Publication: Issued: Pretoria Date: 2001-11-15 Reporter: Editor:

Businessman Welcomes Arms Report Finding


Issued  Pretoria
Date 2001-11-15
Reporter Sapa
Hannes de Wet & Mariette le Roux


Private defence contractor Richard Young on Thursday welcomed a finding that defence acquisition chief Chippy Shaik had a conflict of interest in the procurement of South Africa's arms package.

"That certainly vindicates my position," he told Sapa shortly after a report on a multi-agency investigation into the deal was tabled in Parliament.

Young heads the company CCII Systems, which was originally listed by the SA Navy as the preferred supplier of combat technology for the navy's four new corvettes.

The corvettes form part of South Africa's controversial multi-billion arms deal.

Young lost the corvette contract to the Thomson Group and African Defence Systems (ADS).

In public hearings earlier this year he claimed a conflict of interest on the part of Shaik in the matter.

Shaik's brother Shabir is a shareholder in Thomson which has an interest in ADS.

Young on Thursday reiterated that Shaik's conflict of interest led to the awarding of the contract to his brother's companies.

"The report on the investigation shows that my allegation was correct," Young said.

The report says Shaik declared the conflict of interest in December 1998, but continued to participate in the process that led ultimately to the awarding of contracts to these companies.

"He did not recuse himself properly," the report says.

In testimony during the arms hearings, Young produced secret (sic) minutes showing that Shaik was indeed present at some meetings where the corvettes' combat technology contract was discussed.

Young on Thursday said he first wanted to study the report before commenting further.

Earlier, he indicated that he intended suing for damages of between R100 -million and R200-million.

Shaik on Thursday referred enquiries to his lawyer, Terry Mahon, who said he would only comment after studying the report.

Comment on the report's findings on the involvement of former defence minister Joe Modise could not be obtained.

The report said Modise's involvement in a company that benefited from arms deal offsets was "extremely undesirable".

Approached for reaction, his attorney, Steve Friedland, said: "You should speak to Mr Modise."

He declined to provide his client's telephone number.

Defence sources indicated that Modise's health had deteriorated to the extent that he was spent more time in hospital than at home.

The former minister has cancer.

He was actively involved in the procurement process before his retirement.

The report says : "Although no evidence of impropriety was found in this regard... such a situation seems extremely undesirable as it creates negative public perception about a process that might otherwise be in order."

One of the prime contractors in the defence package, British Aerospace (BAE), was on Thursday still studying the report.

South African spokesman Linden Birns said the company would probably issue a detailed statement later in the day.

He added: "We remain committed to fulfilling our obligations in terms of the contract.

Questions were earlier raised about the appointment of former senior Armscor official Lew Swan as director of BAE. The probe found no wrongdoing in this regard.

With acknowledgements to Sapa.