THE auditor-general is considering a special probe into the Coega Development Corporation, the private firm that government has appointed to handle the Coega deep-water port development.

The development was conceived as a main part of the offset programme in SA's controversial R43bn arms deal, with industrial participation projects revolving around three steel mills that were to have been constructed in the Coega area.

Trade and Industry Minister Alec Erwin appointed the corporation.

Public Protector Selby Baqwa and auditor-general Shauket Fakie are, together with the directorate of public prosecutions headed by Bulelani Ngcuka, investigating the arms deal.

Fakie told the Democratic Alliance in a letter yesterday that the issues on the corporation would "probably require a special investigation" of their own.

A spokeswoman for Fakie, Lynette van Rooyen, said he would know today how far his legal mandate went in relation to the corporation and Coega.

Raenette Taljaard, a spokeswoman for the DA, said any questions about viability, propriety and overall affordability of the Coega project "must be answered openly and honestly".

Taljaard said it was "disturbing" that Fakie wanted legal opinion on a mandate first.

She said the corporation was a public entity under the provisions of SA's Public Management Act. "The clear value-for-money issues and questions of illegality around the (corporation) fall squarely into the jurisdiction of the auditor-general."

Taljaard said only a full investigation would satisfy the SA public that another white elephant would not dot the SA arms offsets landscape. The DA expressed "deep concern" that the corporation did not appear to have either a provisional or a permanent industrial development zone operator's permit.

Taljaard said this had not deterred the corporation from de facto acting as industrial development zone operator and had commissioned research and technical reports. It had also commissioned environmental impact assessments, the purchase of land and an application for rezoning land from agricultural to industrial usage.

She said in the absence of the permits, the only conclusion was that the corporation had undertaken all the expenditure "ultra vires and that the authorisation for such expenditure" was dubious.

The spotlight on Coega intensifies at a time when a public service watchdog based at Rhodes University has raised new concerns about a possible conflict of interests in the development and the arms deal. The independent Public Service Accountability Monitor, headed by Colm Allan, raised the concerns.

He said former trade and industry deputy director-general Paul Jourdan was a member of the international team given the task of securing the best offset arrangements in return for the arms purchases. Jourdan is now a director in the corporation.

Moss Ngoasheng was the special economic adviser to then deputy president Thabo Mbeki at the time of the defence review, which decided that new military hardware was needed. He is now chairman of the corporation's board of directors.

Allan said Saki Macozoma gave an undertaking while MD of Transnet last year that Transnet would bear the costs for the construction of the Coega harbour. A joint venture between Safika, a company in which Macozoma and Ngoasheng have stakes, and two firms of consulting engineers have been awarded three contracts by the corporation.  

With acknowledgement to Bonile Ngqiyaza and Business Day.