South Africa's Treasury said on Wednesday it was still considering an application by state-owned arms manufacturer Denel to do business with a company owned by the Gupta family, which has been under scrutiny over its alleged close ties to President Jacob Zuma.
South Africa's top banks and some audit firms recently cut ties with the holding company for the Gupta family's businesses, Oakbay Investments, following speculation that the family has undue influence with Zuma. Some of those companies cited reputational risk as a reason for ending the ties.
According to South African media reports, Denel said last week that it had set up a joint venture with a Gupta-associated company, VR Laser Services, and that all legal processes had been followed.
The Treasury, however, said on Wednesday that Denel submitted an application on Dec. 10 to set up the joint venture but the department requested further information before approving the deal.
"The Minister of Finance is still considering this application, and further information has been requested from Denel," the Treasury said in a statement.
State-owned companies are required to obtain approval from relevant government departments, including the finance ministry, before making major financial transactions, it said.
The joint venture, to be called Denel Asia and based in Hong Kong, would manufacture a variety of steel products for defence, mining, rail and transport industries and would be 51 percent owned by Denel and 49 percent owned by VR Laser Services, media reports said.
Oakbay Investments lists VR Laser among the firms that are part of the group on its website. Oakbay officials were not available to comment.
The relationship between Zuma and the wealthy Gupta family has been under scrutiny for years but it burst into the open last month when senior figures went public to say the family had exerted undue influence, including offering cabinet positions.
Zuma has denied suggestions the Guptas wield undue political power. The Guptas have also dismissed such reports, saying they are pawns in a plot to get Zuma out of office.