Dear Sir,

THE cabinet's claims (Business Day October 26): (a) that there are no budget risks from the industrial defence procurement package, and (b) that the cost of the acquisitions includes comprehensive agreements with financial institutions, are the same governmental hogwash that insisted the R29,8bn spent on armaments would produce offsets of R110,6bn to create 64165 jobs.

Defence expenditure is the fastest growing item in SA's budget. The military establishment bleats it requires R18bn to maintain existing operations. The SA National Defence Force cannot even afford the fuel for existing equipment, let alone its new "toys". Among the auditor-general's findings are that no provision had been made for the personnel to operate the highly sophisticated warships and warplanes.

The Coega scheme related to the submarine deals supposed to create 16251 of  those jobs has already fallen apart. Fortunately, as Coega's budgetary risks were that of another Mossgas-in-the-making. The trade and industry department just does not have the capacity to monitor offsets. 

Global experience of offsets is that they are an invitation to corruption, and a scam by the armaments industry, with connivance of politicians, to fleece supplier and recipient nations' taxpayers. Chippy Shaik testified at the parliamentary public accounts committee hearings on October 11 that the acquisitions package was a government-to-government project, and the respective embassies orchestrated the tenders, pricing and offset structures. 

Shaik and Jayendra Naidoo may be scapegoated: the real culprits are the ministers of defence, trade and industry, finance and public enterprises. At best, they were either incredibly naive or conned by the European armaments industry which, in turn, holds undue influence over European governments. 

The finance minister despite public knowledge the acquisition process was alleged to be riddled with corruption signed governmental guarantees to the British ECGD and German Hermes credit agencies and to Barclays Bank and Commerzbank. Those guarantees should now be repudiated, and the whole acquisition process cancelled.

With acknowledgement to Terry Crawford-Browne and Business Day.