Publication: Cape Argus Issued: Date: 2008-08-08 Reporter: GCIS

Arms and the Men



Cape Argus



Reporter GCIS

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Minister in the Presidency Essop Pahad chaired a press briefing this week on the controversial arms deal. On the panel were Public Enterprise Minister Alec Erwin and director-general for the Department of Justice and Constitutional Development, advocate Menzi Simelane

Strategic Defence Procurement briefing Date: 6 August 2008

Minister Essop Pahad: Good afternoon members of the media and thank you very much for accepting our invitation to this press briefing. On my left is Alec (Erwin), I didnít know youíre still on my left... is Minister Alec Erwin who as you know had been very deeply involved in all of the negotiations and processes with respect to the arms deal. On my right is Advocate Menzi (Simelane) whoís the DG in the Department of Justice and Constitutional Development. Weíve called this press briefing... weíve wanted to do it for some time, to try to deal with all of the matters around the arms deal. As you know those continuous reports and allegations, many of them spurious, about corruption in the arms deal itself. And what Iím proposing we do... oh, by the way, my name is Essop Pahad, Iím the Minister in The Presidency and also Head of the Government Communication Information System.. is that weíll ask Minister Erwin to make an introductory statement and then weíll throw it open for questions, and my only appeal would be that those who wish to ask questions or say whatever they want to say just please state your name and which particular media house you represent, and it would be helpful if you didnít ask three questions in one. We would want you to give opportunities to more people to ask questions, and if thereís a need for supplementary questions letís look at that. And... well, after Minister Erwin weíll throw it open for questions and responses both from our two main people as well as me if itís necessary. Thanks. Alec.

