Publication: Business Day Date: 2004-10-27 Reporter: Tim Cohen Reporter:

Considering the Fax of the Matter



Business Day, Local

Date 2004-10-27


Tim Cohen

Web Link


Judge says the Shaik trial is not about the arms deal, but it certainly feels like it

Judge Hillary Squires has mentioned several times in the corruption trial of Durban businessman Schabir Shaik that it is not an investigation into the arms deal.

For dedicated followers of this controversial, decade-long issue , this is a bit like inviting kids into the candy store and then instructing them not to eat the candy*.

The state's case against Shaik overlaps with the arms deal in two ways: it elucidates the build-up to the deal and the frantic positioning process prior to the bids being submitted and then it zooms in on an agreement the state alleges was made with the French arms company Thomson CSF (now Thales) after the deal was signed.

The state is attempting to sketch the background of the wheeling and dealing between the different players, suggesting a suspect relationship between the players.

Prosecutor Billy Downer described this as the "informal process" that inevitably accompanied the formal process of bidding for slices of the arms deal.

To illustrate the wheeling and dealing, the focus is on the notorious encrypted fax and the R500000 annual payment for political support allegedly agreed between Shaik, Deputy President Jacob Zuma and Thomson representative Alain Thetard.

The main charge of corruption involves both of these strands of the case so, inadvertently perhaps, the case intersects with the activities of the French, bidding for different parts of the arms deal .

Although it is the French company Thales that comes under scrutiny, the French were one of the smaller players in the arms deal** , winning contracts worth just more than R1bn as part of the German Frigate Consortium to supply combat systems for corvettes.

The total value of the deal was between R30bn and R50bn, depending on exchange rates, and the French were such small players that even the name of their slice of the deal reflected a different country.

The activities of the bidders before any deals were signed made fascinating testimony this week . As well as the already complex job of working out effective tenders and satisfying the stringent terms, the bidding companies apparently had to wind their way through a morass of political infighting.

One eye-opening piece of evidence was yet another encrypted fax sent by Thom son's Pierre Moynot to his bosses long before the bidding process was evaluated.

The fax was sent in November 1997, and suggests an unnamed person had obtained an assurance from the deputy president (at that stage President Thabo Mbeki) that "we would be awarded the combat system and the sensors". Mbeki was also the head of the cabinet committee deciding on the bids.

While it is obvious pre-bidding manoeuvring will occur in any large deal, the state is legally obliged to host a fair tendering process.

This fax and a few others presented in the case are likely to be strongly challenged by the defence, not only as regards their evidentiary weight, but even their admissibility .

The faxes do not identify the recipient of the information . The testimony of KPMG forensic auditor Johan van der Walt suggests it was Shaik's brother Chippy, who was in charge of evaluating the bids.

In his conclusion to this section of his mammoth report, Van der Walt says: "A number of meetings allegedly took place between Chippy Shaik and Thomson CSF in the period leading to the compilation of the short list of potential bidders as well as the process that followed."

The translator of the fax took the French to mean "the person responsible for the short list", described in French as "the tailleur", meaning "the cutter". The translator made the assumption that this was the person who would cut down the number of bids to form a short-list.

However, a character codenamed "the tailor" has been identified by previous witnesses as Yusuf Surtee, a tailor and a good friend of former president Nelson Mandela.

As concrete proof, the faxes are clearly lacking. Yet they remain highly suspicious documents, particularly since some of what they suggest did eventually transpire Thomson did win the combat suite.

With acknowledgements to Tim Cohen and the Business Day.

*       Most of the proceedings have been pretty sweet thus far to this kid.

**      It was not meant to be this way. After the Defence Review and Force Design were approved, one of the packages proposed to be included in the Arms Deal was a squadron (or is this two) of 108 Main Battle Tanks (MBTs). The price tag on this extravagant purchase would have been in the order of R15 billion in 1998 rands. So the number was cut to 54. Although the SA Army were decidedly opposed to getting French MBTs, specifically the le Clerc from Giat Industries, them wanting the British Challenger II from Vickers, all indications were that the French would get this large slice of the pie at about  R8 billion. But, mixing metaphors, this slice of pie broke the piggy's back and the acquisition of MBTs was deferred to the next Arms Deal, Arms Deal II.

Watch this space - the MBTs are back on the acquisition plan at the full "requirement" of 108. All hell broke loose amongst the French defence industry and French Ministry of Defence.

The French Minister of Defence, Alain Richard, even commissioned a report by his personal representative for arms exports, Jean-Bernard Ouvrieu, to give a blow-by-blow account of the French failure to land any contracts when South Africa announced a string of big weapon buys in November 1998.

But the French were determined not to leave completely empty handed and so there was a string of high level interventions between President Jacques Chirac and President Nelson Mandela and Deputy President Thabo Mbeki to ensure that the French component was maximised at the sub-system and sub-contractor level. Hence Mbeki promising the French the corvette combat management system (not the entire combat suite), the sensors and the surface-to-surface missile (SSM), the Aerospatiale MM40 Block II (which is almost obsolete).

There were also major interventions in the selection processes by that jack of all problem solving and aspirant engineering doctor from Durban, Shamin (Chippy) Shaikh. Shaikh managed to get the engine for the light utility helicopter changed from the SA Air Force's strongly preferred option, the Canadian Pratt & Whitney in favour of the Franco-Italian Turbomeca. The Pratt & Whitney engine was also R19 million cheaper while the SAAF regarded the Turbomeca as a high-risk, untested engine.

Chippy Shaikh also tried extremely hard to force the German Submarine Consortium to discard their preferred and qualified STN Altas submarine combat management system in favour of the Thomson-CSF offering.

Chippy Shaikh also tried extremely hard to force GKN Westland to discard their preferred and qualified Marconi radar for the Super Lynx 3000 Maritime Patrol Helicopter in favour of the Thomson-CSF offering