Auditor General Shauket Fakie came under intense fire from the DA yesterday over a R30-million contract in the arms deal apparently awarded under questionable circumstances.

Nigel Bruce of the DA said yesterday - when parliament's watchdog public accounts committee grilled Fakie for three hours - that "new" information on the arms deal revealed that African Defence Systems (ADS), the company of Durban businessman Schabir Shaik, had been given "undue privilege" in a R30m arms subcontract.

ADS was allowed to lower its original quote, apparently to beat a rival tender from Richard Young's company, C²I², and submit a revised quote a day after the tender for an electronic information system had closed.

Bruce read from a letter, which he said was stamped by the auditor-general's office, which showed that ADS was allowed to drop its bid from R32,47m to R29,64m.

Fakie said he could not remember the letter. Unhappy with Fakie's response, Bruce said: "This document does come from your office. It has your stamp on it. This can invalidate the deal. Is it an oversight? This is a critical matter to my mind."

Fakie said later that ADS had made a mistake with its figures and had been allowed to change its tender. He said in his special report tabled in June that "the nomination of a single supplier also created the potential for abuse of the nomination process and potential prejudice to the state, as was demonstrated by ADS's high tender of R64 73m fo the System Management System (SMS) which was reduced to R29 647m after a competitive quote from C²I².

"ADS was the only nominated supplier for the SMS, and C²I², though not nominated, was apparently only invited quote to lower ADS's quote."

During the investigation no acceptable explanation for not applying a fairer and more transparent process was offered, Fakie said in his report.

When the tender was awarded, Schabir Shaik's brother Chippy Shaik was head of acquisitions in the defence department.

Bruce said afterwards that unless Fakie could "explain why a potentially criminal act was glossed over in his reports on the arms deal, his claims that the final report was conclusive and exhaustive would fall flat.

"And he may, himself, have to face a substantive motion in parliament on the conduct of his department,"said Bruce.

Young said he would launch a court action to compel Fakie to produce documents about the deal that he failed to deliver despite an earlier court order.

The ANC said yesterday's grilling showed Fakie had not "heavily edited" the final report on the arms deal on the instruction of the executive as had been alleged.

With acknowledgements to Andre Koopman and the Cape Times.