Minister Alec Erwin: Thank you very much Minister Pahad. Ladies and gentlemen, I think our key objective in this briefing is really to remind you as the media that there is in fact extensive and very voluminous documentation from our own constitutional structures, from our own investigative structures, that actually allow you to quite easily check the voracity and accuracy of most of the allegations that have been made. When you do so you will find time and time again statements made about particular events couldnít have taken place at that time, and itís very easy for you to check that. In Parliament itself there are voluminous records on the hearings conducted by SCOPA (Standing Committee on Public Accounts), where ministers addressed them, where many, many questions were asked. There are the investigations that have been made and published and the findings published, thereíve been hearings where the Auditor General has provided further information and answered questions. So really we would urge the media to take careful note of what are facts, and assess this proliferation of further somewhat spurious and at times quite absurd allegations that get spread around. Iím going to deal just with a few of these to remind you where to find the stuff, what the issues are at stake in this whole issue. Now firstly let us just deal with this continual call for why there should be a judicial inquiry, and the related issue there should be an amnesty. Now frankly as government we can see no basis for the appointment of a judicial inquiry. There has already been an extensive investigation, and for any further investigation to take place there must be sound grounds for doing it. Not a host of rehashed allegations that come out time and time again with very little basis in fact. In any event, where there have been grounds for action to be taken those matters have been either dealt with by the court or are in front of the courts, and to date we have no further substantive information, despite all sorts of newspapers claiming theyíve got this and that information, no one has gone and said to a prosecuting authority or to the police, hereís the information, act on it. The defence against that is this allegation that, well, everything is being suppressed. Now we as government just cannot accept that if there were the actions that people claim them to be that they havenít got he evidence to show this. No oneís been able to show this. (Thatís) the same with the argument for an amnesty. Now there may well be particular people that think this would be in their interests, but an amnesty requires that if someoneís done something, you know, that we must have reasonable evidence that this has happened. Not just vague allegations and unsubstantiated allegations. The other issue that has arisen on a number of occasions with regard to... and we canít go through every single allegation that exists, is an assertion that it must be inherently the case because weíre dealing with arms that there would be kickbacks etcetera. Now I take you back to the investigation done by the Auditor General under his guidance, the Public Protector and the National Director of Public Prosecutions, and their finding was... and someone would have to then disprove it, that this was the case, no evidence was found of any improper or unlawful conduct by the government. The irregularities and improprieties point to the conduct of certain officials of the government departments involved, and cannot be ascribed to the President or ministers involved in their capacity as members of the ministers committee or Cabinet. There are therefore no grounds to suggest that the governmentís contracting position is flawed. Thatís the finding. Now if there is particular individuals as weíve indicated then, as we indicated in a statement in 2001, and if people can come up with evidence they must take action against it. The courts must follow their due process, and that remains very much the view of government that this is the position we should adopt. Evidence must be put forward before the proper authorities if people have it, if people have it. And we want to see that evidence. The argument that the inquiry was tampered with... again weíd like you to go and look it up, an extensive presentation made by the Auditor General. He answered questions before SCOPA and he contended quite clearly that he was entirely satisfied that the process that had been followed where the executive was allowed to comment on the findings of an Auditor General in terms of the law in no way altered his findings or conclusions. Thatís the Auditor Generalís statement. Itís there, itís documented, itís in writing, and itís in the Parliamentary record. Other contentions that somehow for various reasons Judge Heath was kept out of this and that he is the person who would have found everything, here all we can do is to remind you go back to the Constitutional Court ruling which made it clear that in law he could not be part of that investigation. So unless you disagree with the Constitutional Court we would recommend you go back to that finding and have a careful look at it. Thereíve been allegations particularly made around what happened with the corvettes, and again weíve released a detailed statement on the fact that it... this assertion that somehow the President took the order away from Spain and gave it to Germany, if you look at the timing, the schedules, of what happened when, youíll see that this is completely impossible. It couldnít have happened. The Spanish issue had been ended well before the new White Paper on Defence Policy and a new process started. So these two things are completely unrelated. Let me also say as you now know, I hope, and have studied the actual text, that the German prosecutors are not prosecuting anybody. Theyíve stopped the investigation. They believe thereís no basis whatsoever for the investigation. But here one would think that this thing is still being carried out, itís not. And itís very instructive for you to go and have a look at the actual text of the German prosecutors and why they abandoned it. The area too that we need to just briefly touch on, because itís emerged again in a really absurd way is that the offsets were not met, the National Industrial Participation Programme was not being met, and the Defence Industrial Participation Programme. This is not correct. And there are documents that are tabled in reports to Parliament. Theyíre available for you to see, as to exactly how these have been met. And by and large weíre well on track, in some cases ahead of track, for the defence industrial participation credits, some 12.5 billion of credits have been earned in the process already. All companies are on track with that, and if theyíre not they pay a penalty. That specific issue about the validity of those contracts, the strength of the penalty clauses was explicitly addressed by the Auditor General in his investigation, and itís really worth going back and having a look at that. On the industrial participations, the same, weíre very much on track. And here thereís this argument that a steel mill had to be built. I think weíve tried to explain on many, many occasions what the position was. In terms of the process for industrial participation the contending bidders put up various proposals as to how they thought they could meet those credit requirements of industrial participation. Those requirements were then subject to a rigorous scrutiny by the Department of Trade and Industry, the Department of Defence. If you go and look at the investigative record youíll see what the criteria were and how that was done, and had to be accepted... and this is a crucial point, Ferrostaal might have proposed the steel mill but it wasnít accepted by government eventually. And what they had to do was to find other projects to replace that. And the reason it wasnít accepted by government was we felt it was not economically and financially viable at that time. So other projects had to replace that. So for all of those companies on the NIPP they are meeting their obligations. Our estimate is that at this point probably around about 20 000 direct jobs have arisen from the two packages, and probably another 30 000 indirect jobs. And thatís fairly close, and we havenít finished the programme yet, thatís fairly close to the 66 000 jobs we spoke about in a hearing in Parliament which you can go and check in Hansard and see exactly what was said and not said. So, ladies and gentlemen, we really would urge the media to just go and consult some of the basic documents. Let me say too that certain other issues that have been raised about meetings with French companies, these matters are being dealt with through the Parliamentary question process. They have been replied to and as soon as Parliament has had the courtesy of receiving those responses the President will release them publicly, indicating exactly how weíve responded to those issues. Now some of these accusations are really very, very spurious and highly prejudicial to government, to the President and to the ministers. And we will not deal at this point with the Sunday Times matter because I donít think, we know that in fact the President is taking legal advice on what action he should take on behalf of himself and government. Because really here we have reached the very nadir of reporting standard in South Africa. Thank you.

Journalist: Well in the Presidentís case, are you lonesome tonight? With regards to the arms deal, Menzi you and I have chatted as well, you said there was a bit of confusion around the allegations about the minister preventing that investigation from the German side into the letters that were came across and that the minister apparently didnít respond in time to queries from German investigators. Could you just go a bit on that, please? Thanks.

