Publication: Business Day Issued: Date: 2003-07-16 Reporter: Tim Cohen

State Refuses to Budge on Arms Package

Publication  Business Day
Date 2003-07-16


Tim Cohen

Web Link


Erwin says criticisms are misplaced

Only the extremely small chance of a major balance of payments crisis would cause government to cancel the last tranche of its R50bn arms package, Trade and Industry Minister Alec Erwin said yesterday.

Erwin said in a press briefing aimed at clarifying government's stance on the controversial arms procurement process that nothing since the original contracts were signed had given government cause to be concerned that the integrity of the process had been impaired.

In fact, he said, the original decision to upgrade and re-equip SA's defence force with new ships, jets and helicopters seemed, if anything, even more correct today than it did when the process was started.

Erwin said the process used for the selection of the arms included checks and balances to prevent any effort to influence the process.

Erwin was defending the procurement in the face of allegations stretching over years made by disgruntled contractors, antiwar groups, opposition parties and press reports.

Many of the critical reports revolve around the relationship between the former head of the procurement process Chippy Shaik and his brother Shabir Shaik, the CE of Nkobi holdings which won several contracts with French arms company Thales in the procurement process.

The possibility that Shaik influenced the selection process in favour of his brother's company has long been a central question of many of the groups critical of the process, including local defence company C2I2, which claims it was sidelined on the largest part of its tender in favour of Thales and related companies.

Erwin argued that these allegations were misplaced, since they rested on a misunderstanding of the procurement process.

Although the senior ministerial committee was aware at the time of signing the contracts in 1999 that Shaik's brother was involved in one of the bidding consortiums, Erwin said "there was no possibility of contamination of the process".

Erwin said the ministerial committee was advised by the vehicle responsible for the overall contract for the corvettes, the German Frigate Consortium, that if it chose the C2I2 product, they would no longer be responsible for the final effectiveness of the system as a whole.

The reason for this was that although the SA National Defence Force had spent millions in developing an information management system with C2I2, it was, at that point, untested.

It was also "mission critical" to the corvettes, Erwin said, involving the collection of electronic equipment designed to coordinate a variety of functions on the ship, called a databus.

The ministerial committee therefore came to the understandable decision to choose the proven French product, called the Diacerto databus, Erwin said.

** [But previously Erwin had said (in official government press conferences, before SCOPA, as well as under oath at the public hearings) that government had nothing whatsoever to do with sub-contracting - he attested that it was the prime contractor who chose the sub-contractors (including the Diacerto databus). Later the DoD changed this position to it being ADS who made the decision, later to Project Control Board, later to the Naval Board.

Now Erwin tells the country that it was actually the Ministers Committee, of which he was a member, that made the decision. I know because I now legitimately have the minutes of this meeting (signed by, inter alia Ministers Erwin and Lekota as well as Chief of Acquisitions, Shamin (Chippy) Shaikh). This has now become a public document.

And Erwin alleges my "misunderstanding of the procurement process" - he must be joking - or desperate.

Erwin is wrong - very wrong!.

The question is why?!]

Erwin's comments contrast with the allegations of C2I2, which has questioned whether the German Frigate Consortium was appropriately placed to make this finding, since elements of the consortium were themselves bidders for the databus subcontract.

With acknowledgement to Tim Cohen and Business Day.

** Comments by Richard Young - 2003-07-16