The department of trade and industry has decided to institute disciplinary action against a senior official who received a R55 000 discount on a luxury vehicle from a company with an interest in the government's controversial arms deal.

Two weeks ago the department announced that Vannan Pillay had not contravened public service regulations in terms of disclosure, and officials said then that no disciplinary action would be taken against the former director of the department's national industrial participation programme.

At the time when the discount was obtained there had been no requirement to disclose it to the department.

However, speaking on SAFM on Monday, trade and industry director-general Alistair Ruiters said action would now be taken "in the context of the Public Service Code which clearly sets out that officials must not use their position to obtain private gifts or benefits during the performance of their duties".

Pillay would not be suspended pending the outcome of his disciplinary hearing as he had already been removed from his post to another division within the department.

"His current responsibilities bear no influence on this investigation or any other matter under the industrial participation scheme.

"As soon as the investigation is complete we'll know what action to take."

Ministry spokesperson Edwin Smith confirmed a disciplinary inquiry had begun and that Pillay had been informed.

"We will look at the severity of the issue. We will not predetermine the issue. This is not a witch-hunt to please those who believe action needs to be taken, we're trying to do what is rights for the public service"

Smith said it was the department's intention to have the hearing within two weeks.

Pillay was among the recipients of discounted vehicles from the European Aeronautic Defence and Space Company (Eads), a subcontractor in the defence procurement process.

Pillay bought a Mercedes C250 TD valued at R196 000 for which he paid R141 000 in July 1999 from Eads.

Suspended Eads MD Michael Woerfel is facing charges of corruption and forgery along with his co-accused, former ANC Chief Whip Tony Yengeni, who also received a discounted luxury vehicle from the company.

With acknowledgment to Sapa and Independent Online.