Publication: Financial Mail Issued: Date: 2003-05-30 Reporter: Peter Honey

Arms Deal Investigation : There's Still No Smoking Gun



Financial Mail

Date 2003-05-30


Peter Honey

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The latest disclosures about the R50bn arms deal tell us little more about corruption in the procurement process than we knew already. And that isn't much. The real damage lies not in the untested allegations but in the reinforcing of perceptions that the watchdog institutions that investigated the procurement connived with the executive in a cover-up. Even here, though, the evidence is far from conclusive.

The most damnable action so far by auditor-general Shauket Fakie was his decision to show the full draft report to President Thabo Mbeki and the ministers of defence, finance, trade & industry and public enterprises back in October 2001, weeks before giving it to parliament's standing committee on public accounts (Scopa), which had initiated the joint inquiry.

The final report compiled jointly by the auditor-general, public protector Selby Baqwa and national director of public prosecutions Bulelani Ngcuka cleared government of "improper or unlawful conduct", except for a few officials. One, the head of defence procurement, Chippy Shaik, later resigned for actions that seemed to favour a company part-owned by his brother.

Critics of the process, including the official opposition and former Scopa chairman Gavin Woods (IFP), have long criticised the report as a whitewash. Now, part of earlier drafts of the joint report obtained through a court action by Cape Town-based defence industrialist Richard Young reveal curious details that were edited out of the published version.

Omissions included a section detailing "inaccuracies" in Shaik's submission to Scopa and evidence of a R7 000 cash "farewell gift" from companies sub-contracted in building the navy corvettes to the project officer, Rear Adm Johnny Kamerman.

Fakie insists he "did not limit the report" and says he is willing to go to court to defend his case. Indeed, there is no evidence that the omissions weaken the findings. And Young admitted to the FM this week that he himself contributed R300 to Kamerman's gift. It was an open whip-round at an industry function - hardly bribery's smoking gun. Kamerman is now head of the corvette and submarine project team based in Hamburg, Germany.

So much has been written about corruption and the arms deal that the two phrases have become synonymous. Compounding the suspicions are :

But the most persistent allegations of corruption have come from Young. He has been on a single-minded crusade for restitution ever since his electronics company, CI, lost out to African Defence Systems (ADS) for the most lucrative electronics sub contracts for the corvettes. ADS, a subsidiary of Thales, is part-owned by Chippy Shaik's brother, Schabir. Yet CI is still sub contracted to ADS to build the corvettes' navigation distribution subsystem.

Government's sullen silence and the auditor-general's initial resistance to Young's application for access to information have served only to fuel speculation that the executive has something to hide.

Perhaps so. But there may be reasonable explanations for government's ham-handedness.

Government's choice of weapons - not always the cheapest or the most suitable - has been portrayed by some critics of the arms deal as prima facie evidence of corruption.

But, as Modise, now dead, outlined to arms deal negotiators at the time expense was only one of four criteria in choosing weaponry. The others were "best strategic relationship"; maximum industrial participation; and best financing arrangement.

The strategic spread of contracts in the arms deal is not too dissimilar from SA's strategic foreign relations profile - the biggest contracts went to a British-Swedish consortium, the next largest to Germany and France and the fourth to Italy. Only the US is excluded.

But such nuances may be impossible to prove and have little resonance while popular suspicion rages. Meanwhile, the furore seems likely to bubble on for months, if not years.

Young, whose litigations are heading nearer to court, says he will make more revelations in the months ahead - "Chinese water torture", he calls it.

Government faces a dilemma. To return the probe to parliament would amount to a political defeat. More likely Mbeki and colleagues will choose to ride out the storm in hope that each successive gust blows weaker over time.

With acknowledgements to Peter Honey and the Financial Mail.