Publication: Business Day Date: 2005-01-07 Reporter: Tim Cohen Reporter:

Mystery of the Tippex Unmasked as Entrepreneur Battles for Justice



Business Day




Tim Cohen

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What was the story behind the mysterious Tippexed-out paragraph? Was the cabinet misled? Was this why Tippex was flourished with such gay abandon?

These questions form part of a curious adjunct in the travails of Richard Young, MD of arms manufacturer CI Systems.

Young was bidder in the arms-deal process whose bid was mysteriously overruled in favour of French arms company Thom son-CSF, now Thales, after a "risk premium" was added to his tender, which almost doubled its value*1.

Not only that, but the subsidiary of the winning bidder, African Defence Systems was partly owned by Schabir Shaik, brother of Chippy Shaik, who was head of the procurement process at the time.

Young has since launched a campaign in an attempt to avenge what he considers to be a blatant abuse of the tender process.

An entire chapter of the final arms deal report was devoted to his complaint, but the chapter was ultimately inconclusive because one the central issues was whether the risk premium was reasonable. The drafters of the report claimed that to decide this question would require expert evidence, which they did not have the time to obtain*2.

Since the final report was published in December 2001, Young has launched an application for the draft copies of the arms deal report, believing that the final report was a cover-up.

Auditor-General Shauket Fakie opposed this application, but was forced to hand over a portion of the documentation in March 2003, including particularly those chapters which deal with Young's complaint.

Since then Young has pressed forward with his application, and recently the auditor-general's office released the remainder of the draft documents in batches, the most recent being in December last year.

In the July 2003 release, one paragraph in the draft was obscured. The latest release reveals what was covered up.

The paragraph ( graphic above) suggests that a group of cabinet ministers was informed that Young's product was "high risk". The heading of this section suggests that a cabinet committee might have been misled.

The very next paragraph of the draft copy of the report says: "This statement is contrary to the evidence of all naval and Armscor personnel who testified and to all documents made available to us."

Although the final report discusses the issue of risk it does not include this statement.

Neither is this the only dispute about cabinet members being misled. The draft copies of the report record the discovery of two sets of minutes for the same meeting, once again suggesting that cabinet members had been misled.

The final report records then secretary of defence Pierre Steyn disputing a set of minutes of a meeting attended by several cabinet members at which the issue of the choice between the British Hawk and the Italian MB339 was discussed.

Steyn said his recollection was the meeting had decided to defer the issue. A set of minutes making this clear was found in a file marked "secret". These minutes said "both countries will be requested to submit further information in this regard".

The alternative set of minutes, signed by Chippy Shaik, stated that "after a discussion it was decided by the minister present that the Hawk should be the preferred option ".

Shaik said yesterday that the issue was a misunderstanding. The five cabinet ministers present were asked whose version they agreed with, and they agreed with his version.

With acknowledgements to Tim Cohen and the Business Day.

*1 More than double its price - from R42 million (incl. VAT) to R89 million.

*2 The Hallmark of an excellent investigation - not enough time - after two years of investigating.

But they are actually lying, DoD and ADS documents in the possession of the AG, show that the risk premium was not only a misrepresentation of the risk situation, but that the risk premium was actually applicable in respect of ADS's Combat Management System (CMS), or Combat Suite as a whole, and not the Information Management System (IMS). Indeed, even a cursory scrutiny by the investigators of the risk premium being applied to the IMS would have shown it to be fraud.