supply chain management at the state-owned military procurement company since 2015.

“These kinds of delays, they reflect nothing else but simply a disaster, isn’t it?” Zondo asked on Monday.

“It’s just completely unacceptable. How can something that has been required in 2012 and had been promised to be delivered in 2012, eight years later, have not been delivered?”

The deputy chief justice referred to testimony from Denel’s chairperson, Monhla Hlahla, who has described Project Hoefyster as the most significant threat to the company’s finances.

“Why is this situation allowed to continue? Has anybody been fired for not doing their job? Has anything happened? It’s just unthinkable,” said Zondo.

“It’s like there’s nobody who supervises that ministers do their job, DGs do their job, heads of SOEs do their job, people under CEOs do their job, boards of SOEs do their job. How can this kind of situation be allowed to happen?”

After focusing on SAA last week, the State Capture Commission returned its focus to Denel on Monday. Evidence leader advocate Paul Kennedy said the commission will spend the week delving into Denel’s deals with Gupta-linked VR Laser and the suspension of top executives.

Mkwanazi explained how Armscor awarded Denel the Project Hoefyster contract in 2007. He was not involved in the process.

Denel was the only bidder, apparently because it was the only company that knew Armscor’s required specifications.

Armscor wanted to consider multiple bids to design and build more than 200 Badger infantry combat vehicles, but other potential bidders complained that Denel, which had helped develop the technical specifications, hadn’t released the required information for others to compile their bids.

Denel said it had developed the intellectual property under an exclusive agreement with the European Aeronautic Defence and Space Company. 

Armscor’s board disputed that and instructed Denel to send the technical details to other potential bidders. There’s no evidence Armscor ever followed up on its instruction.

“Was this not a predetermined process? Was this not a sham or a facade aimed at ensuring Denel would get the business?” asked Kennedy.

Mkwanazi struggled to provide an answer from the information he had gathered retrospectively.

I mean eight years and five years, it just seems really intolerable.