The Hon Dr Gavin Woods
Chairperson
The Standing Committee on Public Accounts
National Assembly
Cape Town

Dear Mr Woods,

I write to you about the issue of the defence acquisition, which, unfortunately and unnecessarily, has become a matter of controversy.

In this regard, I thank you for your letter to the President dated 8 December, 2000, with whose authorization I am sending this communication to you.

The Executive has no desire to fuel controversy. However, we are obliged to defend the integrity of government.

I enclose for your information two documents, these being

The January 12, 2001 Government Statement of the Defence Acquisition; and,

The January 15, 2001 letter to the President of the Minister of Justice on the issue of the "Heath Unit".

From these documents, you will see that the Government contests the conclusions arrived at by the Auditor General and SCOPA.

Furthermore, we are convinced that, in addition to the requirement for us to respect the decision of the Constitutional Court, there is no need for the "Heath Unit" to be involved in any "investigation" of the defence acquisition.

We do not understand why you, presumably on behalf of your parliamentary committee, suggest that we should ignore the decision of the Constitutional Court on the "Heath Unit".

The reasons for granting the Executive and the Legislature a period of a year to sort out this matter are clearly set out in the Constitutional Court judgement.

Throughout the judgement, the Court makes it clear that by granting a one year grace period, it wishes to protect the Unit's work that is "being done". It refers to "persons being investigated". It further stated that Judge Heath" continues temporarily to be head of the Unit until appropriate arrangements are made for his replacement".

With regard to this last point, the President of the Constitutional Court, speaking on behalf of the Court said

"Although there may be reasons for allowing sufficient time for all matters to be dealt with simultaneously, there are good reasons for the first respondents (Judge Heath) position as the head of the SIU to be regularised without undue delay."

In other words, the Constitutional Court required of us that Judge Heath be relieved of his duties without undue delay.

You will also have seen that during the course of his judgment, the President of the Constitutional Court makes the following observation, concerning the uncompleted work of the SIU

"The SIU is currently engaged in investigations into approximately 100 organs of state said to involve 221 580 cases. The investigations extend over all 9 provinces and include 12 national investigations."

By any account, this is a very considerable volume of work that is currently being handled by the SIU. As Minister Maduna has indicated, it would clearly be absurd and illogical for additional work to be given to this Unit, if this was legally possible.

In the light of everything we have said above, we find it very odd indeed that the Auditor General, according to your letter, is also keen that we act without reference to the decision of the Constitutional Court.

Let me also mention that we find it strange that a parliamentary committee (SCOPA) considers expenditure for the acquisition of defence equipment as a "major diversion of public resources" requiring to be balanced by a "social payback".

As parliamentarians you must surely be aware of our common Constitutional obligation to maintain a national defence force, which, according to the Constitution, shall have the "primary object"

"to defend and protect the Republic, its territorial integrity and its people, in accordance with the Constitution and the principles of international law regulating the use of force."

In addition, this expenditure was considered by the parliamentary Defence Committee and approved by parliament.

I would also like to deal with other matters of grave concern to our Government, including the President.

The first of these arise from the Report of SCOPA which was accepted by the National Assembly on November 2, 2000.

The critical issue in this regard is that SCOPA states that it is interested to carry out an investigation because our Government, foreign Governments and the prime contractors, major international companies, are prone to corruption and dishonesty.

If this is in fact the starting point for SCOPA, it seems that the investigation you seek is tantamount to a fishing expedition to find the corruption and dishonesty you assume must have occurred.

To illustrate these assertions, let me quote some passages from the SCOPA Report.

"By many accounts the international arms trade industry experiences a high incidence of malpractice, with purchasing countries often having been the victims of very costly exploitation. With this in mind, the Committee has considered the transactions and the broader financial and fiscal implications pertaining to the recent South African arms purchases."

Who gave what accounts to SCOPA?

Further the Report states

"With international armaments markets having...recovered, the Committee fears that the large commitments by suppliers might now be resisted and even reneged upon. With South Africa unlikely to be a serious arms purchaser over the next few decades, this possibility needs to be watched closely."

What study has SCOPA done which shows the recovery of the international armaments markets and the possible response of the suppliersto this development?

Further the Report says

"Because of the possibilities of improper influence having been exerted in certain of these selections, further investigation is considered necessary."

What assessment did SCOPA carry out to establish the existence of these "possibilities", which are these selections and why them and not others?

Further, again, the Report states

"The Committee is concerned about the possible role played by influential parties in determining the choice of subcontractors by prime contractors."

What work was done by SCOPA to establish that there was a possible role by which influential parties? Do these include members of the Government? Which prime contractors and which subcontractors would have been influenced by these influential parties?

Further still, the Report asserts

"The government-to-government agreements, which make references to NIPs commitments, while noble in intent and of some influence in official international communications, have questionable contractual or legal standing."

What is questionable about these agreements? What is meant by some influence in official international communications? Is the suggestion being made that the Governments entered into meaningless agreements only for propaganda purposes? If this is so, on what basis is the allegation being made?

The seriousness with which you take your assumption that our Government, the trans-national corporations and foreign Governments are prone to corruption and dishonesty, is illustrated by the steps you have taken to ensure that investigations take place.

