Publication: Sunday Times Issued: Date: 2008-08-10 Reporter:

The Coega Caper



Sunday Times



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The Coega stainless steel mill, on which MAN Ferrostaal won its bid to sell three submarines to South Africa, was abandoned less than six months after the arms deal was signed in December 1999.

But not before the government sent a letter to the industrial giant in April 2000 asking it for written proof of its R6-billion commitment.

Details of MAN Ferrostaal's reneging on its original agreement are contained in the auditor-general's May 2001 draft report, which was never made public.

The draft report states that the Department of Trade and Industry, the Department of Defence and Armscor asked MAN Ferrostaal for proof of "adequate equity contributions" related to its offset project or to provide substitute projects to the same value.

It replied in an unsigned letter on May 29 2000, with details of a new offset deal the "Algossa Development and Investment Holding Company" with authorised share capital of not less than 60 million deutsche marks (R357.3-million at the rand's current exchange rate) ".

The Sunday Times could not confirm whether this company was ever formed.

In the letter, MAN Ferrostaal committed to :

Establish a venture capital fund which would operate as a subsidiary of Algossa.

Build, operate and implement a stainless flat steel production plant; and

At least two stainless steel downstream projects, possibly including a precision strip-mill.

The draft report notes that the revised mill project listed was "significantly different to the Coega project originally evaluated and which substantially contributed to the German Submarine Consortium (MAN Ferrostaal) being selected as the preferred bidder".

Mill output changed from 800 000 tons a year to 240 000 tons, the technology to be used seemed different and the project appeared to have moved from Coega to Middelburg.

On June 23 2000, MAN Ferrostaal sent another letter summarising its substitute projects, including condom manufacturing plants and two projects in Mozambique.

The draft report concluded that:

With acknowledgements to Sunday Times.

This is no caper, it's fraud.

What's as bad is that the German Frigate Consortium had its NIP scores increased by Cabinet because one of its NIP offerings also involved stainless steel.

Otherwise Bazan would have clearly won the entire evaluation and the corvette contract.

In any case Bazan did actually win the entire evaluation, but due to Chippy Shaik changing the scoring system midway and DoD/Armscor messing up the DIP scoring, theGFC won.

But that's why the GFC paid Chippy Shaik US$3 million for taking them from No. 2 to No. 1, after paying Thabo Mbeki and the ANC US$22 million for taking them from No. 5 to No. 2.

As soon as GFC and GSC had their contracts, they reneged on their major stainless steel NIP offerings.

It's no caper, it's fraud, it's corruption and corruption is a multi-party crime.

Tell me it ain't true.