Chippy Shaik's Name Dropped at Brother's Trial [Sapa, 2004-11-23]

Publication: Sapa Issued: Durban Date: 2004-11-23 Reporter: Sapa

Chippy Shaik's Name Dropped at Brother's Trial

Publication	Sapa COURT-N/L-SHAIK
Issued	Durban
Date	2004-11-23
Reporter	Sapa

South Africa had no policy in place to use as a guideline when it embarked on a multi-billion rand arms acquisition process in the 1990s, the Durban High Court heard on Tuesday.

State witness David Griesel, giving evidence in the Schabir Shaik fraud and corruption trial, said policy was tailor-made *1 as the process proceeded.

Griesel is the assistant general manager of acquisition at the Armaments Corporation of SA Ltd (Armscor), which acts mainly as an acquisition agent for the Department of Defence.

Griesel said Armscor looked abroad for equipment because it knew what the capabilities of the local market was *2.

The state alleges that Shaik solicited a R500 000 per annum bribe for Deputy President Jacob Zuma from French arms company Thomson-CSF in exchange for protection during investigations into irregularities in the arms deal.

It also alleged that through Zuma's influence Shaik and his Nkobi Holdings secured a slice of the arms deal. The German Frigate Consortium won the corvette tender and Shaik's Nkobi and Thomson-CSF had shares in ADS, which was part of the GFC.

However, it was mention of Shaik's brother, Chippy Shaik, which dominated court proceedings on Tuesday.

At the time of the foreign acquisition process Chippy was head of acquisitions for the Department of Defence. He was also the co-chair of the strategic offers committee -- SOFCOM.

Griesel said: "(Chippy) Shaik was to a large extent driving the process."

Chippy Shaik had also made presentations to all the committees which finally decided on the preferred bidders.

The defence pointed out that in December 1998 Chippy Shaik wrote a letter to the navy vice-admiral recusing himself from decisions concerning the corvettes.

However, Griesel denied any knowledge that Chippy Shaik had recused himself during the process, not even at the consolidation stage.

On Tuesday Griesel said there was no policy for foreign acquisition after South Africa's markets were opened. Previously all decisions regarding acquisitions were done by Armscor but in the case of this arms deal several committees like the Armaments Acquisition Steering Board, the Armaments Acquisition Council and a cabinet committee comprising several ministries were involved in the process.

This was also the first time that external funding was requested from the Department of Finance and the first time the Department of Trade and Industry was involved.

Griesel said the Defence Department did not have enough money for the arms deal and that because additional funding was needed for the project it had to show government how South Africa as a whole would benefit from the programme.

He said the awarding of the tender was on done on a points basis and that in the case of the naval corvette tender, the German Frigate Consortium got top marks throughout the entire process *3.

Griesel said the main contractors in the acquisition process were allowed to choose their own sub-contractors.

*1 The policy was indeed tailor-made to force pre-determined outcomes favouring the ruling elite and their pre-selected foreign benefactors.

*2 SA did not need new jet fighter aircraft in 1997 as the SAAF had just that same year taken 38 Cheetah Cs into service.

SA already had the highly successful Aermacci Impala jet trainer, the forerunner of the MB339.

The following is an extract from :

Address by the Deputy Minister of Defence, The Hon. Mr R Kasrils, to the Fourth Configuration Management Symposium, International Conference Centre, Durban, 18 September 1997.

"Locally developed combat suites, are rated among the best in the world.
And all of these are dependent on our state-of-the-art computers and information systems.
Their quality proves that the South African Defence industry can stand its ground in the very competitive international military market."

See :

http://www.info.gov.za/speeches/1997/100149797.htm

*3 This is a very long stretch of the truth. It might be possible to say that the GFC got the overall highest score, but it is not true to say that they "got top marks throughout the entire process". The DoD's own scoresheet summary shows that the 590B frigate offered by Bazan of Spain had by far the lowest cost (GFC's Meko 200AS was 15% higher) and by far the highest IP (GFC's Meko 200AS was 14% lower).

In Chapter 7 of the Joint Report into the Strategic Defence Packages, Selection of Prime Contractors - Corvettes, the JIT found, inter alia, that :

Bazan obtained the highest military value and DIP scores;
Bazan provided the highest percentage of DIP and NIP in relation to the contract price;
Bazan offered the lowest price of the four bidders.

and that :

Only Bazan complied with all the minimum technical performance criteria.

and that :

GFC, however, was nominated the preferred bidder on the basis of their NIP offer.
This being despite the fact that NIP is not ascertainable in terms of achievability.

and that :

GFC was given a score of 5 instead of 1 on the total DIP offered.
There is no evidence regarding the manner of awarding the NIP quality multipliers of 1 to 25, as these were not linked to any documented benchmarks.

and that :

A ministerial briefing by the co-chair of SOFCOM, Mr Shaik, was conducted on 31 August 1998, when the preferred bidders were recommended for final consideration;
On 18 November 1998 the preferred bidders were recommended by SOFCOM and were approved by Cabinet.

Almost all of these decisions and irregularities can be attributed to Mr Shamin Shaikh who was :

Chief of Acquisitions;
Brother of Schabir Shaikh.

and was labouring under :

multiple and divergent responsibilities conflicting with independent and impartial assessment and decision-making;
a declared Conflict of Interest;
a failure to recuse himself.