Cape Town. Auditor-General Shauket Fakie has used the report by a joint investigating team on the arms programme to dispute allegations arising from a "surprise" letter presented at a hearing of Parliament's public accounts committee this week and to show the team dealt adequately with the allegations.

One allegation was that the successful bidder for a corvette subcontract, African Defence Systems (ADS), was allowed to alter its final bid price after the closing date for bids. This was claimed by Democratic Alliance MP Nigel Bruce at the hearing.

Fakie said yesterday that it would have been highly irregular to change a quote after the deadline, but the report made it clear that the quote deadline was April 16 1999 the date of the letter from ADS to the defence department and not April 15, as claimed by Bruce.

The April 15 deadline was the closing date set by main contractor German Frigate Consortium to get quotes for its subcontracts from ADS and rival C²I², and April 16 the department's deadline for the consortium to submit its bid.

C²I² submitted its quote on April 14, said Fakie.

However, Bruce said Fakie was avoiding the issues raised "that one of two companies tendering for a government contract was treated in a way that gave it an unfair advantage, that this was at best highly irregular, and that grounds could exist for an action to nullify the contract.

"This is not a matter that can be recorded as an irregularity and its consequences ignored."

Bruce said ADS was allowed to increase its price on May 7 after a best and final quotation request, which was usually intended to get a final discount. "Unusually in this case a premium was countenanced.

"What this controversy indicates is that the report cannot be the last word on the arms deal. It is neither a conclusive nor exhaustive investigation."

Fakie conceded that the report did not make recommendations on all possible irregularities dealt with in the chapter dealing with the C²I² complaints about the bidding process.

"We believe it would have been irregular that ADS had sight of C²I²'s quotes, but we were not able to prove this very conclusively. We say that there was a strong possibility that it could have happened," said Fakie.

"We were hesitant to make any formal recommendations (on this chapter) because we knew that there was the potential for the matter to go into litigation. By making recommendations we could in some way undermine the court process.

"The current investigation by (the national directorate of public prosecutions) on Schabir Shaik (who had interests in ADS) is very much interrelated to this issue."

Fakie also said the investigators seemed not to have followed things through with the German Frigate Consortium, and he was busy looking into this.

With acknowledgements to Linda Ensor and the Business Day.