As you know, the acquisition process was led by a Ministerial Committee, which was chaired by the then Deputy President. The Committee reported to the Cabinet. The Cabinet gave final approval for the acquisition.

This Committee dealt with the prime contracts and not the subcontracts, which are a matter between the prime contractors and whoever they subcontract to.

The members of the Cabinet Committee were the then Deputy President, Thabo Mbeki, and Ministers Joe Modise, Trevor Manuel, Alec Erwin and Stella Sigcau.

The prime contractors are Blohm + Voss, Thompson-CSF, Ferrostaal AG, Thyssen Nordseewerke GmbH, Agusta unAzienda FINMECCANICA S.p.A, British Aerospace, British Aerospace (SAAB) and others, all of which are well-known and prestigious international companies.

The foreign governments involved are those of the UK, Sweden, Germany and Italy.

Your assumption of corruption and dishonesty is therefore specifically directed against these personalities, governments and corporations.

Natural justice demands that you both substantiate the allegation that the persons, governments and corporations we have mentioned are prone to corruption and dishonesty and provide even the most rudimentary or elementary evidence that any or all of these acted in a corrupt and dishonest manner.

I believe that it is a most serious matter indeed for our parliament or any section of it, to level charges of corruption against foreign governments and corporations without producing evidence to back up such allegations.

All of us have a duty to build friendly relations with the peoples of the world. We cannot achieve this by arbitrarily and falsely presenting these in the negative light that some have defined as being their duty with regard to our Government and country.

Least of all can it be the task of our parliament to act in this manner.

As we have said, it is clear from your Report to parliament that you have a significant amount of written information in your possession and, presumably, other evidence.

This should enable you to present the information and evidence we suggest you present, substantiating the extremely damaging assumptions you state in your Report to parliament.

Obviously, should you have any evidence indicating possible criminal misconduct on the part of any of the individuals and corporations I have mentioned, you should hand it over to the Police Service.

In this regard, I also believe that any information you may have on Members of Parliament, including Ministers who are members of the National Assembly, should immediately be brought to the attention of the Speaker.

The rules, I believe, prescribe that any investigation pursuant to this information, would not fall within the competence of SCOPA.

You may also wish, as you inform the Speaker, to request her to take steps to ensure that the country is informed about the alleged misconduct, provided that this is legal. We would have no problem with that to the extent that it relates to members of the Executive.

The next matter I would like to raise concerns the interaction between SCOPA and the Executive on the issue of the defence acquisition.

SCOPA has proceeded to reach conclusions on this matter without having heard the Cabinet. This is despite the request the Ministers made to meet SCOPA.

As you can see from the documents we have enclosed, we are of the firm view that because this meeting did not take place, SCOPA has seriously misdirected itself and thus arrived at decisions that are not substantiated by any facts.

It is difficult to understand how SCOPA could have gone as far as it has, investigating a decision taken by the Cabinet, without asking the people who took the decision any questions that SCOPA might have felt they should ask.

We hope this strange manner of proceeding was not driven by a determination to find the Executive guilty at all costs, based on the assumption we have already mentioned, that the Executive is prone to corruption and dishonesty.

It might be necessary that both the Legislature and the Executive try to draw the necessary conclusions from this experience, to ensure that we do not repeat the obviously wrong things that have happened during the handling by parliament of the defence acquisition issue.

In the meantime, I believe that those who occupy positions of leadership in parliament, including yourself, will have to make the matter clear to parliament as a whole, why it is that at least SCOPA believes that the Executive is prone to corrupt and dishonest practice.

As you are aware and as Minister Maduna indicated in his letter to the President, in her public statement issued on 27 December, 2000, the Speaker of the National Assembly, the Hon Frene Ginwala, makes the following comments;

"The Speaker is not aware of any resolution of Parliament or the National Assembly instructing the President to issue any Proclamation regarding the work of the Heath Commission. Any such action would be of dubious legal and constitutional validity."

Further

"A Committee of the National Assembly has no authority to subcontract its work to any of these (investigative) bodies, or require them to undertake any particular activity, or to report directly to the Committee. Nor are Chairpersons expected to act on major issues without the agreement of the Committee. Such direction as the Assembly may wish to give would require specific referral by a resolution of the National Assembly, and be subject to the procedures provided in relevant legislation."

In his letter to the President, Minister Maduna reports that you informed the investigative units that SCOPA was in contact with a foreign "forensic accounting facility" that could draw up the terms of reference of the investigation you seek.

We must therefore include this unnamed "facility" among the bodies which, according to the Speaker, cannot be subcontracted by SCOPA.

From the statement of the Speaker it is clear that your letter to the President was ultra vires. This is true of any action you might have taken to cause any investigative unit to carry out any investigation.

This has put the Executive and its organs in an embarrassing situation, to the extent that you, and others, have conveyed the false information that the National Assembly had requested that various organs should carry out an investigation.

It is therefore necessary that specific steps be taken to correct this situation, to ensure that all of us, including SCOPA and you, respect the rule of law.

