VOLUME 12 PAGES 855 - 993

THE HEARING RESUMES ON 2001-08-29

PUBLIC PROTECTOR: Perhaps we could begin with some housekeeping, in terms of further progress of this hearing. We already had indications yesterday about counsel who are going to pose questions to Dr Young, but clearly parties who are affected have the opportunity to respond, not only by way of posing questions, but also calling witnesses by way of rebuttal, and I believe that there is an indication that this would happen in at least one of two cases. I was advised that Mr Kamerman would be called tomorrow. What are the indications in this regard? This is necessary. We should discuss this, because some of the legal representatives and counsel need to not just make their plans, but make travel arrangements and so on, and of course, actually make arrangements about those people who need to be called, and it is only fair also that all the parties should know who is coming or who is not coming. Can we have indications in this regard?

MR : I confirm that the Department of Defence intends calling Admiral Kamerman tomorrow as a rebuttal witness.

PUBLIC PROTECTOR: Any other indications?

MR KRIEGLER: We intend, as we have indicated through your office, that we intend submitting a statement in rebuttal dealing with the areas which we feel warrant a response by way of evidence. It may well be in the format, depending on your directions, in the format of a statement which must then be put before you by way the witness who attested to the content of that statement, or by way of an affidavit, and then leave it either to you or my learned friend for C²I² to decide whether questioning of the witnesses who are involved in that affidavit would be necessary. That is of course something on which we do not take a stance one way or the other. We can understand if evidence is put up, that it should be put up and tested, otherwise it is not worth anything. But we believe that we could be in a position, as things stand at present, the indications are that some time next week even - we had thought a delay of two weeks would be necessary, but it would seem that one of the key witnesses from France, Mr Emmanuel Mary, will be coming to South Africa tomorrow or so, and would be able to assist in preparing some of the more technical aspects of the evidence we intend leading, and so that we may be ready far sooner than we had thought. There is of course the not insignificant matter of settling the entire thing, and also of checking with the Detexis people in France, who are also of course directly implicated, and they must give their technical input on this matter. So that may cause the statement to be delayed towards the end of next week, if things really go according to plan. I would really be reluctant to commit ourselves to a specific date, unless you direct otherwise, Mr Protector, but regrettably it is a matter which traverses or spans a period of time, over ten years, involving witnesses literally from around the world, and a massive body of information and documentation with which we were confronted only very recently, and we really had to focus our own attention as a legal team on meeting what has been thrown into our laps by Dr Young, for purposes of questioning him, and can only now, once today is over, turn our attention to preparing our own case. So regrettably it is not something which can be done overnight, but we are making every effort to do so as soon as possible.

PUBLIC PROTECTOR: Thank you, Mr Kriegler. I am encouraged by your talk about the possible person, Mr Mary, coming down to assist you, because I did receive your message about your possibly looking at two weeks, and we were rather perturbed, even though we knew the reasons why you are saying that. The issues that have been dealt with, in terms of the players here, whether it is bidders who are taking up issues here, who lost or who won or whatever, mention was made yesterday that they are international players in this field of arms procurement. So whether we are talking about reflections on their integrity or whatever, the issues are important. We understand that people would want to rebut whatever reflection may be upon them, because it may have some significance in the future, directly or indirectly. So we take full cognisance of that, but having said that, at the risk of repeating myself, I would like to indicate the parameters, the constraints under which we are also operating, and trust that whilst all these issues are important, that you have to attend to the matters which you have already mentioned, we take that also into consideration, and that you give warning to your counterparts or to whoever you have to deal with, in front, that timing is of the essence, not just for its sake. You will recall that this investigation already gave a deadline of July, and it is long past, and we cannot give more than two deadlines, other than risking the credibility of the whole investigation. So we are under those time constraints. I have been talking to my colleagues in the other sections of this investigation. They are also working flat out, almost 24 hours in the operational office, to make sure that these deadlines are kept, and that in September we do submit our report. So please, we are requesting you to indeed pull out all the stops in this regard. I am sure you are doing that, but we are just underlining it. I take it that with the kind of assistance that you are indicating might be available to you tomorrow, then you would endeavour to make us have a copy of that statement in the best form, at short notice, subject, of course - I mean, you have seen Dr Young's statement was slightly amended, at a certain point, not drastically, but the idea would be that you enable us to take the decision that you have quite clearly referred to, also to enable Dr Young's counsel to decide whether they are going to deal with it in terms of a statement or whether they would need to ask questions to whoever would be making that. So how soon - I know it is difficult for you to give an indication before you meet the person that you are talking about.

MR KRIEGLER: What we would propose, and perhaps take a cue from you, is not to put in a statement which approximates what Dr Young has done, in other words put up a statement which is to all intents and purposes in the sort of detail one expects from an affidavit. We do not believe that that is what is understood by a fair summary of evidence. It is of course very useful to have a comprehensive statement to the effect that Dr Young had given us; it is no criticism, but we believe that we can serve a useful purpose by providing an executive summary or a fair summary, properly so called, in far less detail, but certainly not skirting the issue, putting up squarely what our version would be on the issues, and leave it to a witness, if necessary, to give the necessary detail in due course when he gets into the witness box. So that is perhaps the approach that we would follow, and if that were so, we would be able to submit a fair summary of the evidence to be given far sooner, and I would imagine somewhere around Tuesday or Wednesday next week.

