Arms dealing, by its very nature, is a dirty business. The sums involved in arms transactions are huge — weapons and equipment tend to be bought in significant quantifies by countries and state agencies, so competition is fierce and the stakes high.

Tales of corruption in arms dealing around the globe are legendary. Closer to home, our own former deputy president was fired for being implicated in a “generally corrupt” relationship that was linked to SA’s arms procurement exercise. And now SA’s weapons manufacturer, Denel, finds itself in the middle of a scandal that threatens its existing and future business efforts.

It is too early to pass judgment on whether Denel is, indeed, guilty of the allegations levelled against it by the Indian government. These revolve around suggestions that Denel paid bribes to win contracts to supply India with arms. Indian authorities have recently been looking into all of the deals done with Denel, notably a R24m contract to supply 400 anti-matériel rifles and an R88m contract to supply 9000 rounds of ammunition.

The value of these contracts is not particularly large, but the relationship held out enormous future potential. And Denel needs all the help it can get. It is near bankruptcy, having reported mounting losses in recent years. While recently appointed CEO Shaun Liebenberg has announced a workable turnaround strategy, it will succeed only if Denel can actually sell its products in the global market.

This already difficult task has just been made significantly more so by the corruption allegations, raising real questions about whether Denel has a future at all.

Denel has vehemently denied any wrongdoing. The company has apparently been speaking to lawyers in both SA and India and has come back convinced that no laws were broken during the transactions with India.

Nevertheless, India’s media were full of news this week that their government had cancelled all its arms contracts with Denel, and while there remains some murkiness about the actual state of play, it casts both the arms manufacturer and SA in a dreadful light.

As shareholder, government needs to find out, and quickly, just what took place during these transactions. The outcome of this investigation, whatever form it takes, then needs to be made public.

If Denel is guilty of corruption, government will have to intervene. There’s a lot at stake here, not least of which is our country’s reputation.

With acknowledgement to the Business Day.