Publication: Business Day Issued: Date: 2003-05-23 Reporter: Tim Cohen, Paul Kirk and Sapa

Risks, Vital Facts Kept Out of Arms Deal Report



Business Day

Date 2003-05-23


Tim Cohen, Paul Kirk

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Facts were kept from board that made recommendations to government

More omissions from Auditor-General Shauket Fakie's report on his investigation into SA's R60bn arms acquisition process have come to light, showing that there was a crucial "nondisclosure of facts" to a body tasked with evaluating products.

The new information follows the disclosure this week by Business Day of six pages of the draft audit report that Fakie showed President Thabo Mbeki, but which were omitted from his final report.

Further comparisons between the final and draft versions of the report show that important facts were not disclosed to a body called the Project Control Board, which might have influenced their decision to recommend a product to those higher up in the decision-making hierarchy.

The new information is likely to strengthen the perception of detractors of the arms deal, who have long suspected that significant changes were made to the report at the instance of the highest levels of government.

However, Fakie has strenuously denied his report was significantly altered, and has argued that to the extent that there were omissions, this was because they involved continuing investigations of the incidents by, among others, the Scorpions.

A section in the draft report headed "Nondisclosure of facts to the Project Control Board (PCB)" says: "Various vital facts were not disclosed to the PCB by the JPT (Joint Project Team), the combined effect of that would probably have prompted the PCB to take appropriate action." The "vital facts" concern the relationship between the then head of the procurement effort, Chippy Shaik, and his brother Schabir, who had become a shareholder in a company tendering for one of the subcontracts that formed part of the arms deal.

The board was not informed that French armaments company Thomson had taken over African Defence Systems (ADS), of which Schabir was a shareholder and director. This made ADS part of the overall consortium, with the result that it became "the main contractor, combat suite integrator as well as subcontractor competing with other subcontractors in an environment virtually free from the constraints of tender procedures", the edited section says.

The committee was choosing between two computer systems Diacerto (sic), owned by CI [not quite - CI's system was the Information Management System (IMS)], a losing bidder in the arms deal and whose MD, Richard Young, has been involved in legal action with government, and Detexis, owned by ADS and Thompson [not quite - with ADS, which is owned by Thomson (now Thales) who also own Detexis]. In various parts of the report, reference was made to "risks" involved with the Diacerto databus (sic). But the edited draft states the board was not informed of "the fact that the Detexis system also involved risk".

The edited report states that the board was not informed of the "exact nature of Mr Shaik's conflict of interest. The nondisclosure to the PCB probably also led to committees higher up in the hierarchy not being apprised of the facts." Asked to comment, Young said he thought these excised findings were "vital".

With acknowledgements to Paul Kirk, Tim Cohen and the Business Day.