Publication: Sunday Tribune Issued: Date: 2000-07-23 Reporter: Sam Sole Editor:

New Arms Deal Row Erupts



Sunday Tribune

Date 2000-07-23
Reporter Sam Sole


New claims of irregularities in the awarding of South Africa's huge arms purchase contracts have been put to the Auditor General.

A small sub-contractor on South Africa's R32-billion arms procurement programme is set to blow open allegations of irregularities which have dogged the controversial arms deal.

CCII Systems has written to the Auditor-General to formally 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 SA Navy. However, late in the process, the contract was granted instead to French company Detexis.

The significance of this is that Detexis is owned by 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 companies which have raised eyebrows about their role in the acquisition process. A key director of ADS is Schabir Shaik, brother of the Chief of Acquisitions, Shamin (Chippy) Shaik, who has driven the whole arms deal. Chippy's wife also works for the marketing department of ADS.

Shaik has said that he recused himself from the decision-making process because of 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 A-G's office, Wally van Heerden, CCII 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 has family and business links (at least indirect) with the Chief of Acquisitions, Mr Shamim (Chippy) Shaik, who is also chairman of the project control board, the body responsible for final decision making on the corvette programme.

"Mr 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 Mr Shaik's supposed recusal could hardly be described as a 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 claims is 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."

Shaik told the Tribune 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% mark up if the Navy insisted on having the CCII system, forcing the Navy to accept Detexis.

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

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

Shaik added: "There was only one meeting where all the final decisions took place. I recused myself from that."

Van Heerden said 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 which are understood to have been investigated by the AG's office.

The final report of Van Heerden's team is sitting with Auditor-General Shauket Fakie awaiting his signature before it is released to Parliament. It is understood the Auditor-General has raised concerns about the procedures used in 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 which went to British Aerospace.

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

Tensions between the unit and government have reached crisis point, with an apparent reluctance by government to approve proclamations. Heath has recently announced a media blackout on his unit's activities - apparently in a bid to mend relations.The Democratic Alliance called on President Thabo Mbeki on Thursday to set up a commission of inquiry to probe Deputy President Jacob Zuma's financial affairs.

The inquiry should also look into the nature of Zuma's financial relationship with his financial advisor Schabir Shaik, who was currently facing criminal charges, DA spokeswoman Raenette Taljaard said in a statement.

Recent allegations against Zuma were very serious and struck at the heart of government.

"South Africa cannot afford to have a cloud of suspicion and questions of corruption hanging over the head of the second most important political office bearer in the country," Taljaard said.

In a letter to Mbeki on Thursday, she said the allegations against Zuma included that he attempted to secure a bribe of R500 000 a year from French defence giant Thomson-CSF (now Thales) to be paid in return for Zuma's protection of Thales during investigations into the arms deal and to secure his permanent support for future projects; that he met Shaik and Alain Thetard, then Thomson-CSF's chairman for Southern Africa, in a hotel in Durban on March 11, 2000, when the Joint Investigating Team's probe of the deal had already commenced to discuss the question of Thomson-CSF making an "effort" on behalf of Zuma in return for his protection; and that Zuma might have a direct or indirect interest in Thales via other companies.

Taljaard said although Zuma had denied all the allegations as "baseless, mischievous and unfortunate" and stated that he was "far removed from the arms procurement process", this statement was misleading.

For example, it was Zuma who wrote a letter to Parliament's public accounts committee (Scopa) chairman at the time Dr Gavin Woods, "that attacked a committee of Parliament in virulent terms -- an attack that appears prima facie more sinister if any allegations against him are proven".

Furthermore, Shaik was currently facing serious criminal charges of stealing classified state documents.

"The probity, or otherwise, of the deputy president's ongoing financial relationship with Mr Shaik requires objective scrutiny," she said.

"These allegations are very serious and raise both questions of potential unethical and criminal conduct -- questions that, if proven, could make a mockery out of Mr Zuma's leadership of the South African government's moral regeneration campaign."

Therefore, the DA requested a commission of inquiry be appointed to investigate the matter, Taljaard said.

With acknowledgement to Sam Sole and the Sunday Tribune.