Publication: Sunday Times Issued: Date: 1999-03-07 Reporter:

Taxpayers Need Reassurance of Transparency on Arms Deals

 

Publication 

Sunday Times, Business Times

Date 1999-03-07

Web Link

www.btimes.co.za/99/0307/columns/columns2.htm

 

THERE seem to be far more questions than answers in the murky matter of South Africa's R29-billion arms procurement programme.

To start with, there have been reports and rumours of vast kickbacks to officials and politicians. This is par for the course in the arms industry wherever it operates. It is well known, for example, that serious fortunes were made by Rhodesian arms merchants who today live in great style in fashionable capitals around the world.

There is an investigation under way now by the Office for Serious Economic Offences (OSEO) into commissions paid five years ago when South Africa bought 60 Swiss-made training aircraft. According to reports, Jan Swanepoel, head of OSEO, says R6.7-million in commissions was paid into an account in St Kitts-Nevis in the Caribbean by a former Pilatus employee.

Then there was a piece in the Sunday Independent suggesting that a middleman had been paid R100-million commission in a failed deal to supply G6 and G7 long-range artillery guns to Saudi Arabia.

And, of course, there was the sinister behaviour of Denel, a government entity, in seeking and gaining a court order to prohibit newspapers from reporting on a mooted SA arms sale to a mystery Middle East country.

The Sunday Times suggested that Denel's frantic efforts to gag the press may have been an attempt to "prevent discussion on the financing of the deal and the parties involved, on who gets what and how. Just like the old days".

Now when R29-billion in armament sales is up for grabs one can expect the fight to be dirty. It would surprise no one if illegal commissions were paid, if kickbacks and corruption surrounded the enterprise, regardless of the country concerned. It would also be no surprise if rival bidders cried foul if their tenders failed. But in the fallout from the Cabinet decision to buy from German, Swedish, British and Italian suppliers there are some comparative numbers which must raise questions in the mind of the average taxpayer who is footing the bill.

For example, how do arms orders of R29-billion translate into a R110-billion investment in South Africa and 65 000 jobs over the next seven years? This is a fair question which I put this week to Chippy Shaik, who is in charge of the nation's arms procurement programmes.

Shaik went to considerable lengths to try to explain to me some of the apparent anomalies in the deal such as the allegedly inflated costs of Agusta helicopters from Italy (as opposed to the Bell Canada tender) and Gripen fighter aircraft from Sweden's SAAB and the UK's British Aerospace. He also addressed the counter-trade or industrial participation programmes which promise such vast positive effects for SA.

He said, for example, that a German supplier is part of a giant conglomerate, Thyssen, whose other non-defence activities could source products from SA in order to make the deal sweeter.

On price disparities, he claimed there were different specifications and that some prices quoted did not include all the attendant costs such as VAT and customs and excise. On the Bell issue, he said there was confusion. As the supplier was Canadian, he dealt with the Canadian government and Bell of Canada but the marketing and negotiating was done by Americans.

There has been speculation about the involvement of a company, Futuristic Business Solutions, apparently not registered and of no fixed abode, in the arms deal. Shaik says he has not specifically recommended them as an empowerment partner but rather the association to which they belong, the Defence Industry Interest Group of SA. Tshepo Molai of Futuristic is said to demand an upfront fee of $250 000, a R1-million "success" fee and a monthly retainer. Shaik says there is a dearth of black groups, which were legally barred from participating in the arms business under apartheid. They will share in less than 2%.

Let's hope that Shaik's willingness to discuss and debate these issues will lead to greater transparency for the taxpayers.

With acknowledgement to the Sunday Times.