Advocate Menzi Simelane, DG in the Department of Justice and Constitutional Development: Thank you for that question. I must say that at no stage was there ever a delay in response to the Germans. The German prosecutors requested mutual legal assistance from the South African authorities, and one of the things we had to immediately consider was whether or not we were in a position to provide that assistance. One of the first things that we did was to write back to the German investigators to ask for clarity on the questions that had asked. We in fact asked for further particulars, for clarity on the... you know, the details and the allegations that indicated in their request, and their response to that request was that they will get back to the South African authorities with the information request. And we waited for them to get back with the particular information. And when they did come back to us they did not address themselves to the request for further particulars that we had made. They merely provided clarity on one of the paragraphs that they had made allegations. And in that same letter indicated that they will still come back to us on the questions that we had made. Until today... well, not until today, until today in fact they have not come back to us on that particular matter. So our questions have still not been responded to. They were very basic questions, very simple questions, and weíre hoping that they would have responded positively by now by giving us those details that we had demanded, so that in fact we could determine how they could best be assisted. Recently I wrote to them again reminding them that they have not come back as promised to the... to us on the questions that had been made to them, and we indicated to them that because we also have an interest in the matter, in that we would like to consider whether or not government should not conduct its own investigation it would assist us if they could respond to the questions so that we can get more details. They had not responded to that as well. And understandably because we have since learnt that they are not pursuing that investigation any further as the German authorities for reasons that they have not disclosed to us but which we understand have actually nothing to do with South Africa at all. Itís got something to do with the other things that theyíre involved in, but certainly nothing to do with us. Because I did meet one of the investigators in different fora, the prosecutors, and I did ask that we are still waiting for the response. They indicated that they have received my correspondence, but that they are unlikely to come back because they for reasons that they couldnít disclose to us are not going to be pursuing the matter, so it would not be necessary. But if we want the information that they have, that we could request if we meet and they would be able to consider it. But they were not focusing on the South African investigation anymore. It wasnít necessary, they 1/8unclear 3/8. So on that basis I just want to assure you that thereís been the fullest engagement with the German authorities and theyíve come back to us and weíd engaged. But then the challenge was that we didnít know the details of the stuff they wanted because they never got back to us. So at no stage were they not responded to.

Journalist: Maybe just flowing from that, Mr. Simelane. With both the German and the British investigations youíve asked the South African Police Service to assist the authorities with conducting... you know, getting documents and going to court. Why did you not ask the Directorate of Special Operations, who have been investigating the arms deal since 2001, who have never closed the arms deal investigation and actually now is still conducting an investigation into especially the British part of the arms deal, into the BAE transaction. And just secondly flowing from that question is this issue about frustrating the Scorpions to go overseas, meet their counterparts and gather more information on this detail. Weíve been reported in our newspaper, and itís been confirmed by your spokesperson of your department, that you didnít allow people to go overseas to meet them. I was just asking you when testified in front of the Ginwala commission, that you were not always happy with the racial makeup of investigating teams of the Scorpions and thatís why you didnít allow them to go. Did you specifically refer to this investigation when you made that remark in the Ginwala commission? Thank you.

