In an interview with the SABC, Minister of Trade and Industry Alec Erwin responded to our story last week about the inflated value ascribed to many of the offset projects linked to the arms deal. He said: "The Mail & Guardian article was factually inaccurate in a whole range of ways ... The figures about a drop in exports are just wrong. We don't respond to such grossly inaccurate and speculative nonsense."

The trade and industry department has failed to point out what these inaccuracies are supposed to be. Instead, the minister perpetrated a few of his own. He said the offset obligations were put at R104-billion at the time of the signing of the contracts, which translated into roughly $9-billion - due over a period of 14 to 15 years.

Yet his own departmental report of March this year says the offset obligations are worth about $13,3-billion over a period of seven years - or 11 years in the case of BAe-Saab.

Erwin also failed to deal with the three principal criticisms of the way that offset credits are calculated.

First: export credits are granted on the basis of the total value of the export product, rather than on the value added (or cost saved) by the investment. In the case of BAe-Saab's gold beneficiation projects, this results in the most obscene distortion, with the trade and industry department claiming offset credits of $2,3-billion from an investment of a mere $70-million.

Second: investment is calculated not on what the obligor puts in, but also on what it can claim to have "facilitated" from other sources - such as our own Industrial Development Corporation.

Third: investments which on the available evidence have nothing to do with the arms deal are being claimed by the trade and industry department as providing offset credits as obligors piggy-back on other projects - in defiance of the department's own principles of "causality" and "additionality" which are supposed to be a condition for valid offsets.

It may interest the minister to know that even at this late stage - after his department has boasted of these figures for nearly two years - BAe would say only this about its gold projects: "We have not announced any gold projects and cannot discuss detail publicly."

The arms deal has repeatedly exposed the government to communicating dishonestly in a bid to deflect legitimate criticism. This reached its zenith when the president said in a public broadcast he had acted on specific legal advice in excluding the Heath unit from the joint arms probe, when in fact that advice recommended the opposite. The issue here is one of political honesty. Our democracy deserves better.

With acknowledgements to the Editor and Mail & Guardian.