State-owned defence industrial group Denel issued a press release on Thursday stating that it will continue to discuss with National Treasury the issue of its joint venture with private sector South Africa company VR Laser, to create a Hong Kong-based company to be called Denel Asia, to resolve “any misunderstanding” about the deal “amicably”. Denel issued the statement in reaction to press reports about National Treasury’s attitude to the deal.

On Wednesday the National Treasury put out a media release stating that it had “noted . . . that Denel may have entered into a joint venture to form a company that will operate from a jurisdiction in Asia.” It then pointed out that any such deal would have to have the approval of the Minister of Finance and/or the Minister of Public Enterprises.

Furthermore, in terms of the conditions attached to the giving to Denel of loan guarantees worth R1.85-billion, any significant transaction Denel undertook would have to be approved by both these Ministers.

Denel has to comply with Sections 51(1)(g) and 54(2) of the Public Finance Management Act, the National Treasury stressed in its release. “Denel submitted its application in terms of Section 54(2) on 10 December 2015. However, prior to Denel submitting its application, National Treasury had outlined the information that would be required to comprehensively assess the application. The Minister of Finance is still considering this application, and further information has been requested from Denel. … The National Treasury received a Section 51(1)(g) [application] from Denel on 10 December 2015. The application is still under consideration and no decision has yet been made.”

In its release, Denel, which is led by acting CEO Zwelakhe Ntshepe, stated that “Chapter 3 of the Constitution enjoins all spheres of government, including organs of State like the NT [National Treasury] and Denel SOC [State Owned Company] to cooperate with one another in mutual trust and good faith. That includes an expectation to always deal with matters of mutual interest internally and underpinned by principles of cooperative governance and inter-governmental relations.”