Advocate Menzi Simelane: Iíll start with the last one. The last one has nothing to do with the issue of strategic arms procurement. It related to other matters. Maybe let me just clarify what the procedure is for dealing with mutual legal assistance requests. So that they can be better understood. Mutual legal assistance requests are between states, you know, theyíre between a country and another country, not agency to agency. And what generally happens is that the central authority in each country representing their particular country must satisfy him or her that there is an investigation, a thorough investigation, a proper investigation to which the other country has to offer assistance as required in terms of their particular legal instrument. So before any decision is made whether or not to assist there must first be those preconditions that are met, and it is in that respect that we were not able to move forward as far as the Germans are concerned. But what we did do is that because there had been some contract we referred the matter to the police to look into whether they would be a in a position based on information that they know to guide us on how we can respond. If thereís any reason that we can take further this particular request we ask if they could indicate on that particular score. The issue of the DSO, we had engaged with the DSO and the NPP to say that before we can even consider whether or not the matter should be dealt with by the DSO these preconditions first had to met... first had to be met. We had to know that there was a proper investigation in the requesting country, and then assess whether the information so requested is the type of information that we could be in a position to assist with. So we never crossed the first hurdle actually as it were, we never crossed the first hurdle. Recently the DSO needed to or wanted... indicated to us that they want us to go and have engagements with their counterparts. What they were advised is that before you have any such engagement there must first be a cross of this first step of the request. We have to satisfy ourselves that there is a request that has been made and properly made, because if you remember in that matter, I donít know if you have this information, the information had been sent by the British authorities to the central authority. But that information never got to the central authority. That information found its way to the NPA and the NPA brought it to us only this year, and we are engaging with them on that particular request. So they were advised that it may not be yet the time for them to engage on the matter until the central authorities have at least dealt with the administrative issues which are really basic legal steps that are taken before there is actually assistance given. So weíre still at that stage and even now we are still at that stage with the British authorities, the serious fraud office, where we are engaging with them to say in light of all the developments that are taking place within the serious fraud office how do they still treat their request for mutual legal assistance, are they still pursuing it, and if they are pursuing it can they clarify a few things as well. So itís not a question that anybody or any institution has been prevented from doing anything. Itís just that certain steps must first happen legally as those are the requirements before thereís agency to agency requirements. So we did caution the DSO to say this is a matter that is still dealt with at a central authority level, state between state, and that once those matters have been dealt with it would then be considered whether or not they can continue with whatever they need to do. So we havenít dealt... we havenít gone to that stage yet. Itís still very early.

Journalist: Just a very simple question to either Minister Pahad or Minister Erwin. Can you guarantee that not one cent went from any of the arms deal that is into ANC coffers?

Minister Alec Erwin: Well, youíre asking essentially an impossible question. We would not be able to give such a guarantee. Weíre not responsible for those companies. What we have said time and time again is that there was no process between government and these companies that in any way asked them to make any payments to anything or anyone in this country. That was part of the investigation and that we can stand by absolutely. What the companies did in their own right, if they did anything, we cannot be held accountable for. If youíve got evidence on that you must make it available. But we can be certain that from governmentís side and as part of the contracting with these companies no such arrangements were reached in any way whatsoever.

Minister Essop Pahad: Ja, and I think the Presidency issued a statement over the weekend in which it made very clear that at no stage had the President of the Republic of South Africa benefited in any way from the arms deal. That was said in the statement. I understand we have people in Cape Town, youíre very far. Is there somebody in Cape Town who might want to ask a question?

Journalist: Two questions for Minister Erwin, please. You mentioned that the President is investigating or taking legal advice about bringing litigation against the Sunday Times. Would that be for defamation? Just to clarify. And secondly are there discussions or suspicions within The Presidency that this... these renewed allegations, these never dying allegations about the arms deal and governmentís... and the Presidentís involvement could have a political purpose? Thank you.

Minister Essop Pahad: You are very far; I wish I could understand your question. But let me respond with respect to what Minister Erwin said. You know that there were these... the Sunday Times made a report in which it claims to have a report made by a risk agency in which these scurrilous allegations are made against the President. Obviously in The Presidency we have decided to take legal advice with respect to those allegations, and once we have received the legal advice we will act on that legal advice and see what we can do about it. But I just want to emphasise again that The Presidency issued a statement over the weekend in which it categorically rejected the allegations that appeared with respect to the so-called report in the Sunday Times. But today we want to deal with the arms deal, once we have received a legal opinion we will then deal with the matter that appeared in the Sunday Times itself. But I repeat, The Presidency once more categorically rejects all of those allegations that appeared in that so-called report that appeared in the Sunday Times. Alec, you want to take the other question.

Minister Alec Erwin: I donít think that The Presidency or government are going to be drawn into any speculation as to what motives may or may not be. But as weíve indicated in this briefing, our concern is that very basic homework is not being done by the media, that itís quite possible to check most of these things and... against documentation that exists in large quantities. So at the very least what weíre certain about is that our standards of journalism in this regard are exceptionally low. What the motives for that are, weíre not going to be drawn into any speculation. Thanks.

Journalist: Two persistent allegations that werenít addressed today is one that you had an economic downside assessment which suggested weíll go into massive debts as well as if it is possible recession as a country as a result of arms deals which doesnít seem to be borne out in fact, but it does seem to come up all the time and could you please respond to what... whether the Cabinet had other information that allowed it to go with the arms deal, that had a different scenario in terms of the economic impact? And secondly, the military rationale for the actual acquisition seems to be quite vague, you know, thereís a lot of questions as to whether we bought the right equipment, and both those allegations are persistent and both werenít responded to today.

