A public enquiry into South Africa's £4bn purchase of military equipment from European companies is underway in Pretoria. BAE Systems, the largest contractor, has been cited in the allegations that stretch from gross incompetence to corruption and nepotism.

Overall, 43 specific allegations are levelled at ANC politicians, government officials and businessmen involved in the 1999 deal. Most allegations will be excluded though, as the investigator's document finds them more suitable for "thorough criminal investigation".

The wafer-thin remit of the investigation - which is comprised of three agencies: the offices of the Auditor General, the Director of Public Prosecutions and the Public Protector - has dismayed many. Aside from accusations of an ANC government cover-up, concerns were made toward the overall wisdom of the procurement programme. The Freedom of Expression Institute argued: "thus far, the government has been unable to come up with convincing reasons why national security should take precedence over social delivery."

The deal is worth twice the government's total housing budget, and is over one hundred times larger than the allocation for combating HIV/AIDS, from which 10% of South African's suffer. It appears that the hearings are now only to investigate costs of the package, ongoing fiscal implications and scrutiny of the deal's presentation to cabinet.

Allegations include:

ANC Chief Whip, Tony Yengeni, receiving a £32,000 Mercedes whilst Chairman of the parliamentary Joint Standing Committee on Defence. European Aeronautic Defence and Space Company (EADS) won £37m of contracts to supply missiles and radar for four new navy corvettes. Recently EADS admitted assisting thirty prominent individuals "in the civil airlines, defence, electronic, diplomatic and political fields" to obtain vehicles. EADS is partly owned by Mercedes manufacturer, Daimler Chrysler.
Joe Modise, former defence minister, and Shamin "Chippy" Shaik, head of arms procurement, are accused of pressurising bidding arms companies to use subcontractors linked to their families. The contract to fit electronics to new warships went to Thomson CSF subsidiary, African Defence Systems (ADS). Mr Shaik's wife is a senior executive for ADS and his brother is a director of both Thomson and ADS.
A winning contractor, Agusta, agreed to subcontract work to a local company, Futuristic Business Solutions (FBS). Previously, Bell Helicopters, a US firm, pulled out of the bidding citing pressure to subcontract business to FBS as a reason for cancelling their bid. Bell also blamed ad hoc charges levied by FBS, one of which was a £90,000 "administration fee".
Links between contracts granted to BAE Systems and funding of overseas trips for cabinet ministers and senior MPs face scrutiny. The possibility of a connection between BAE's £500,000 donation to the ANC's military veteran's association and the awarding of contracts are under investigation. Before BAE was selected, cheaper and more modern Italian aircraft were the preferred option of the SA airforce.

At the enquiry, explanations of inexperience and myopic administration, rather than corruption, are being served up. Rear Admiral Keg Verster, a defence acquisition officer, said that the department had faced acute budget restraints with the Rand's depreciation against other hard currencies. (A request for UK helicopters has been postponed.) Other difficulties were that the SA defence department had no control over subcontractors. Hence, the capability of the government to manage the £10bn offset packages never emerged.

Trade Minister Alex Erwin attempted to assure the hearing that the final arms deal had so many safeguards that "it was impossible for any individual to corrode the selection procedures". He emphasised the repeated "late night" soul-searching as to whether the government should upgrade its defences or invest in social programmes. Responding to parliament's estimate that the 1999 spending commitments had risen by £1bn, Erwin spoke like a tycoon who had mislaid a fiver: "As soon as you start dabbling in different types of figures, you will only confuse yourself." The hearings continue.

With acknowledgement to Richard Bingley and CAAT Magazine.