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

Contractors Slam Arms Report


Issued  Pretoria
Date 2001-11-15
Reporter Sapa


Some conclusions in the report on South Africa's controversial arms deal drew fire from divergent quarters in the defence industry on Thursday.

Private defence contractor Richard Young said the document was "unwell".

"It's actually a sick report," he told Sapa. "There are serious omissions and the conclusions are wishy-washy."

The report resulting from a multi-agency investigation into the deal was tabled in Parliament on Thursday afternoon.

Young welcomed a finding that defence acquisition chief Chippy Shaik had a conflict of interest in the procurement of the arms package.

This arose from the shareholding of his brother Shabir in the Thomson Group and African Defence System, which were awarded a contract at the cost of Young's company, CCII Systems.

Shabir on Thursday blamed the finding on his brother's conflict of interest on what he described as flaws in the acquisition system.

Procedures on how such conflicts should be handled were vague, he said.

"Because of a weakness in the system, my brother and I have become the targets."

Shabir is a shareholder in Thomson which has an interest in ADS.

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

The ships form part of South Africa's controversial R43-billion arms deal.

Young on Thursday reiterated his belief 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. "That certainly vindicates my position."

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 states.

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

He said on Thursday that he was obtaining legal advice on possible litigation.

Shabir said there was no clear guideline on what should happen once an official declared his conflict of interest. He rejected the notion that he had tried to influence his brother.

"There were a total 33 packages to tender for. Had I been driven by greed, I would have gone for more than one package."

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

Reaction on the report's findings regarding the role 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 more in the 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, BAE Systems, welcomed the report and the government's response to the document.

"They confirm South Africa's approach linking long-term economic and strategic relationships beneficial to the country with the modernisation and downsizing of the SA National Defence Force," the company said.

"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.