State arms manufacturer Denel on Tuesday pleaded for an equity injection as it briefed MPs on its results for the past year, but former finance minister Pravin Gordhan flatly countered that the company's dire financials were linked to its dealings with the Gupta family believed to have corrupted key parastatals.
Gordhan said these allegations had dented business confidence around Denel, and cash alone could not fix the problem.
"The story of state capture has impacted on confidence," Gordhan said as members of Parliament's portfolio committee on public enterprises responded to the financial report.
"A new board needs to be appointed with no emails linked to them, or visits to Dubai. Otherwise we keep asking the CFO and the CEO to do the impossible," he said, adding that in the current financial climate it was hard to see where the funds for a bailout would be found.
Earlier Gordhan remarked that the defiance shown towards him in his capacity as finance minister by Denel chairperson Daniel Mantsha around a partnership with close Gupta associate Salim Essa had been unprecedented.
"Mr Mantsha was very vocal in 2016-17, precisely at the time when the Gupta emails indicated he had a close relationship with the Guptas, particularly at the time when Denel Asia was at play," he said.
Gordhan was referring to a joint venture Denel sought to pursue with Denel-Asia, fronted by Essa, in the absence of approval from National Treasury, which eventually shut down the deal.
"No CEO has ever challenged a sitting minister as he did, and that was as a result of his relationship with the Gupta family, which impacts on his credibility."
Documents submitted to the committee by Denel said it needed a R3-billion capital injection.
Chief financial officer Odwa Mhlwana said the company's cash flow crisis was due in part to lenders cancelling agreements, forcing it to repay R756-million "in the last few months" that had been designed as five-year loans.
It severely hampered its ability to pay suppliers, who were now demanding cash transfers before delivery, he added.