R7.7 billion and 18 years later: Defence project has delivered zero vehicles

South Africa’s Department of Defence has still not received any Badger Infantry Fighting Vehicles, despite first signing a contract with Denel in 2007 and paying a total of R7.7 billion so far.

This was revealed in a recent Parliamentary response by Minister of Defence and Military Veterans Angie Motshekga to a question posed by Democratic Alliance Member of Parliament (MP) Nicholas Myburgh.

The Badger Infantry Fighting Vehicle (IFV) was intended to replace the Ratel IFV, which was designed in the 1970s by German truck manufacturer Springfield Büssing.

South African state-owned aerospace and military technology company Denel was selected to design the replacement, and a contract was signed in 2007. 

At the time, the project, known as Project Hoefyster, involved the state-owned entity designing and delivering 264 vehicles.

In her reply, Motshekga said the contract agreed to produce five different vehicle variants: a section variant, a fire support variant, a command variant, a missile variant, and a support variant.

This would include the logistics, ammunition, and simulators for the vehicles, with the development agreed to cost just over R1 billion, with order amendments increasing this to R1.2 billion.

As reported by DefenceWeb, the contract’s first phase was supposed to be fulfilled by May 2012. However, Denel was unable to meet the deadline.

This was supposed to be followed by phase two of the project, which involved the industrialisation and production of 238 vehicles.

Motshekga said South Africa signed a contract to produce 244 of the Badger IFVs, for which the planned amount was R7.3 billion. However, she said the actual acquisition cost is R8.3 billion.

This part of the project was expected to be completed by November 2023, with the entire budget for the badgers intially sitting at over R16 billion.

However, not a single Badger had been delivered by that point.

‘Denel cannot complete Project Hoefyster’

Former Minister Thandi Modise even went as far as to say that the SANDF is unlikely ever to receive any of the vehicles.

“Denel, by their own written admission, has conceded that they cannot complete Project Hoefyster within specification, budget or timescale,” she said in 2022. 

“As a responsible acquisition agency, the board of directors of Armscor resolved during December 2021 to cancel the Project Hoefyster industrialisation and production contract on Denel in principle, conditional on engagement with all relevant stakeholders.”

DA MP Chris Hattingh told Newsday that “the original fleet target has been cut back in current planning discussions to a single battalion set, a materially smaller number of vehicles than earlier programme figures.”

It been reported that the size of the order of vehicles has been reduced from 244 to 88.

Hattingh added that Denel currently has R1.5 billion in Project Hoefyster stock, including parts and sub-assemblies.

However, Motshekga said in her response that none of the vehicles are expected to be delivered by the end of 2025 because they are still in the development phase.

Denel’s state capture

Denel’s failure to progress past the development phase has been due to severe financial struggles attributed to the Guptas’ hijacking of the company during the state capture period.

The Zondo Commission revealed in the second part of its report, which focused on the capture of Denel and Transnet, that the Guptas had used VR Laser Services as a vehicle to capture the company.

VR Laser, a Denel supplier, produced steel plate components for heavy vehicle bodies, with its only competition being international companies.

The report said that Gupta associate Salim Essa bought a 74.9% stake in 2013, with the remainder sold to Craysure Investments. Company records show that Zuma and the Guptas were directors of Craysure’s holding company.

Once the Guptas controlled one of Denel’s most reliable suppliers, the report said Essa approached then Denel CEO Riaz Saloojee about expanding Denel’s business into the Middle East and Asia.

The Commission heard that VR Laser was then awarded two contracts by Denel in 2014 and 2015 worth hundreds of millions of rands, linked to constructing the hulls of 217 armoured vehicles.

Hattingh says that these contracts were for Project Hoefyster. “Our notes indicate that only a small fraction of hulls were actually completed. Fourteen hull shells were transported to Denel for integration,” he added.

The Zondo Commission said that when Mr Saloojee showed “that he would not dance to the Gupta’s tune, steps were taken to oust and control him.”

In 2015, Minister of Public Enterprises Lynne Brown appointed a new Denel board, removing the old one, which had been “competent and honest” and had accumulated the company’s highest order book in its history at R35 billion.

The new board then suspended Mr Saloojee, Denel’s CFO, and the company’s secretary, eventually paying them large settlements to leave the company.

“The reputational damage which Denel suffered from its capture and the fact that the control of Denel passed into unscrupulous hands was enormous,” the report read.

“The evidence shows that rebuilding Denel will take a long time. That is, if it does not go under.”