Investigation signals an about-turn by trade and industry department

The trade and industry department is to launch a second inquiry into an official who received a Mercedes at a discount.

The official, Vanan Pillay, is being investigated for contravening a government code of conduct by accepting a R55000 discount on a Mercedes-Benz purchased through the European Aeronautic Defence and Space Company (EADS).

The announcement yesterday signals an apparent about-turn by the department after it said last week no action was being taken against Pillay. Department officials denied there had been pressure from any outside the party. Spokeswoman Manana Makhanya said director-general Alistair Ruiters had been concerned all along the gift should never have been accepted.

Spokesman Edwin Smith said at the time a probe had cleared Pillay as far as disclosure of the vehicle to the department was concerned.

Until he was moved to another post earlier this year, Pillay was the director responsible for national industrial participation offsets, and played a major role in deciding which bidders offered the best counter-trade proposals.

Pillay reportedly got a discount of 29% on a Mercedes-Benz in July 1999. He paid R141000 for the vehicle.

EADS, a beneficiary of the defence procurement process, suspended MD Michael Woerfel earlier this year in connection with the discount deals.

Smith said yesterday Ruiters would investigate whether Pillay had broken public service regulations by accepting the car. He said those regulations prohibited officials from using their positions to obtain gifts or benefits.

Pillay is currently serving in a new information and communications technology division in the department.

Said Smith: "His current duties have no relation to previous responsibilities."

Consequently, he said, Pillay would continue to carry out his new responsibilities and would not be suspended.

The decision to institute a disciplinary inquiry follows the conclusion of an internal investigation to establish whether Pillay had complied with regulations regarding disclosure of private gifts or benefits.

Makhanya said yesterday that investigation had found that Pillay had no obligation to disclose the discount.

The department's senior management is known to be deeply embarrassed that Pillay did not inform Trade and Industry Minister Alec Erwin before his appearance before the standing committee on public accounts.

He had also remained silent when Erwin went before the public protector and expressed confidence that no single person could have influenced the process. Another senior government official named in the car discount saga is SA National Defence Force chief Gen Siphiwe Nyanda.

Two prominent people have already appeared in court over alleged offences related to the scandal. Former African National Congress chief whip Tony Yengeni and Woerfel will appear in court again next January.

With acknowledgment to Bonile Ngqiyaza and Business Day.