Some items excluded from the package said to be essential for functionality of equipment

Cape Town - Government's R43,8bn defence package will require additional "hidden" spending of about R2bn, which will have to come out of future defence budgets, MPs learnt yesterday.

A special sitting of seven parliamentary committees was convened to question the joint investigating team about its report on the arms procurement programme. They were told these extra costs were excluded from the package to bring its total cost to a level acceptable to the cabinet.

But some of the excluded items are essential for the functionality of the equipment purchased, and will have to be paid for by the defence force. The disclosure that additional amounts will have to be spent comes amid concern about the exchange rate and the financing implications of the deal.

Opposition parties criticised the "rushed" and "unilaterally decided" process of the interaction with the investigators, which they said was contrived to prevent thorough questioning. Public accounts committee chairman Gavin Woods of the Inkatha Freedom Party remained silent throughout the proceedings, which he felt had been structured in such a way as to disempower the committee from taking a leading role in the inquiry.

Woods said he felt a number of important issues had been brushed over.

African National Congress (ANC) MPs left most of the questions to opposition MPs, who said this was because the ANC had already formulated its position.

Auditor-General Shauket Fakie told the MPs that an additional R1,169bn was required for "essential functionalities" removed from the original purchase package because of budget constraints. Defence Minister Mosiuoa Lekota has also told Parliament of plans to acquire marine helicopters at an estimated cost of R967m for delivery at the same time as the R6,9bn corvettes ordered under the package.

The corvettes will be largely useless without the helicopters.

Fakie said a proper impact study should have been undertaken to ensure that when functionalities were reduced the equipment purchased was not rendered unusable.

The report recommended giving the cabinet information on all possible costs, saying "such information is necessary to ensure that essential functionalities are not removed from equipment during negotiations due to budget constraints".

Finance committee chairwoman Barbara Hogan suggested amending the Public Finance Management Act to require full costing of not only legislation but all major government contracts before adoption.

National director of public prosecutions Bulelani Ngcuka disagreed with opposition party suggestions that the report's exoneration of government was premature because of the number of investigations still under way, some of them into high-ranking officials who allegedly accepted gifts from bidders.

Ngcuka said the exoneration of government came after a thorough investigation to ensure that even if the allegations were proved true they would affect neither the validity of the contracts nor government's lack of culpability. The irregularities uncovered so far had also had no effect on the awarding of the prime contracts because of the number of departments and committees that had been involved in the decision-making process.

This was the case even though the chief of acquisitions in the defence force, Chippy Shaik accused of conflicts of interest was represented on a number of the committees.

"We are very comfortable with this report I will put my head on a block for it," Ngcuka said.

Fakie said the right bidders got the contracts, except for the lead-in fighter trainer aircraft and the Hawk trainer aircraft, which were awarded on strategic grounds.

Responding to allegations that Shaik had a hand in amending the investigators' review of the arms deal, Fakie said he would have made amendments only if he was satisfied they were justified by the facts. It did not matter at that stage that Shaik was suspected of conflicts of interest.