Minister Alec Erwin: Well, itís often not clear what reportís been referred to, but let me deal with the report that government knows about. This was commissioned by a number of economists, outside the process. It was dealt with in the original investigation, and essentially that report and Iím summarising what was an extensive document highlighted two potential periods of risk. If my memory serves me correctly it was 1999 and 2004. Those risk factors related to a combination of debt that had to be repaid on the national account, coinciding with potential payments that would have to be made for the arms deal. And all the report indicated was that you may be at some risk there if other external factors influenced the exchange rate and make it difficult for us to cover the debt burden in those specific periods. That was the risk referred to. There was no argument that this was unaffordable or that we would not be able to pay it or it would cause a recession. And Cabinet after the recommendations made by the ministers concerned felt that this risk did not counteract the perceived and actual benefits of the strategic defence procurement package. In hindsight in fact neither of the predicted tight periods actually eventuated. And as you say in fact none of the risks that were there really eventuated in any way. With regard to the equipment, Iím obviously not the Minister of Defence, but I think I can say quite clearly and unequivocally that from governmentís perspective we believe that the purchase was correct, that the equipment weíve got is to the standards we want, and that the benefits in terms of industrial participation and events participation have met our hoped expectations, and we believe that the wisdom of South Africa ensuring that it had a defence capacity is probably being borne out more and more rather than less and less as the years go by. But certainly the equipment is fine, I think that the Department of Defence dealt in a last few days with some of these stories about the equipment not being functional and all of these issues. Weíve dealt with that in some detail. But the governmentís position is very clear, that the strategic defence procurement process and the products weíve got were a correct decision.

Minister Essop Pahad: Does somebody from Defence want to answer? Do you want to say something? Please.

Sam Mkwanazi, Spokesperson for the Ministry of Defence: Well, allegations that the Department of Defence purchased wrong equipment are not true. With specific regard to the allegations that SAS Manthatisi is plagued with problems are also not true. The fact of the matter is that the military strategy and the DOD business plan say that at any given time the department will operate two submarines...

Journalist: Minister, just on the subject of the offsets. I think it was in 2005 that I got the Trade and Industry figures for job creation and I phoned up a number of companies involved to check whether they had as many people employed as the documentation supplied to the committee said, and in all of the cases they said in fact, that they didnít and that those were the numbers of people that they hoped to eventually employ. I can remember one company in particular, called Blackstone Tech that manufactured carbon fibre motorbike wheels and I think the document said it had thirty or forty employees and it had maybe fifteen. Weíve subsequently spoken to the Auditor-Generalís office about the degree of rigour with which they audit those figures and theyíve told us that what they do is not an audit but a review. We havenít been able to establish exactly what a review means, and then finally in the case of defence offsets, itís very difficult for us to independently try and verify whatís going on there because repeatedly weíre told that even the names of the companies involved are confidential. So the crux of my question is given all the circumstances, how can we really have faith in the numbers that we keep on hearing about the offsets? Thank you.

Minister Alec Erwin: With regard to the employment issue, you would have to show us exactly what you found and weíd have to then check that with you and thatís a matter the DG Iím quite sure, would be comfortable to take up with you. The offsets, the actual measurement, the technical measurement used to see whether offsets have been complied with or not, is Rand or dollar figures. Itís not the number of people employed. And thatís what you will see in the report. Have they been given those credits and those credits are made up in different ways in terms of production for local markets, it can be for exports, or it can be for specifically and clearly defined technology transfers. So the adjudication criteria for industrial participation and defence participation are built around that. That then gets converted into so-called credits and those credits are denominated in either dollars or rand. So the precise measurement of whether a company has complied or not is that, and those figures are what are published and thatís the obligation that the company has. The question of employment was, when we were asked what we estimate this may or many not do, we gave those figures and we give figures now and if you dispute them weíll have to argue that out. However, Iíd like to draw to your attention, both in the investigation undertaken and in terms of presentations made by myself at the time as Minister of Trade and Industry and in presentations made by myself, the Minister of Finance, the then Minister of Defence and Public Enterprises before SCOPA and in a statement issued by government in 2001, we made it absolutely clear that the defence procurement, the equipment was the prime objective. That was the basis for making the decision, that was why we did it, and industrial participation and defence participation and the employment that may accrue from it, was a corollary of this, a benefit that we were attempting to obtain as we procured the defence equipment. It was not the reason for procuring the defence equipment. And I think itís very crucial that we maintain that distinction, a distinction that weíve stressed all along.

