Government has seen fit to take a lenient stance towards arms-deal suppliers that have not met their contractual requirements for offset deals to date.

It emerged at the weekend that three of the five largest arms suppliers have not met the targets they had been contractually bound to meet over the past four to five years.

None of them has been penalised so far - which is a surprise given that government promised to impose heavy penalties on arms suppliers that did not meet their offset targets when the arms deal was signed in 1999.

Nothing was said at the time about generous grace periods for suppliers that struggled to meet their commitments, which are in fact contractual obligations.

Thyssen, one of the five largest arms suppliers, was given an extension of 18 months to meet its target in terms of investments that had to be made by this year. The other laggard is Thales. Government has admitted to Thales shortfall, but has not said anything about penalties or a period of grace.

One reason for government's leniency could be that imposing penalties on its suppliers would amount to admitting to a degree of failure in the offset programme. But surely the same applies to allowing a period of grace. Government would go a long way towards regaining some of its lost credibility on the controversial arms deal if it acted swiftly against those that failed to honour their commitments by penalising them.

We have pointed out before that the lack of transparency on the arms offset programme is cause for concern. A case in point is last month's release in Parliament of the annual report on nondefence offsets. Despite glowing reports on the success of the offset programme, it is now clear that government's annual report did a good job of disguising the fact that some suppliers had not met their targets.

In the report, government said only that it was concerned that the German Submarine Consortium would not meet its targets. Tardiness in meeting targets by two other suppliers came to light only after the Democratic Alliance requested further details from the trade and industry minister.

It will be interesting to see whether government will decide to penalise the German Submarine Consortium's lead member, Ferrostaal, for not meeting its targets.

The consortium has admitted that it was slow in rising to the challenge of offset projects. Penalising the German consortium - and indeed all other tardy suppliers - in the apparent absence of good reason for a failure to deliver the promised offsets.

Taking the example of the submarine consortium, we do not know what its shortfall is, because government declines to give details. We can only assume that the shortfall is large, given that the consortium has not facilitated any megaprojects. It had to generate investments and sales worth €720m or about R4,3bn by July this year.

Government should be particularly vigilant - and equally transparent - about offset deals, given that the true value of the offset programmes is questioned by many, including bodies such as World Bank and World Trade Organisation.

A soft hand, and opaque information, serve only to reinforce the argument that offsets are little more than a sweetener for arms deals. If there is a shortfall, government should inform the public swiftly. This should include details of the shortfall, and how it came about.

It cannot afford to attempt to bamboozle the media and public about the success of its offset projects. The 2004 annual report on offset projects in the nondefence sector appears to be just such an attempt. More than half the pages in the report are dedicated to highlighting successful offset projects. The balance of the report offers insufficient detail to enable the reader to judge whether arms suppliers are fulfilling their obligations or not.

The arms offset programme has already lost credibility, but it is not too late to regain at least some of it. Much of the future credibility off the offset programme will depend on how the trade and industry minister decides to act against any and all suppliers that fail to meet their contractually agreed targets now, and in the future.

With acknowledgement to the Business Day.