State-owned armaments company Denel has announced its decision to exit the planned joint venture with VR Laser Asia.
“…we can officially report that Denel SOC has ended its involvement in the Denel Asia JV. We have exited the JV,” the company declared on Friday in a statement.
According to Denel, the decision comes after the “untenable atmosphere” caused by the joint venture” which it blamed on various media reports it believes were inaccurate.
“The Denel Asia JV became the focus of negative attention from the media to the detriment of the Denel Brand, both locally and internationally,” said Denel.
The group has defended establishing the deal saying it had done so because of declining prospects in the arms industry locally. Denel claims that it had looked towards the Joint Venture as a means to offset declining local market by gaining access to the lucrative Asian market.
“This market continues to be a focus area for Denel because of its demand for defence equipment which has been seen year-on -year increases in spending – in excess of 20%- making it one of the top spending regions on defense equipment in the world,” said Denel.
The joint venture, however, was dogged by allegations of favouritism and wrong-doing amid claims that the Gupta family stood to gain from it, an allegation which Denel repeatedly denied.
Former Minister of Finance Pravin Gordhan last year announced that Treasury was investigating the deal.