Denel confirms arms deal talks with Saudi Arabia

State arms utility Denel has confirmed South Africa was in talks with its middle-eastern counterpart, Saudi Arabian Military Industries (SAMI), about an arms deal which would see the parastatal making and selling weapons to Saudi Arabia.

Saturday Citizen had asked Denel to confirm a Reuters report that Saudi Arabia made a R14 billion bid for a partnership with Denel that would include the acquisition of a minority stake in a joint venture with Rheinmetall Denel Munition.

“I am not in a position to answer to details on any specific country or company interest to invest in Denel,” said Denel’s head of communications Pam Malinda.

“However, as part of the efforts to reposition the company and find a sustainable funding model, some of the options Denel is discussing [subject to board and shareholder approval] include the consideration of exiting non-core capability areas, restructuring the cost base, exploring partnerships on core non-viable businesses and to drive a strong export orientation through strategic equity partners and joint ventures. These are all still only at internal discussion and exploration stage.”

Denel said it was aware that various government institutions confirmed discussions had taken place between SAMI and various organs of state in South Africa.

However, Malinda argued that since Denel was a state entity under the department of public enterprises (DPE), such a deal had to be pursued by SAMI on a state-to-state basis.

“The South African government’s regulatory framework dictates this approach to these kinds of overtures.

“Denel’s response would then be guided by its board, the DPE and possibly National Treasury among relevant institutions.”

Denel’s last attempt to enter the multibillion-rand Asian arms race was thwarted when it was revealed that Denel Asia, the would-be joint venture between the utility and VR-Laser Asia, was wrought with links to the controversial Gupta family. The event cost the state R400 million.

The discussions with Saudi Arabia have been met with criticism by some who pointed out that the middle-eastern monarchy was linked to human rights atrocities, such as its ongoing and deadly occupancy in the neighbouring Yemen, as well as the recent death of Saudi journalist Jamal Khashoggi.

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