Publication: Mail and Guardian Issued: Date: 2001-11-23 Reporter: Paul Kirk Editor:

Chippy Shaik Meddled in Arms Probe


Publication  Mail & Guardian
Date 2001-11-23
Reporter Paul Kirk
Web Link


Chippy Shaik, the suspended Department of Defence procurement chief, was allowed to make significant changes to the September 2000 arms report the auditor general submitted to Parliament.

One alteration - relating to the contract to supply corvette components - clearly served the interests of a contractor in which Shaik's brother was involved. In the arms report last week Chippy Shaik was directly accused of a conflict of interest regarding this contract.

The 2000 audit set the ball rolling for the joint investigation into the R66-billion arms package, and helped set the tone for it. Parliament's standing committee on public accounts (Scopa) recommended the investigation that culminated in last week's joint arms report following the first, preliminary report.

The Mail & Guardian revealed last week that the latest report was shown in advance to President Thabo Mbeki and members of his Cabinet in terms of the apartheid-era Special Defence Account Act, which empowered them to censor it for reasons of "national interest". Auditor General Shauket Fakie has denied the executive used this prerogative to make any "substantial changes".

Now it has emerged that the provisions of the Act were enforced by the executive as early as the 2000 audit - and that Shaik managed to convince Fakie at the time to amend a section where Shaik had a conflict of interest.

The M&G has seen a September 1999 letter from Minister of Defence Mosiuoa Lekota to Fakie in which he gave a qualified go-ahead for an audit of the arms deal to be done, but put the auditor general on terms. He said Fakie could have access to secret documents, but only if he provided the terms of reference in advance, which would have to be okayed by all affected ministers.

Lekota also wrote: "The Auditor Generals Act [which incorporates provisions of the Special Defence Account Act] requires the auditor general to consult with the president, the minister of finance and the responsible ministers when reporting on the Special Defence Account."

The Special Defence Account was created in the apartheid era to handle clandestine arms acquisitions, and is now being used to channel payments for the arms package deal.

Before he released his first report to Parliament, Fakie showed a draft for comment to, among others, Shaik as arms procurement head. One subsequent amendment - relating to the battle between Cape-based C2I2 and a French company to supply components for the navy's corvettes - is telling: Fakie's draft stated: "The South African navy expressed its preference for the C2I2 [system]."

In a letter marked secret and dated June 7 2000, Shaik replied that he did not agree with the draft: "The South African navy did not express 'its preference to the C2I2' rather 'although the South African navy appreciated the technical potential offered by the C2I2 this was outweighed by the risk-driven cost '"

Indeed, when Fakie tabled the reworked report, it was amended along the lines suggested by Shaik. It read: "Although the South African navy preferred the technical potential offered by the local company, this was outweighed by prohibitive risk-driven cost implications "

What makes Shaik's meddling extraordinary is the fact that the issue was of direct interest to his brother, Schabir Shaik. The French company that C2I2 was competing against - and lost to - was Detexis, a sister company of African Defence Systems, in which Schabir Shaik is a director and shareholder.

Last week's arms report criticised Chippy Shaik for not recusing himself when this conflict of interest arose during the tender adjudications, and he has since been suspended.

C2I2 managing director Richard Young this week commented that if Shaik had made the remarks in his letter to Fakie under oath, he would have "charged him with perjury". Young said he has now asked Fakie to provide him with the draft of last week's arms report - to enable him to judge further amendments. He also threatened: "My lawsuit [to challenge the contract] is coming very soon."

Fakie's office confirmed that Young had lodged a request under the Promotion of Access to Information Act, but said it was taking legal advice about how to deal with it.

With acknowledgement to Paul Kirk and the Mail and Guardian.