Cape Town - BAE Systems, one of the successful bidders in South Africa's R43 billion arms deal, on Sunday rejected criticism of the industrial participation (IP) programme linked to the contracts, saying it was well on track.

BAE's statement, issued by its South African executive director Stuart McIntyre, comes only hours before the four Cabinet ministers most closely involved in the deal face a grilling from Parliament's public accounts committee.

McIntyre said a similar statement, also dealing with the criticisms, had been delivered to President Thabo Mbeki's office.

He said the company felt it was necessary to summarise its achievements since the contracts were signed "in the interests of transparency, deepening co-operation, and greater clarity".

Corruption buster Judge Willem Heath said last week that the R104 billion offset deals, concluded by the government with foreign powers as a quid pro quo for the arms agreements, were completely unenforceable.

"According to standing committee reports these offset contracts are unenforceable as the foreign countries with which they were concluded have the discretion to continue with these contracts," the judge said.

However, McIntyre said the penalties for non-performance on the IP commitments were twice the international norm.

"Our contract does not permit us to elect to pay penalties in lieu of delivering IP.

"Delivery is not a matter of choice and we would not have deployed the substantial resources we have, were we not fully committed to delivery."

He said that less than 11 months after BAE's contract with South Africa became effective, the IP programme was "on track for success" in delivering the promised economic benefits and jobs.

He said BAE and its Swedish partner Saab, who won a contract to supply South Africa with new Hawk jet trainers and Gripen fourth generation fighter aircraft, had already "launched" more than $800 million (R62.8 billion) worth of IP in the defence arena.

They had also launched nine other projects which would generate $2.9 billion (R22.62 billion) in new economic benefit to South Africa by April 2011.

"To date, BAE Systems and Saab have met every technical and performance milestone under the contract," he said.

He said BAE wholly supported the South African government's investigations into the defence procurement "as they will eradicate the misconceptions and misinformation dominating discussion today". 

With acknowledgement to Sapa and News24.