A Denel company logo is seen at the entrance of their business divisions in Pretoria. Picture: REUTERS/ SIPHIWE SIBEKO
A Denel company logo is seen at the entrance of their business divisions in Pretoria. Picture: REUTERS/ SIPHIWE SIBEKO

The Special Investigating Unit (SIU) is investigating the alleged theft of intellectual property (IP) rights belonging to state defence company Denel, the unit said on Wednesday.

The IP relates to air-to-air missiles, stand-off weapons, surface target missiles, air-defence and unmanned aerial vehicle systems, the SIU told Reuters.

“The focus area for the investigation in question is unlawful, irregular or unapproved measures or practices in relation to the misappropriation of proprietary and intellectual property rights,” the SIU said.

Denel told Reuters the claims surfaced in 2018 and were investigated.

“Denel did report the allegations of theft of IP to the relevant authorities who investigated the matter and found no substantiating evidence of impropriety,” the company said.

Denel employees are alleged to have inappropriately passed information to Saudi Arabian Military Industries (Sami) during talks over a potential partnership, the City Press newspaper reported.

Saudi Arabia’s state defence company did not respond to a request for comment sent on Wednesday.

President Cyril Ramaphosa authorised the SIU inquiry in October, according to a proclamation published in the official Government gazette.

The SIU is already investigating possible corruption and mismanagement at Denel during the administration of former president Jacob Zuma under an existing, broader probe.

Saudi Arabia, the world’s third-largest defence spender, is seeking partnerships to develop its own defence industry.

In 2018 it made a $1bn (R14.84bn) bid for a partnership with Denel. Among other things Sami would have financed research & development of Denel Dynamics, the division of the group that produces tactical missiles and precision-guided weapons.

Denel CEO Danie du Toit told Reuters earlier this year that his company was open to partnerships but would not sell equity or relinquish IP rights to Sami. As recently as July, Sami said it was still in commercial talks with Denel.

Denel has not released financial statements for the 2018/2019 financial year and was projected to be insolvent in a presentation to parliament’s portfolio committee on public enterprises in September.

A pillar of SA’s once-mighty defence industry, like a handful of state-run companies, Denel has needed government bailouts to stay afloat in recent months.