Publication: Business Day Issued: Date: 1998-11-19 Reporter: Stephen Laufer

Dealers Retreat as Countertrade Deals Spike Their Cannons

 

Publication 

Business Day
Date 1998-11-19

Reporter

 Stephen Laufer

 

With the international arms industry facing tighter world markets than at any time since the Second World War, and SA contracts worth billions of dollars in sight, it was perhaps inevitable that yesterday's cabinet decision on new weapons systems would bring out the sour grapes alongside the champagne.

SA arms makers are unlikely to be among those with long faces. Whoever got the nod, the SA defence industry was going to be the winner. The industrial participation requirement of the tenders set minimum investment and procurement levels to guarantee work for the local defence industry *1.

From those who began to sense they were on a losing wicket, there has been no dearth of stories suggesting impropriety by SA officials *2, rarely - if ever - followed up with tangible evidence *3. Then, at the defence exhibition Dexsa '98 in Pretoria this week, a whining sound that had nothing to do with jet engines warming up became audible. It was the unmistakable sound of weapons merchants who had realised that they had made inadequate countertrade offers, or that their additional bountiful promises *4, submitted after the tender's closing date, had perhaps come too late to swing the process around.

But if there have been few hard facts regarding gerrymandering, there has certainly been a hard sell. At least one prime minister is said to have phoned Deputy President Thabo Mbeki on Tuesday night from the Pacific Rim summit in a last ditch attempt *5 to sell a system that was already well on the skids.

Canada was left empty-handed, France will at best get work through subsystems *6. Some say they did not understand how serious SA was about getting investment in return for purchases. Others believe they relied too heavily on political contacts *7 and did too little research.

Russia and the Czech Republic, shortlisted to supply the lead-in fighter trainer, seemed to accept the inevitability of the decision against them.

For Spain, the status as also-ran was particularly painful. After all, Bazan appeared to have the corvette contract in the bag *8 when it was initially adjudicated before the two year long defence review.

With acknowledgements to Stephen Laufer and Business Day.


*1       What kind of dumb procurement policy guarantees work for the local defence industry for 5 or even 10 years and then nothing.


*2      This was November 1998; in June 2007 there is still no dearth of stories suggesting impropriety by SA officials.

Because these stories are true stories.


*3      How was it possible to get hard evidence in November 1998?

The contracts were only signed a year later and the money, including the bribe money flowed even later in the April/May 2000 timeframe.

But people were talking then and alot of what they heard and told to the likes of Patricia de Lille and even the Secretary for Defence and then the Acting Secretary for Defence were very, very true.


*4      Wrong, it was the merchants who made the bountiful and mainly unachievable promises that won the contracts.

The merchants who made the obligatory and mainly achievable promises that lost the contracts.


*5      My information is that this was Jacques Chirac whose country then got compensated for losing the prime contracts, by increasing there participation in the secondary contracts.

This is where Thomson-CSF comes in with its R2,599 billion contract for the corvette combat suite, with their French Tavitac Combat Management System (CMS) replacing the South African Action Information System (AIS), Weapon Control system (WCS) and Information Management System (IMS).

Other French systems were also selected to increase the French share and placate the angry Chirac; the Ship-Ship Missile (SSM), the Search and Surveillance Radar (SSR), Hullmount Sonar (HMS) and Internal Communication System (ICS).


*6      Tell me it ain't so.


*7      Wrong - the successful merchants relied heavily on the right political contacts; the unsuccessful merchants relied heavily on the wrong political contacts.


*8      Until Mbeki and Chippy Shaik lifted the German Meko 200AS from zero to hero.