Journalist: Just while weíre on figures, could you remind us please of the definitive cost of the arms deal and Iíve just got back from Pietermaritzburg and Mr Zuma yesterday said that if his case does ever come to court he will call witnesses and to quote him, he said íthe truth will be revealedí. Now he didnít name names but the implication is very strong that one of the witnesses would be President Mbeki himself. And I was wondering, do you have any views on this and whether any government ministers or even the president himself would be prepared to testify and just finally, you mentioned in passing an amnesty. Has there been any consideration of an amnesty for Mr Zuma?

Minister Essop Pahad: I wonít do a (Unclear) by double-crossing the bridge, okay? With respect to the trial of the president of the ANC Mr Zuma, that trial is going on. I think we must wait for those legal processes to be completed so weíre not going to comment on the legal processes themselves. Thatís as far as that is concerned. The question about...I donít think we have the full figures, but let Alec explain it and then if itís necessary we can get the figures and pass them on to you.

Minister Alec Erwin: We donít have the figure offhand. For one reason we didnít bring it with us, and the second reason is that essentially what you have to watch is the expenditure reports in the budget process, because these figures can be influenced by exchange rate matters from time to time, but I can say that from a government expenditure point of view this is having no major adverse impact on our expenditure patterns in any way.

Journalist: Thank you, Minister. Mr Simelane if we can just go back. My recollection is that the Minister of Justice in February last year announced that she now received the request from the (Unclear) and referred the matter to the police and that she was not informed by the Scorpions of the matter as you said previously this year. I donít know if you can comment on that and then just maybe a question to Mr Erwin. On the matter of Judge Heath, if my recollection serves me right, the matter was not a Constitutional Court case but rather a report by two advocates, Advocate Frank Kahn who was at that stage the Attorney-General for the Western Cape and Jannie Lubbe who was working for the SIU. President Thabo Mbeki went on television and said that the report he received says that Judge Heath should not be part of the process. However, in the Schabir Shaik trial in Durban, it was revealed by Advocate Lubbe himself that their report said no such thing. Indeed, the opposite, that Judge Heath should form part of the investigation. Can you please comment on that?

Advocate Menzi Simelane: Let me just give you the sequence of the Serious Fraud Office matter. In March this year, I think if I recall the 13th of March, the department received correspondence from the NPA. In this correspondence, attached was the request for mutual legal assistance from the Serious Fraud Office. We got it in March from one of the officials of the NPA. When you look at that attachment for mutual legal assistance from the Serious Fraud Office, it contained a letter addressed to me personally, dated September 2007, with the other documents that go with the report. When we received it, I then immediately wrote to the NPA to say íWhy is it such that I am receiving these documents in March 2008 when in fact they are addressed to me, but delivered to the NPA in September 2007. It was a very clear problem, that this correspondence is written to me but itís not delivered to me, itís delivered to the NPA. And I asked for clarity how this could have happened, but I also asked exactly for the same thing to the Serious Fraud Office official -unfortunately one of whom has recently retired - but I asked them. I said íthere appears to have been a bit of a mishap here in that the documents are addressed to me, they are supposed to be sent and received by me, but I didnít receive them and they are dated September and yet I received them from the NPA only in March.í And the Serious Fraud Office responded and sought to clarify the matter to say according to them they were expecting that I received the documents at the time that they were sent and that obviously there may have been some miscommunication and itís something that we are still dealing with. But on further check, our information indicates that we received information beginning of March this year from the British High Commission on that particular matter and that we then forward it to the NPA to comment to the extent that they were dealing with the issues. So that explains why the following week they would then have sent these documents to me. So on the 7th March we sent this information to them to say weíve received it, can they comment and look at the matter and see if they can assist us with it and then the following week they then sent me this information. So it still doesnít explain the September to March gap obviously, but that is something in which Iím engaging with the Serious Fraud Office to say íhow could this have happenedí but obviously we are not making anything big out of it. There are certain implications that flow from it because as you know, the processes are still at a stage where it is between central authority to central authority. We have not yet made a view or made a decision on how we can assist, because first we are clarifying that matter but secondly as you may know publicly, the Serious Fraud Office terminated the investigation. So if the Serious Fraud Office has terminated the investigation, on that basis is there a request for mutual legal assistance? And thatís what we are trying to clarify from them, to say where we put this request of yours if you have terminated the investigation. Iím sure you follow those particular matters. So as soon as theyíve responded to us on that we will then be in a position to consider the request and then determine how we take it forward.