There is an additional matter I would like to raise with regard to your communication dated 21 November, 2000, to the "Joint Investigating Initiative", in which you mention the "international forensic accounting facility".

In this letter you say

"Against uncertainties created through the media last week, of possible interference in the investigation by government, it was felt appropriate to mention this offer as a possible means through which SCOPA could assure the public of a comprehensive investigation."

According to this statement, because of what the press said, you became so fearful of possible government interference that you felt that you should accept the offer made by some "international facility".

Seemingly, this "facility" made its offer just on time to provide a way out of the "uncertainties created through the media"!

You were quite happy to accept the judgment of the media about the intentions of the Government. This was presumably because, as we have said, you know that the Government is prone to corruption and dishonesty.

Accordingly, according to this view, the Government must be assumed to have acted corruptly with regard to the defence acquisition, and would therefore, naturally, seek to cover up its misdeeds!

Whatever you say about our own investigative units in your letter to them, you also felt that they did not enjoy sufficient credibility with "the public" to be able to reassure this "public" of the integrity and honesty of the investigation, if the foreign "facility" was not involved in the investigation.

On what information do you base this assessment of the Auditor-General, the Public Protector and the National Director of Public Prosecutions, all of whom have been confirmed in their positions by parliament?

I am certain that all these matters will need to be explained, including who this "facility" is, with whom they have discussed and when, why they felt that they should set the terms of reference for the inquiry you seek, who felt it appropriate to mention the offer to the investigative units, and so on.

I am not raising these questions so that you should report to the Executive, I mention them because they cause grave concern to the Executive, which is interested to hear straightforward answers.

Parliament will have to deal with these and other questions, as we have to respect the principle contained in our Constitution of the separation of powers.

In your 8 December, 2000 letter to the President, urging the involvement of the "Heath Unit" in the investigation, you say

"SCOPAs reason for including a role for the Special Investigation Unit (SIU), as one of the investigating parties, related to the SIU's particular powers and areas of competence and its relevant experience. It was apparent to us that the comprehensive investigation advocated would be weakened by its absence - mainly due to its authority in civil type actions and role which could be played by its special tribunal arrangement."

I am certain that you are aware of the fact that in his letter to Minister Maduna, dated November 22, 2000, the Public Protector said

"With regard to the application for a proclamation by the SIU, I am of the opinion that such a proclamation is not necessary at the present juncture;

"There is no evidence of any unlawful appropriation or expenditure of public money and accordingly no need for the SIU to recover any assets or public money;

"The application by the SIU, is based primarily on the Special Review by the Auditor-General and does not raise any new evidence;

"I believe that such a proclamation by the President, is not necessary at this stage and that the application be pended for consideration by the President, at a later date, if necessary."

I am also certain that you are familiar with the decision of the Constitutional Court, which contained the following view

"The functions that the head of the SIU (Judge Heath) has to perform are executive functions, that under our system of government are ordinarily performed by the police, members of the staff of the National Prosecuting Authority or the state attorney."

It is clear that you disagree with the views both of the Public Protector and the Constitutional Court, believing that there are public funds to be recovered and that neither the police, nor the Prosecuting Authority nor the state attorney have the same competence to act as does the SIU.

Accordingly, with regard to the paragraph of your letter to the President quoted above, it would help us enormously if you favoured us with a response to the following questions

What are the particular powers, areas of competence and relevant experience to which you refer, distinct from the powers, area of competence and relevant experience of our judiciary?

In what way are the competencies mentioned under (a) above especially relevant to the determination of the truth about the defence acquisition, which determination of the truth would be weakened by the absence of the SIU?

We have publicly indicated our desire and willingness to have some of our Ministers meet SCOPA. I trust that, this time, this will actually take place.

Further, to enable us to give the proper and necessary direction to the National Director of Public Prosecutions and the South African Police Service, I request that SCOPA indicate to me the specific matters it wants investigated and why , providing the prima facie evidence which it believes justifies this investigation.

As of now, we do not have this prima facie evidence and are completely at a loss as to what the loudly proclaimed wrongdoing consists of.

Parliament is, of course, at liberty to interact with the Public Protector and the Auditor-General as it wishes.

Let me reiterate the commitment contained in the attached statements, that the Executive would co-operate fully with any investigations necessitated by information that suggests that corruption might have occurred in the process of the defence acquisition.

Whoever has such information should make it available to any investigative unit of their choice, the Executive, as well as the general public, if they so wish.

The Government will also act vigorously to defend itself and the country against any malicious misinformation campaign intended to discredit the Government and destabilize the country.

I would like to inform you that copies of this letter and enclosures will be sent to :

• The Speaker of the National Assembly ;
• All members of SCOPA
• The heads of the investigative units, including the SIU;
• The Chairpersons of the Defence, Trade and Industry, Finance and Public Enterprises parliamentary portfolio committees, as well as the parliamentary Audit Committee;
• The principal contracting companies;
• The relevant foreign governments; and,
• The media

 The President has asked me to assure you that he did, indeed, give urgent attention to your request, as you asked.

Similarly, he and I respectfully request that you give urgent attention to all the matters raised in this letter.

Yours sincerely

JACOB G. ZUMA
Leader of Government Business