Gibbons : ...bidder was African Defence Systems in which Durban businessman Schabir Shaikh has an interest, Shaikh, brother of former head of defence force procurement Chippy Shaikh. The losing bidder, C²I² which has alleged all along the bidding process was irregular which throws the spotlight onto the judging investigation into the deal one of whose components was the office of the Auditor-General. Indeed the letter confirming that ADS had lowered its price with copies of C²I² documents attached, came from the Auditor-General's office after a high court action by Richard Young of C²I².

Midday Report is joined now by South Africa's Auditor-General, Shauket Fakie. Mr Fakie, good afternoon to you and welcome. Thanks for your time.

Fakie : Hi, good afternoon to you and the listeners.

Gibbons : These documents were produced yesterday during your testimony to the Standing Committee on Public Accounts, SCOPA. First of all, what was your reaction when you saw them.

Fakie : Well, umm, Chris is it?

Gibbons : Yes it is

Fakie : Chris, let me first turn around and say we go through thousands and thousands of documents and for me to recollect the details of this document, I was taken a bit aback because the expectation was that I had to know the content of the letter and my request was that "can you please give me a copy of the letter and I need to check the facts after I have had sight of the letter". So I was a bit taken aback that this letter was not presented to me earlier so that I could come through a bit more prepared to the hearing before SCOPA.

Gibbons : Okay, you've had a chance to have a look at the letter, at the document. What is your reaction this morning?

Fakie : What my view is that it is a storm in a tea cup really. Again, it's making big play out of nothing. The three allegations that's come through out of the SCOPA process, firstly it's a document that was handed to a DA member, Nigel Bruce, from Richard Young. It is very clear that that's happened, you know, and it's because this is a document which we released to Richard Young a couple of weeks ago. The allegation that was made revolved around three issues. Number one, there was a statement made that the issues of this letter was not reported on. And that is incorrect, very clearly there are many areas in the report on Pages 302 to 305 where issues relating to this letter has been reported on. Also on Page 329 to 333 of my report there is all the information that this letter relates to has in actual fact been reported. So the first allegation that this thing was not covered in my report is incorrect. The second issue that was raised was that this letter was submitted a day after the closing date. That's not the way we have it. The closing date of the tender and this is also covered in our report, was the 16th of April 1999 * . And this letter was submitted by ADS on the 16th of April 1999. So it was on the closing date, so we don't believe that it was irregular to come through before the closing date and amend your price. The third allegation was that ADS may have had sight of C²I²'s tender. That we also make mention in our report that that's very possible because C²I² submitted their tender on the 14th of April, a day before the closing, before C²I² was asked to submit its tender to the main contractor *. We do say in our report that it is possible that ADS had had sight of C²I²'s tender. So all those three allegations that were made, I in actual fact very categorically covered in our report *

Gibbons : The third issue that ADS may have had insight according to the reports that I have seen in this morning's newspapers and I'm relying on newspapers; you have the documents in front of you. The ADS revised offer which was submitted you say on the closing date had copies of the C²I² bid attached to it.

Fakie :Yeah, I'm just not sure whether it is correct in that context, Chris, for we are still busy researching it. You see the covering letter from ADS refers to "Appendix A" and "Appendix B" and the document that was attached to the ADS letter doesn't say "Appendix A" and "Appendix B". There is some other documents attached that has the C²I² . So we are busy going through our records and files to make sure that the reference ADS is making of "Annexures A and B" in actual fact is the same documents that was attached to this letter by Mr Young and presented by Mr Nigel Bruce to us. We are not sure of that.

Chris : So what is the bottom line here. There may have been some skullduggery, but you can't put your finger on it?

Fakie : Ja, just based on the process that was followed and the dates.......you know the fact that ADS was able to reduce its offer and come through on the 16th, two days after C²I² had submitted its bid to the German Frigate Consortium. If I could just explain to you the German Frigate Consortium is the main contractor, right. And the department of defence and Armscor told GFC to submit its price including all the prices for the subcontracts. And GFC asked ADS and C²I² to submit prices for the subcontractors (sic). And C²I² submitted its price on the 14th of April, two days before ADS submitted its final offer * . So we are saying that it is possible, the fact that ADS and GFC is connected, it is possible that ADS would have had access to C²I²'s quotation.

Gibbons : In fact in mid-march the original ADS bid was R65 million, 30 days later it suddenly changed to under R30 million, tells you something doesn't it?

