Publication: Mail and Guardian Issued: Date: 2003-08-21 Reporter: Sapa

Fakie Rebuffs New Arms Deal Claim



Mail and Guardian

Date 2003-08-21



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Auditor General Shauket Fakie on Thursday rebuffed claims that arms-deal investigators glossed over alleged irregularities in the procurement process.

He also moved to quash an accusation that a subcontractor, African Defence Systems (ADS), was allowed to drop its price to secure a deal after the "tender" had closed.

"We are convinced that statements made yesterday, that this matter was not reported on, are factually incorrect," he told journalists in Cape Town.

The auditor general was referring to allegations, made during a standing committee on public accounts (Scopa) hearing on Wednesday, of serious irregularities in the awarding of subcontracts in the controversial multibillion-rand deal.

Scopa had been questioning Fakie on claims the final report of the probe into the arms deal was "heavily edited" and "doctored".

The deal was investigated by the auditor general, the public protector and the National Directorate of Public Prosecutions.

Democratic Alliance MP Nigel Bruce produced a letter during the hearing supposedly showing ADS was allowed to drop its offer a day after the deadline for final bids, thus allowing the company to undercut the rival offer.

It was claimed that the investigators had missed this fact, and that ADS had seen the competitor's bid.

ADS and CI were competing for a contract to supply the management system of the combat suite for the South African navy's four new corvettes.

CI MD Richard Young had described the allegations as "a smoking AK47".

Fakie on Thursday stressed that all of the allegations were, in fact, dealt with in chapter 11 of the joint investigation team's final report - tabled in Parliament in November 2001.

The investigators, he said, had acknowledged that the tender was handled by the German Frigate Consortium (GFC), as the primary contractor for the corvettes, and had been conducted outside the state's normal procedures.

ADS had initially been identified as the subcontractor, and it was only when concern was raised over the price offered that CI was asked to bid.

The company subsequently reduced its price after the process had been opened to CI, and there was an indication that CI had been used to lower ADS' offer.

The auditor general said the process of nominating one supplier could have created the potential for abuse of the process and potential prejudice to the state.

Considering the amount of money involved - R2,6-billion for the combat suites for the corvettes - it would have been preferable for government to have a greater say in the tender process.

The GFC, however, had been given primary responsibility to choose its suppliers.

Fakie said that the closing date for the tender had been April 16, and not as alleged, the day before.

"It is very clear to us that the closing date was, in fact, the 16th of April, so this letter was received on the closing date," he said.

The letter from ADS details errors in an earlier bid and reduces the offer from R32,4-million to R29,64-million. The final offer is marginally lower than CI's bid, including a management fee, of R30,4-million.

ADS had originally quoted R64,7-million.

The auditor general said the final report stated that evidence suggested ADS had been given sight of CI's final offer, but this could not be proved "conclusively". If this was true, it was clearly "irregular", he said.

Fakie acknowledged that the tabling of the letter at the Scopa hearing had surprised him, adding that he had not been personally involved in investigating the matter.

"To expect that I would have gone through all of those documents personally and have personal knowledge of those documents is also, I think, a bit unreasonable," he said.

With acknowledgements to Sapa and the Mail & Guardian.