The parliamentary committee on public accounts is awaiting written proof from the defence department as to the exact nature of the commitments undertaken by the defence procurement package before a decision is made as to the validity of the contracts and thus whether they may be terminated, Dr Gavin Woods, chairman of the committee, said on Monday.

"All of the contracts allow for termination if and when irregularities are discovered - we have the power to declare the contracts null and void if we can establish evidence of dishonesty," Woods told WOZA. Similarly, certain contracts may be scaled down if the long-term financial predictions of the process are found to be less than expected. 

"We are still awaiting certain figures before my committee and I can analyse them in order to get a better idea of the long-term financial implications and benefits of the deal," said Woods. "My committee is there to represent the interests of the public. We need to determine if the entire process was clean and transparent. In other words, what was parliament and the public told before the contracts were approved, and was this the accurate truth?

"If there is evidence of corruption, then we need to act on this - we will make sure that the facts do come out," he said. Woods is of the opinion that Cabinet may have been misinformed when the contracts were originally awarded. "We need to find out how and why this happened - it could either involve deception, incompetence or ignorance, but if we discover that the process was tainted then we will act."

The arms deal - which was originally billed at R30,3 billion - is now expected to cost the country well over R40 billion, Chippy Shaik, the department of defence's head of procurement, told the committee last week. The deal is now expected to cost about R43,8 billion over 12 years. This figure, however, could rise even further once bank loan costs are factored in.

This latest financial shock follows closely behind Auditor-General Shauket Fakie's special report to parliament, released last month, which found that generally accepted procurement practices were also not followed. Fakie recommended a special forensic audit into the deal's subcontracts. Woods and his committee have been charged with deciding whether to pursue a forensic investigation into the matter or not. He said that the latest figures would be tested against those submitted to Cabinet for approval last year. "We would have to ask whether Cabinet was aware of this (the increase in costs)," he said.

"It will be a difficult task to calculate the final cost of the package. It is a difficult process as one has to make long-term predictions as to the effects of changing exchange rates and inflation. Any figure that we arrive at can never be final". Questions could be raised as to how well Cabinet "put its mind around" the deal should the figures be the same. However, the sudden rise in cost is not the only issue to be investigated - the deal has also been tainted by allegations of corruption and deception, particularly surrounding the supposed industrial participation offsets of R104-billion.

It is generally accepted that the package was approved because of the benefits of industrial participation - the process whereby SA would benefit from reciprocal investment from those firms from which the military hardware was purchased. However, it seems as if certain officials greatly overestimated these industrial participation benefits, which come in the form of job creation and investment. 

Officials associated with the arms deal - including Shaik, the government's former chief negotiator Jayendra Naidoo and top Armscor personnel - were grilled for seven hours about details of the package by the committee last week. The committee will table a report by next week and release its findings before parliament on October 30.

With acknowledgement to Greg Gibbons and Woza.