Publication: Mail and Guardian Issued: Date: 2001-11-09 Reporter: Paul Kirk Editor:

Arms Deal Report may Blow Up in Govt's Face


Publication  Mail & Guardian
Date 2001-11-09
Reporter Paul Kirk
Web Link


THE long-awaited report on South Africa's R60-billion arms package, due out next week, is expected to blast officials for conflicts of interest, recommend a shake-up of tender procedures and criticise several of the weapons deals.

Compiled by the Scorpions, the public protector and the auditor general, the report will update Parliament on the progress of the marathon probe, while investigations continue into possible crimes linked to the arms deal.

Although the report is being kept under wraps, the Mail & Guardian has pieced together its salient features. Sources in the Office of the Auditor General said this week that several deals come in for close scrutiny and criticism.

The purchase of British Aerospace Hawk trainers was mentioned as a case that receives attention in the report. The minutes of official meetings where this acquisition was discussed are stamped "secret", but a copy in the possession of the M&G shows how former defence minister Joe Modise led a campaign to disregard tender procedures in order to award the contract for fighter trainer jets to British Aerospace. Sources say the report will also broach the controversial purchase of defence equipment from Schabir Shaik - the brother of the army's acquisition chief, Chippy Shaik.

Local company CI was given capital by the state to develop combat suites for navy ships. However, when the contract for the corvettes' combat suites came up CI was overlooked in favour of a foreign company linked to Schabir Shaik.

Confidential minutes obtained by the M&G suggest that Chippy Shaik did not recuse himself from meetings where his brother's company was discussed.

The report's discussion of conflicts of interest and flouting of tender procedures could expose the state to litigation by those who lost out in the deal.

Bidders have not, until now, been able to use or obtain confidential documentation relating to the arms acquisition programme. However, the report may give those who lost out on contracts the necessary ammunition to mount lawsuits.

The report has attracted controversy before even reaching Parliament. The Office of the President - and the ministers of defence, finance, and trade and industry - saw a copy last month.

The chair of Parliament's standing committee on public accounts, Gavin Woods, said he was "certain" suspicions existed that the report may have been rewritten since then.

Woods said he found it strange that when Auditor General Shauket Fakie appeared before his committee on October 16 he did not mention the fact that the report had already been shown to the executive.

While the M&G could not contact the auditor general, his staff defended the report, saying it had not been tampered with or censored by the executive, but had to be shown to them for comment.

Should the committee feel the report needs clarification or explanation it could call in the various agencies that contributed to it to question them or demand further particulars. It could also summon the ministers responsible for the arms deal to account for themselves - and call for any documents it feels necessary for it to understand the report - regardless of the security classification of the documents. Meanwhile, companies that lost out in the R60-billion arms deal are limbering up to sue the government after the long-awaited report into the arms deal, which could provide crucial information to mount lawsuits.

The Mail & Guardian reported last week that Italian airplane manufacturer Aermacchi was considering litigation after tender procedures were changed to overlook their product in favour of the British Aerospace Hawk - a plane that originally came third in the tender evaluation.

This week the local representative of Swiss gearbox manufacturer Maag said it too was considering litigation. Maag was originally chosen to supply the giant gearboxes for the Navy corvettes. After being chosen by the German Frigate Consortium and the Department of Defence for supplying a better product, Maag was named as preferred supplier.

Then, with little explanation, Armscor intervened in the deal and insisted the consortium use a gearbox made by Renk.

Maag was deemed by naval experts assigned to the armaments acquisition committee to make a less complex gearbox with a better noise signature.

The noise signature is of vital importance to naval vessels as the more noise a gearbox makes the easier it is for a submarine - or homing torpedo - to locate the vessel and destroy it.

Tienie van Staden, director of Joesten Marketing, the agents for Maag, said his principals may yet litigate. "It has always been our intention to litigate providing we are not on our own. If other companies are prepared to take the battle to court then we will join in."

Maag originally did not offer trade offsets as attractive as Renk's and it was ostensibly for this reason they were deselected after being selected. However, they later increased their offsets - but were still pipped by Renk.

Richard Young, managing director of CI - which lost out on a bid to supply systems for the navy's corvettes - told the M&G that he too was planning on civil litigation. Young said he was waiting to study the report before deciding what course of action to take. "I am waiting for the report with glee. Once I have studied it I will decide on a plan of action early in the new year."

The deal also faces a legal challenge from a group called Economists Allied for Arms Reduction, which wants to take the government to the Constitutional Court, if necessary, to overturn the loan agreements that finance the arms deal.

The group's South African head, anti-arms campaigner Terry Crawford-Browne, intends to argue that the loan agreements signed to finance the arms deal cannot be justified constitutionally or legally and that they should be set aside. If the order is granted it will see the arms acquisition programme collapse with no money being available to supply the arms dealers.

Crawford-Browne will be using the services of one of the country's top advocates, Malcolm Wallis SC - former chairperson of the General Bar Council of South Africa - in his campaign.

With acknowledgement to the Paul Kirk and the Mail & Guardian.