The Department of Trade and Industry (DTI) told Parliament on Wednesday that most foreign companies with obligations related to South Africa’s controversial multibillion-rand arms deal were nearing the completion of their offset programmes.

It added that French defence group Thales, whose role in the deal has been controversial, owing to persistent allegations that it attempted to bribe African National Congress President Jacob Zuma in return for protection from prosecution, had met and exceeded its obligations.

The DTI made these assertions in its 2008 National Industrial Participation (NIPP) annual report, which was released to Parliament’s Portfolio Committee on Trade and Industry.

The 43-page report *1 was released on the same day that the Democratic Alliance called for a reopening of a probe into the arms deal and as Zuma’s corruption trial date was set down by a Pietermartizburg court for late August.

The NIPP annual report provided an update on the status of both the defence and nondefence offset programmes arising from procurement processes by government departments and State enterprises, where the value of the projects or contracts was more than $10-million.

In the document, the department asserts that Thales, whose offsets arose as a result of it being awarded a contract to supply the combat suites for the South African Navy’s four new patrol corvettes, had secured $700,7-million in offset credits against and obligated value of $652,4-million. *2

Further, the reported showed that Agusta, which supplied light utility helicopters, had also met it full obligated value of $768-million, having received NIPP credits worth some $775-million.

The DTI noted that, while most defence suppliers were meeting their NIPP milestones, BAE-Saab’s milestones still had three years to run. The consortium, which was supplying Hawk and Gripen aircraft to the South African Air force, also had the highest obligated value of $7,2-billion.

To date, BAE-Saab had earned NIPP credits amounting to $6,3-billion, leaving a residual of $865-million outstanding.

The second largest obligator was Ferrostaal, which led the German Submarine Consortium. It had accrued credits worth €1,7-billion against and obligated value of €2,9-billion.

The leading participate in the German Corvette Consortium, Thyssen, had an outstanding balance of $436-million, having earned credits worth $1,6-billion against an obligation of just over $2-billion.

Meanwhile, Agusta Westland, which supplied the Super Lynx helicopters, had an outstanding balance of £66,9-million against an obligated value of £108-million.

The DTI noted that some of the defence groups were progressing faster than their milestones demanded, while others “have some catching up to do”.

It stressed, however, that the programmes continued to be monitored by the NIPP secretariat within the department, as well as by an intergovernmental committee made up of the DTI, the National Treasury, the Department of Defence and the Department of Foreign Affairs. The Auditor-General also conducted audits yearly, while the Portfolio Committee received regular briefings.

Acting DDG Sipho Zikode told the portfolio committee that the secretariat’s attention was shifting increasingly to the nondefence obligors, including those of the foreign participants in the R25-billion-plus Gautrain project.

However, while it had been confirmed that the Bombela consortium, which was building the Gautrain, needed to meet offset obligations worth R1,88-billion, the first milestone date was still to be announced.

Zikode had told Engineering News previously that the DTI was planning to refashion the NIPP programme in a way that aligned the offset project to the industrial sectors with which the obligor was intimately involved.

This model emerged following a recent review of the NIPP programme, which showed that there was a higher probability of offset failure, when projects fell outside the ambit of the obligor’s core business portfolio.