Jury Still Out on Arms Deal Report
Pending further evidence, words like exoneration' or whitewash' are premature
Opposition parties have claimed that the report of the joint investigation into the controversial arms deal is a whitewash.
Cabinet ministers, on the other hand, have claimed the report exonerates government. Neither claim is justified on close reading of the report. The political spin and counterspin are inconsistent with the content of the report and related developments.
The key point in this regard is that the report does not address some of the most serious allegations of misconduct by government officials and others involved in the arms deal.
The report states the investigating agencies "received numerous allegations, most of which were of a criminal nature, referring to issues such as corruption and conflict of interest". However, "areas of a criminal and sensitive nature were considered inappropriate to be included in this report".
The report states four allegations were found to have no substance but "other allegations appeared to have substance and are currently being pursued". The report summarises six sets of allegations still under investigation by the national prosecuting authority's directorate of special operations, commonly known as the Scorpions.
Because the report does not cover "areas of a sensitive and criminal nature", it does not discuss the following matters:
The arrest of Tony Yengeni, the former chairman of the parliamentary defence committee, and Michael Woerfel, suspended head of the European Aeronautic Defence and Space Company, on charges of corruption, fraud and forgery;
The investigation of Vanan Pillay, a trade and industry official who played a key role in evaluating tenders and allegedly received an improper benefit from a defence firm;
Allegations against Joe Modise, the late minister, "not investigated during the public and forensic phases of the investigation"; and
Allegations of criminal conduct made by an unsuccessful bidder for one of the corvette subcontracts and which "form the subject of an investigation by (the Scorpions)."
Following the release of the report, Chippie Shaik, chief of acquisitions in the defence department, was suspended and is the subject of a departmental investigation.
His brother Shabir Shaik, who has financial interests in private sector defence companies, was arrested on charges of unlawful possession of confidential documents relating to the arms deal.
In light of the pending trials and continuing investigations, it is impossible to reach a definitive conclusion about the veracity of the outstanding allegations and the validity of the arms contracts. The report's conclusion about the Scorpions' investigations is thus provisional: "as matters stand, there are (at present) no grounds to suggest that government's contracting position is flawed".
Nevertheless, the report records a number of deviations from agreed tender evaluation procedures. In some instances the investigators find that the deviation had no material effect on the selection of the successful bidder but this is not the case in all instances.
For example, the successful bidder for the corvettes was the German Frigate Consortium. The report states the consortium did not comply with a minimum criterion specified in the defence industrial participation value system and "should have been disqualified from proceeding to the next round of evaluation". Had there been no deviation from the value system instructions, the consortium would "not have won the bid for the corvettes".
The report states further the Spanish bidder for the corvettes, Bazan, was the only bidder that complied with all the minimum criteria in respect of technical and defence industrial participation evaluations; it obtained the highest military value and evaluation scores; and it offered the lowest price of the four bidders.
The report continues as follows: "(The German consortium) however, was nominated the preferred bidder on the basis of their NIP (national industrial participation) offer. This (although) the national industrial participation is not ascertainable in terms of achievability."
The report finds Chippie Shaik had a conflict of interest because of his brother's financial interests in defence companies that were part of the consortium's successful bid.
The report also identifies procedural anomalies and apparent unfairness in relation to some corvette subcontracts, and expresses doubt about the accuracy of statements by certain government officials.
Space constraints preclude a summary of the other procedural problems recorded in the report. Anyone wishing to form an independent opinion of the arms deals should go through the whole report rather than rely on the findings contained in the final chapter.
The main conclusion of the report is that "no evidence was found of any improper or unlawful conduct by government"; the "irregularities and improprieties" referred to in the report point to the conduct of certain government officials and "cannot be ascribed to the president or cabinet ministers"; and there are "therefore no grounds to suggest that government's contracting position is flawed".
Many commentators have pointed out the distinction drawn here is dubious since government comprises both officials and ministers. More importantly, the conclusion excludes allegations that are the focus of criminal prosecution and ongoing investigation by the Scorpions and government departments.
It remains to be seen whether the trials and probes yield evidence with wider political and legal implications. Meantime, emphatic pronouncements of "whitewash" or "exoneration" are premature.
Nathan is executive director of the Centre for Conflict Resolution. He was one of the drafters of the 1996 white paper on defence and the 1998 Defence Review.
With acknowledgement to Laurie Nathan and Business Day.