Publication: Woza Issued: Date: 2000-10-30 Reporter: Editor: Sapa

MPs Want Super-Inquiry into Arms Deal

Publication  Woza
Date 2000-10-30
Editor Sapa
Web Link

Parliament (Sapa) - Parliament's watchdog public accounts committee wants a super-investigation into South Africa's controversial R30 billion arms deal which would involve at least five independent agencies, including the Heath anti-corruption unit.

The committee has also taken Cabinet to task for failing to disclose that the cost could escalate, and says it believes there may have been "undue influence" in awarding the prime contracts. According to its report to parliament, the committee will convene a meeting with Judge Willem Heath, Auditor-General Shauket Fakie, the Investigating Directorate of Serious Economic Offences, Public Protector Selby Baqwa and National Director of Public Prosecutions Bulelani Ngcuka within two weeks. "In noting the complex and cross-cutting nature of the areas to be investigated . . . the investigation would be best served by combining a number of areas of investigative expertise and a number of differing areas of legal competence and authority."

Once the meeting took place, the committee would issue an "investigation brief" to the team. All the agencies - bar Ngcuka - have launched separate probes into the deal. A second report would be issued early next year, followed by a final report to Parliament, which would incorporate the report of the investigating body, the committee said.

The deal, signed in late 1999, has been the subject of repeated corruption claims. Earlier this month, defence officials were grilled for seven hours by members of the committee. This followed Fakie's special report to parliament, which found that generally accepted procurement practices were not followed. Fakie also recommended a special forensic audit into the deal's subcontracts. Speaking after MPs met behind closed doors on Monday to discuss their report, committee chairman Gavin Woods said: "There is sufficient reason to want certain matters investigated." He declined to say whether there is any substance to specific claims of corruption already in the public domain. Committee members said it is too early to say whether there are grounds for the cancellation of contracts.

The report echoes concerns expressed during the committee's hearings about the eventual cost of the deal. Cabinet said in September last year that the cost would total R29.9 billion, which was adjusted to R30.3 billion two months later and which rose in September this year to R43.8 billion. The committee said it is clear that Cabinet had omitted to mention certain cost implications which will significantly add to the state's commitments. This includes the cost of serving the loan, and negative foreign exchange movements.

"As all this is hugely material to the public interest, the committee believes that the public should have been informed of these possibilities." On the deal's supposed R104 billion industrial participation offsets, the committee joined Fakie in expressing its concern that the 10 percent guarantee is inadequate. Moreover, it said the claim that the deal could result in 65 000 jobs is "optimistic", and that parliament's trade and industry committee should investigate the claim further.

It said the written contracts do not appear well prepared and said that an important indiscretion is the reference to the use of two different foreign currencies in one of the contracts. "The committee will assess whether these important contracts were subjected to appropriate legal scrutiny in their preparation."

The committee also needs more information to satisfy it that in relation to the Gripen and Hawk fighter planes there was no loading of the price to cover such guarantees, or to offset the cost of any other industrial participation obligation.

The committee also criticised the selection process for the prime contractors, confirming the possibility that improper influence may have been applied. In the case of the lead-in fighter trainer contract, the committee said it is concerned that the evaluation system, accepted in April 1998, was changed a month later. This had led to the choice of a contractor who otherwise would not have been awarded the contract. 

MPs were also worried about the possible role played by influential parties in determining the choice of sub-contractors, and that government had no influence over this process. The committee said the integrated management system (IMS) of the corvettes should also be investigated, particularly the basis upon which the risk for the South African product was loaded.

The committee also recommended a thorough postmortem and review of the arms procurement processes, particularly those of Armscor. Committee member Andrew Feinstein repeated the committee's concern about the lax attitude to possible conflicts of interest. The committee has also received more information about instances of conflict of interest, in addition to the instance disclosed by the head of the acquisition programme, Chippy Shaik.

The report has yet to be tabled for adoption in the National Assembly, although the process is a mere formality. Sapa

With acknowledgement to Christi van der Westhuizen and the Beeld.