Fakie : Well let me also put that into context, Chris, that initially, right, German Frigate Consortium only nominated ADS as a single contractor, so they didn't go out on open competitive bid and the process was that initially ADS submitted a price of R64-something million. As part of the negotiating process the project control team within DoD said look this price is too high, we need to negotiate this price down with ADS, so they were the only supplier initially. When they went through to ADS, ADS reduced their price to about R42 million from R64 million to R42 million. The project control board at DoD said look this is not good enough. If ADS is not prepared to come down with the price we will go and get another quote from another supplier. And that's where C²I² came into the bidding process. So C²I² was never in the bidding process from day one. They only were brought in later when ADS, to force ADS to come down with the price and they have achieved that. And that is when ADS came down with its price. And we say in our report very clearly that this open competitive, the unfairness of this process and the fact that, you know, the original price from ADS was hell of inflated in a big way.

Gibbons : So you are saying that C²I² should have been involved right from the word go?

Fakie : That's right and that's also what I'm saying in my report. So those are the two issues in that C²I² should have been involved and going out for a single tender contract is not in the state's interest. We make mention of all those issues in our report, but to turn around and say that it hasn't been covered in the report is again indicative of having a shot at me. The question that one needs to ask, and these things are all contained in the report, you know, what did the member of parliament do, because my responsibility is to report and present my report to parliament? It is a member of parliament's responsibility then to take these findings that I put into the report and deal with it appropriately.

Gibbons : For the record, you were appearing in front of SCOPA to answer allegations that you in fact altered the final report on the probe on instruction from members of the cabinet. Did you?

Fakie : No, I didn't. And I've made that statement very categorically yesterday in SCOPA as well. Now, yes these allegations are going on and on that these reports have changed, this is not in the report and there's another example of an allegation claiming that certain things are not in the report and it is in actual fact in the report. My plea is that everyone including the media, including members of parliament, need to read the report before they make these statements.

Gibbons : We are going to leave that with Shauket Fakie, Auditor-General, live from Cape Town. We are going to stay with the story though. We are joined by Nigel Bruce who is the DA spokesperson on the Public Accounts, the person who tabled the C²I² information, at SCOPA and gave it to Shauket Fakie.

Nigel Bruce, good afternoon to you and welcome to the Midday Report. You were listening there to Shauket Fakie. Are you satisfied with that?

Bruce : No, I'm not. I hope the Auditor-General is not implying that I did anything wrong by raising this matter. After all he is there to answer to the committee, that is his job. There are a few points. The Auditor-General is wrong. And so I have read these documents and clearly he hasn't. So let me tell him exactly when the bid was due to close. I'll give you the date and some of the details attached to it. But I want to go back first of all to his allegations that this was dealt with in his report. Yes, there are references to it in his report, but the nub of the letter is that ADS was given an illegal privilege is not dealt with anywhere in the report. Now I have access to a document which shows that the tender closed at 1700 on April the 15th 1999.

Gibbons : But he just said it was on the 16th. You are saying that he is absolutely wrong?

Bruce : Yeah, it's a little more complicated than that, because the German company that asked for this, who was handling the tender, asked for the reports to be tabled by 1700 in the afternoon (sic) of the 16th (sic) of April 1999. Now that company was under an obligation to hand in the reports to the defence force by 0900 on the morning of the 16th of April. Now there are two issues here. The first one is a question of equity. If C²I² had to get its report in by 1700 on the 15th then ADS equity demands must do the same thing. Second then, the Auditor-General is going to have to convince me that that letter, if the closing date of 0900 of the 16th was when the German company had to have the letter with the defence force. Well, I don't believe a letter dated the 16th April was delivered before 0900. But that is secondary to the fact that the tender in effect closed at 1700 the day before. Now there is something else which I didn't raise which subsequently came up later. When ADS had found that it had cut its price too much, it was then allowed to increase it again. Now for the Auditor-General to say that his report adequately covers this situation, which has inequity written all over it, is to my mind a major inaccuracy and simply goes to indicate that there are material differences between the various reports; the various drafts. He told us yesterday that he had 50 to 60 people working on the drafts making it more readable. Now Chris, you've been an editor, you know that 50 to 60 people don't make a document more readable. Huge chapters were left out, how the cabinet was misled, how SCOPA was misled. In one of the early drafts there was a whole series of references of how SCOPA was misled. Hardly anything in the final report. It would be a wonderful editing job if you just leave things out.

Gibbons : That's Nigel Bruce, DA spokesman on Public Accounts on the line from Cape Town. Nigel, thank you for joining me on the Midday Report.

 * The A-G is in big, big trouble for these gross misrepresentations of the truth.

With acknowledgements to Chris Gibbons, Shauket Fakie, Nigel Bruce and Radio 702.