A retired South African Cheetah fighter jet, at the center of a $7million lawsuit between Denel and US company Draken International [Image by DefenceWeb]
(The Post News)– South Africa’s state-owned defense behemoth Denel is coming under growing pressure after a $7 million (R124 million) claim by US-based firm Draken International, claiming the company failed to deliver nine of 12 Cheetah fighter jets in terms of a 2017 deal.
Florida-based rival air training company Draken International had in December 2017 signed a $35.2 million (R624 million) deal with Denel Aeronautics. Under the agreement, nine single-seater Cheetah C aircraft and three twin-seater Cheetah D aircraft were refurbished and delivered. The jets were meant to complement Draken’s fleet, backing up its 22 Spanish Mirage F1Ms for US Air Force, Navy, and Marine Corps training flights.
Court documents reveal Draken had paid Denel $12.7 million (R225 million) upfront. But only three aircraft were delivered in seven years, with Draken now demanding the return of $7.1 million, as well as damages. On 19 August, Draken launched the case in the Florida Middle District Court. The case was taken up by a judge on 20 August, and a summons was issued to Denel the following day.
Denel Responds to Legal Action
On August 27, Denel issued a statement affirming it would contest the lawsuit. “Even though the case is in the courts, Denel will not comment on merits or demerits. We wish to assure all stakeholders that Denel is committed to fulfilling contractual obligations, strengthening performance, and achieving long-term sustainability,” the company stated.
It delivered its first two refurbished jets to Draken in October 2019 under Project Dragon and a third one in mid-2021. In addition to the aircraft, Draken also acquired spare components, ground support equipment, and a Cheetah simulator from Air Force Base Makhado.
But the project went awry. Denel struggled to get ejection seat components, and its finances collapsed under the time of state capture, leaving cash flow and payments to suppliers and employees in arrears. With COVID-19 in 2020, progress ground to an even slower halt. By 2021, the key US Air Force contract that made the Cheetah acquisition worthwhile was lost by Draken. Without the contract, there was no pressure to complete the project.
Defence analyst Darren Olivier, of African Defence Review, said Denel’s Aeronautics division had been producing “fantastic, high-quality work” on the Cheetahs until the state capture crisis. “Denel couldn’t pay suppliers or even pay staff salaries anymore, so it couldn’t buy critical items like ejection seats. That brought everything to a grinding halt. And then Covid came along and made it worse, and the project just stopped,” Olivier said.
The company also added that the Treasury and Department of Public Enterprises lost a chance to salvage the deal. “Had the government pledged bridging finance to enable the program to proceed, Denel would have been able to make deliveries. Draken would be flying those Cheetahs today.”
The Cheetah, constructed by Denel in the 1980s using the Mirage III, remained with the South African Air Force until 2008, when Saab Gripens replaced it. The company was also able to sell 12 Cheetahs to Ecuador in 2011, proving its viability in the global market. The controversy surrounding the Draken can nonetheless potentially further erode South Africa’s defense industry reputation. It’s a further case of corruption, poor management, and procrastination ruining a strategic jewel,” Olivier said. “Instead of flying in US colors, the Cheetahs are now parked in hangars.”
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