Pretoria - The American company Quantum International Services, which is reportedly planning to sue Armscor for R2 billion in damages, had no case, the state armaments company said on Tuesday.

Company directors Roy Segers and Richard Parker earlier claimed Armscor had, because of some underhanded dealings, reneged on a contract with their company for the sale of nine C160 Transall transport aircraft. 

They said they later heard that former Defence Minister Joe Modise and current Armscor chairman Ron Haywood were seeking finance to buy the aircraft themselves, a claim strongly denied by both Modise and Haywood.

Armscor chief executive officer Sipho Thomo, speaking at a news conference in Pretoria on Tuesday, said the directors could never substantiate their claims. He also denied there had ever been a contract between Armscor and Quantum.

Thomo said the C160s were bought from a French company in the sixties. The SA Air Force decommissioned them in 1993. After one bidding process failed, and a option to upgrade them was found to be not feasible, eight of the aircraft were put on tender again. Quantum put in a bid of US28 million, which was acceptable to Armscor, and it was named the preferred bidder.

Armscor then provided the company with a copy of its standard contract document, with the request to check if it found the terms and conditions acceptable. When Quantum returned the copy to Armscor, it had been signed in the space allotted for the company.

Armscor never signed it, and therefore never reneged on it, Thomo said. Also, beforehand Armscor informed Quantum that certain conditions had to be met for the deal to go through. The company had to provide a bankguarantee for the money payable, as well as an end user certificate. South Africa's National Arms Control Committee and the original supplier had to approve the deal.

Quantum did produce a bank guarantee and the French company gave the green light for the deal, but as far as he knew, Quantum never provided the end user certificate, Thomo said. Also, the NCACC did not approve of the sale. 

Armscor then informed Quantum the deal could not go through. Obviously Quantum was unhappy then, and the rumours of underhanded dealings by Armscor and the alleged efforts by Modise and Haywood to buy the aircraft surfaced, Thomo said.

"Armscor deals with huge sums of money... People, when they lose contracts, become very, very unhappy. They go to great lengths to create all sorts of distractions, unfounded stories when they lose contracts..." Armscor would investigate any substantiated allegations, Thomo said. He met Parker and Segers in March last year and asked them to provide substantiation. They said they could not substantiate the allegation about underhanded dealings by Armscor, but they claimed to have a letter by the NCACC informing them it had approved the deal. 

Upon a request by Thomo, they agreed to provide him with information about the origins of the letter within two days. Regarding Modise's and Haywood's alleged involvement, they could not provide any written evidence or a witness, Thomo said.

He never heard of them afterwards, and when he phoned them three weeks later, they would not speak to him. Yet they started telling everybody they would sue Armscor. According to Armscor's lawyers, Quantum had no claim as there existed no contract between the two parties, and the precondition of the NCACC approval was not met.

In July last year, Quantum's lawyers wrote a letter to Armscor stating that the company had chosen to cancel the agreement. Yet it was calculating its damages and reserved the right to take legal action. Thomo said the only damages Quantum could want to claim, was about R100000 in cost it incurred to do an evaluation of how much it would have to spend to move the aircraft. But Armscor was not prepared to accept responsibility for any form of claim from Quantum.

In every tender situation various companies spent a lot of money preparing for the bid, Thomo said. In what  could turn into another lawsuit, Richard Young, managing director of the defence company CCII systems, has also accused the government of underhanded dealings. 

The SA Navy originally identified CCII Systems as the preferred supplier for the integrated management system for the navy's four new German corvettes, which forms part of the government's controversial R43-billion arms deal. Yet the contract was awarded to another company with links to former defence officials, Young claims.

He sought relief from the Public Protector, who advised him to go to court. Young plans to sue for damages of between R100-million and R200-million, but has said he would only go to court if Judge Willem Heath's anti-corruption investigation unit was excluded from the comprehensive probe into the arms deal. Thomo on Tuesday said he did not want to comment on the matter, as it formed part of the larger probe. "We at Armscor regard it as sub judice," he said. - Sapa.

With acknowledgement to Sapa and News24.