Publication: Business Day Issued: Date: 2001-03-15 Reporter: Farouk Chothia Editor:

Defence Department Plays Down Shaik's Role

Publication  Business Day
Date 2001-03-15
Reporter Farouk Chothia
Web Link

He played one small role in a big programme' driven by cabinet. 

THE defence department has played down the role of weapons procurement chief Chippy Shaik in the R43bn arms deal, saying other state officials had far greater influence in the purchasing process. 

The department was reacting yesterday to claims that Shaik played a key role in the selection of subcontractors, and faced a conflict of interest because his brother Shabir Shaik was a director of African Defence Systems (ADS). 

One of Shaik's accusers is CI Systems MD Richard Young. The company won some subcontracts but lost others. The department said Young has been threatening legal action for about two years, and he should go ahead if he believes he has a case. Young has submitted his allegations to members of the Parliamentary public accounts committee, and the auditor-general's office for investigation.  

The department said that Shaik played "one small role in a big programme" driven by cabinet. Technical discussions on the arms purchase were led by then Armscor CEO Llewellyn Swan, and he was the "real decision maker", the department said. The department refuted claims Shaik supervised the process leading to the selection of subcontractors for the corvette combat suite. The supervision was done by Swan and then SA navy chief Robert Simpson-Anderson, it said.  

The department said that Shaik played a supporting role to Swan, and was the co-ordinator between the departments of finance, trade and industry, Armscor and the navy. Shaik took no decisions, and performed the task of taking the recommendations and decisions of lower bodies to higher forums for approval.  

The department said that Shaik recused himself from meetings when potential conflicts of interest arose. This was in line with the way the state tender board operated. The department said it should be noted that ADS won the combat suite contract in 1999, before Shabir became a director. Shaik held one meeting with Young where there could have been a potential conflict of interest. However, the meeting was held at the request of Young.  

Shaik felt he should hear Young's complaints because this is what "natural justice" demanded. Young was aware of the potential conflict of interest, but he still wanted to discuss his concerns with Shaik, the department said.  

ADS is owned by French electronics group Thomson, which also owns Detexis. Detexis won a subcontract for the combat suite's information management system after Cape Town-based CI Systems was overlooked.  

Auditor-General Shauket Fakie last year voiced concerns about the selection of Detexis, saying a forensic audit of the subcontract was needed.  

The department denied claims that government was responsible for the choice of Detexis. The German Frigate Consortium, which includes ADS-Thomson, recommended the Detexis system. Government was told at the time that if it wanted the subcontract to go to CI Systems, it would have to carry the entire risk because the company's technology was untested.  

With acknowledgement to Farouk Chothia and Business Day.