THE government on Tuesday broadened its investigation into a major European arms deal to probe allegations that top officials received cut-price luxury cars from a European defence company.

The trade department said it had launched an internal investigation into whether one of its former officials compromised his position during the negotiations.

The Star newspaper published on Monday details of 33 luxury cars sold at big price discounts to leading political and defence officials by the European Aeronautic Defence and Space Company (EADS).

A trade and industry ministry spokesman said former trade department official Vanan Pillay was being investigated in connection with the cut price cars.

"Vanan Pillay, the previous director of the department's national industrial participation programme, participated in critical aspects of this process and is due to make submissions to this investigation," Edwin Smith, a spokesman for Minister of Trade and Industry Alec Erwin, said.

"Given the magnitude of the discount and the circumstances that brought it to light, the Director General has launched a preliminary internal investigation to verify Mr. Pillay's statements," Smith said.

Three state agencies are probing up to 50 allegations of fraud and corruption in the awarding of contracts in the multi-billion dollars deal after a recommendation by parliament's public accounts committee found irregularities in the awarding of contracts associated with the purchase of submarines, corvettes, helicopters and jet fighters.

Senior government officials including President Thabo Mbeki have denied that there was corruption in the deal.

The Scorpions, an elite police investigating unit, have interviewed EADS managing director Michael Woerfel and other staff. The Scorpions last week interviewed Tony Yengeni, chief whip of the ruling African National Congress (ANC), on his purchase of a luxury 4x4 vehicle from EADS.
Yengeni was chairman of parliament's joint standing committee on defence when he received his car.

The opposition Democratic Alliance (DA) urged EADs to explain why it had sold cars to prominent South Africans.

"EADS's commercial reputation is at stake and the company owes the South African public and its own shareholders a clear explanation why it entered the car selling business if it did not wish to influence key players in the defence procurement," said DA spokeswoman Raenette Taljaard.
EADS, owned by DaimlerChrysler, Aerospatiale Matra of France and Spain's Casa, won a contract to supply radar and missile systems worth more than $50 million to four German corvettes.

EADS, the parent firm of Airbus, acknowledged last April that it had arranged about 30 car deals for VIPS over the last three years but has said it had made a profit from the sales.  

With acknowledgement to Steven Swindells, Reuters and the Daily Mail & Guardian.