Publication: Independent Online Issued: Date: 2000-07-22 Reporter: Editor: Sam Sole

Subcontractor on Navy Deal Cries Foul 

Publication  Independent Online
Date 2000-07-22
Editor Sam Sole
Web Link

A subcontractor on South Africa's R32-billion arms-procurement programme has refocused attention on allegations of irregularities that have dogged the controversial deal. 

CCII Systems has written to the auditor-general formally to request that a forensic audit be conducted into the removal of CCII as selected contractor to provide the information management system for South Africa's new patrol corvettes. 

The information system is the vital "brains" of the ship, linking weapons, communications and vessel control systems. 

The CCII system, which is South African, had been developed in conjunction with Armscor and had been selected by the South African navy. However, late in the process, the contract was granted to French company Detexis.

The significance of this is that Detexis is owned by a French defence company, Thomson-CSF. Thomson also owns the South African company African Defence Systems (Ads), which was appointed to drive South African participation in the "fighting" components of the corvette programme. 

Ads is one of a number of firms that have raised eyebrows about their role in the acquisition process. A key director of Ads is Schabir Shaik, brother of the chief of acquisitions in the department of defence, Shamim "Chippy" Shaik, the man who has driven the whole arms deal. Chippy Shaik's wife also works for the marketing department of Ads. 

The acquisitions chief has said that he recused himself from the decision-making process because of a potential conflict of interest, but CCII has raised concerns about the timing and nature of this recusal. 

In a letter to the executive manager in the AG's office, Wally van Heerden, CCII's director Richard Young said his company had come to the conclusion "that there are vested interests behind our deselection and the most obvious of efforts to ignore our valid concerns". 

"In particular, we are concerned that Ads have family and business links (at least indirect) with the chief of acquisitions, Shamim "Chippy" Shaik, who is also chairperson of the project control board, the body responsible for final decision-making on the corvette programme.

"Shaik has frequently publicly declared his recusal from the deliberations and decisions of the project control board, but we have been advised on good authority that Shaik's supposed recusal could hardly be described as formal recusal."

Young said that a recent report by the corvette project team clearly recommended the use of the CCII management system in preference to the Thomson Detexis system, which he claimed was technically inferior.

"Our position is that we have what we believe to be conclusive and substantial proof that the information system was both nominated and selected for the corvette.

"We are therefore of the opinion that its deselection is both irregular and legally unfair.

"We believe we have shown the auditor-general sufficient evidence of  flagrant irregularities in the contract award process and at least this prima facie evidence would support a full formal inquiry." 

Chippy Shaik said in an interview that CCII had been passed over because its system was "new technology" and that CCII had been unwilling to provide performance guarantees. 

As a result of this "risk", Ads added a 100 percent mark-up if the navy insisted on having the CCII system, forcing the navy to accept Detexis. 

Young denies that CCII had been asked to provide a performance guarantee and says his company was never approached to do a risk assessment on their system. 

In fact, he said, the system had exceeded development and performance benchmarks set by Armscor, and Thomson-CSF of Belgium had selected the same intrinsic CCII technology for a new generation of Nato aircraft. 

Chippy Shaik says the project team that made the final recommendations on the contracts operated independently: "We didn't interact with the project team." 

Van Heerden has revealed that the AG's office was "considering" Young's letter. The CCII allegations come on top of several other areas of concern about the arms deal that are understood to have been investigated by the AG's office. 

The final report of Van Heerden's team is sitting with the auditor general, Shauket Fakie, awaiting his signature before going to parliament. 

It is understood that the AG has raised concerns about the awarding of contracts. Among these is believed to have been a mid-process adjustment of selection criteria in several instances, including the jet trainer purchase that went to British Aerospace. 

The Heath unit has also been investigating aspects of the arms deal, but is understood to have been hesitant about requesting a presidential proclamation to launch a formal investigation. 

Tensions between the unit and the government reached crisis point recently, with an apparent reluctance by the government to approve proclamations.