Minister Alec Erwin: In my introductory remarks my purpose was to remind you that thereís documentation that deal with these issues. The Constitutional Court judgement as you will recall, related to the appropriateness or otherwise, of a judge being in charge of a Special Investigation Unit and this matter was dealt with quite extensively in a statement made by the Director-General of the Presidency in 2001, setting out the basis for why the president concurred with the view that it would be inappropriate and wrong for either the SIU or Judge Heath at the time to be involved in the investigation and that the appropriate structures were the four agencies and institutions that were charged with that. So you can go back and check precisely what that position was.

Journalist: Iíd just like to clarify your statement in my mind on what the president was aware of. You said the president did not benefit personally from the arms deal. Are you able to say whether the president facilitated or was aware of any donation made by any bidder or recipient of an arms contract, to the ANC, either directly or through a third party?

Minister Essop Pahad: No. Itís very clear that your Sunday Times had made these allegations or reported from a risk agency. But thereís no truth whatsoever in that allegation. If there are other allegations that President Mbeki has or has not facilitated the transfer of money to any other institution, we will deal with that matter when such allegations are made. At the moment I state categorically, that President Mbeki in no way benefited from the arms deal. There are no allegations that are in front of us that we can deal with.

Journalist: Just on the legal advice the President is taking, if he decides not to institute legal action, thatís going to be seen as rather incriminating of the president. If he does proceed with legal action, thatís going to open up the whole arms deal to a question of fact or not fact. Does the president want to go down that route?

Minister Essop Pahad: I was saying that once the legal advice is given, The Presidency will then take the necessary steps that it has to take, so we cannot prejudge what the legal advice would be. Is there somebody else in Cape Town?

Journalist: Sir, I think you are misrepresenting what the Sunday Times reported. I donít think they reported that the President had benefited personally, they said as I understand it that he had channelled the money to the ANC and I think they said Mr Zuma, so if I could perhaps just state Brendanís question in another way. Would it be in order for you to tell us whether to the best of your knowledge the president channelled any money from FerroStaal or any other person who benefited from a contract arising from the arms deal to the African National Congress?

Minister Essop Pahad: In the statement that Mukoni had issued over the weekend, he made a categorical denial with respect to that and Iím repeating the categorical denial. I repeat it again. The Presidency denies categorically that President Mbeki facilitated any money either to the ANC or to the President of the ANC as a result of the arms deal that may have accrued from what FerroStaal has claimed is given. And since you were so very defensive of the Sunday Times, you might yourself want to read the report, because in that the Sunday Times claimed that a former South African official, who remains unnamed and un-sourced, made this allegation.

Journalist: When BA Systems donated about R5 million to the MK Veterans (Unclear)

Minister Alec Erwin: We can only repeat what I said a moment back. There is absolutely no part of the contracting process, formal or informal with government that relates in any way to passing money on to the ANC or anyone else. What BAE did afterwards we cannot be held accountable for. The Minister has just stated categorically that The Presidency and the President didnít facilitate that and Iím quite certain for my ministerial colleagues who were involved, we didnít do that either. So it was not part of any contracting that one of the conditions of the contract was formally or informally that you had to give support to the ANC. To ask us then to be accountable for what companies have done subsequently, we canít be.

Minister Essop Pahad: Without any more questions, can I take the opportunity to thank all of you for coming and to really reiterate that this press conference is really designed to once more state very clearly our position as a government, and as far as the contracts are concerned, there was no corruption, nobody is going to find any corruption and if anybody has any evidence of corruption by anybody or any institution, we would please urge that they take that matter to the relevant law enforcement agency so that they can be acted on. This is an appeal weíve made before. Weíve issued that in a statement too that if anybody has any evidence of any involvement in any corruption, we would urge that they take it quite directly to the relevant law enforcement agency so that it can be properly investigated and if anybody needs to be prosecuted with respect to that, then those things can take place. This government will not be party to any corruption and certainly not with respect to the arms deal. Once more, thank you very much for coming.


With acknowledgements to GCIS and Cape Argus.