PUBLIC PROTECTOR: Yes, of course, that statement would be necessary also because it enables the Minister to give his consent. It is important also in that regard. But in the manner that you have just set out, that is what you would expect in the circumstances, because it is evidence in rebuttal. You are not trying to make out a case about issues that have not been dealt with here.

MR KRIEGLER: It will not be an answering affidavit.

PUBLIC PROTECTOR: Yes, a statement along the lines that you have set out is what one would expect. Any other indications? Mr Mahon?

MR MAHON: Mr Chairman, as presently advised it is not our intention to call any witnesses.

MR WEBER: Mr Chairman, I have not for housekeeping purposes put my name on record. My name is Brian Weber from attorneys Ramsay Weber. I am here representing a person named in the aide memoire by Dr Young, Mr Swan, the erstwhile chief executive of Armscor. It is also not my intention to call a witness.

MR : Mr Chairperson, might I add that we also intend recalling a witness that previously testified, Admiral Simpson Anderson. We do not know at what stage he will be called, because he might have problems tomorrow, as presently advised, but he will be called soon after Admiral Kamerman.

PUBLIC PROTECTOR: Now that we know about those particular two, what are the possibilities of trying to make sure that he is called soon after Admiral Kamerman? Would you try to make efforts in this regard? I know this was not planned and that it arises out of testimony that was given by Dr Young, but maybe if you could, I think that would assist us.

MR : I am advised that he will be available tomorrow. So if Admiral Kamerman finished before the end of the day, Admiral Simpson Anderson will then testify thereafter.

PUBLIC PROTECTOR: Thank you very much. That is appreciated. Mr Rogers?

MR ROGERS: In regard to ADS's position, if there is going to be a fair summary in advance, that is fine. I regard to the Department of Defence, their Admirals Kamerman and Simpson Anderson, it appears to me that it would be fair rather if they were to provide again statements or fair summaries of their evidence in advance, so that my client can assess whether he wishes to engage counsel to examine them, and that perhaps they should rather give evidence in the same session that is scheduled, if any is, for the ADS witness or witnesses. That is particularly important here, because you will recall that yesterday my learned friend Mr Kuper specifically did not traverse in cross-examination aspects of great importance. He said they were going to be producing evidence on Dr Young's testimony that the IMS was in fact a developed product and not merely a future technology on his understanding of whether this was an acquisition programme properly so called, and almost all of the technical stuff was left undealt with and unchallenged. So it is not as if we know now what the version of Simpson Anderson and Kamerman is going to be, and if my client - I remember one of the points you again raised at that meeting we had on the previous occasion, one of the three points, was that in order to facilitate preparation, it was important that a statement or at least a summary of it should be furnished in advance. I submit there is no reason why that should not be permitted here. In fact I may say, obviously this inquiry is under your control and your direction, but one might even question why the Department of Defence should be permitted to call two witnesses to say things, apparently to challenge what Dr Young has said, without the basic courtesy and fairness of Dr Young's version on those matters not having been challenged. As you know, the primary purpose of cross-examination is to enable a witness of whom it is later to be said that his evidence should be rejected, we know there is an attack on Dr Young's bona fides, if that is going to happen, then one of the basic fairnesses which Dr Young should have been accorded through cross-examination has not been honoured, and the basic question arises as to whether evidence of rebuttal on matters on which he has not been challenged should be permitted at all. That is a matter for you to decide, and as I understand it, under the Act, it is ultimately your directions as to which witnesses should be allowed to come and give evidence, but if they are to be permitted to give evidence, then I submit at least in advance they should give a summary of it. Of course you will still be left with the very unsatisfactory position that you will have Dr Young's un-cross-examined evidence on the vast bulk of what he has said, unchallenged, and you will have countervailing evidence perhaps from Simpson Anderson and Kamerman, also potentially unchallenged, or maybe I will cross-examine them, but it will not be backed up by my client's own evidence, because he has not been cross-examined on those aspects.

PUBLIC PROTECTOR: Without in any way suggesting how you should conduct your case, to a person of your stature, Mr Rogers, if evidence is unchallenged, do you worry about that? What are the implications?

MR ROGERS: If I was in proceedings in a court and evidence of my client in chief had not been challenged, I could legitimately object if a witness for the other side was then called to give evidence which had not been put to my client.

PUBLIC PROTECTOR: Let us deal with Admiral Simpson, without making this really an issue, because it is a right which the other parties have, which I cannot take away. For instance, the Department of Defence, one of the people in that department, like Admiral Simpson, has been challenged. His integrity, his credibility in terms of saying his testimony was not correct. So the only person - no amount of cross-examination will make that testimony correct, even if Mr Kuper has suggested to the witness, you are not telling the truth, it is only the admiral who can come and say, no, I stand by my evidence. So you do not have to lay a basis. The very fact, the suggestion in the evidence that what he says was disingenuous, calls upon him to come into the witness box and say what he has to say. So with respect to you, if you are suggesting that because there was no questioning in that regard, therefore you cannot call that witness, I would rather not quite see it the same way in that regard.

MR ROGERS: I am sure my learned friends for other parties will be fully aware of the Appellate Division and Supreme Court of Appeal authority which laid down in the very clearest terms that if what a witness has said in chief is going to be refuted by another witness in chief, then in advance that version should be put to the first witness in cross-examination. That is a basic principle of fairness, because otherwise, where you will be left at the end of the day is, you may have to decide between whether Dr Young or Admiral Simpson Anderson or Kamerman is telling the truth on a particular issue. But Dr Young's credibility on the very point in question will not have been tested or put to him in cross-examination. So he would not have been given the fair opportunity to defend his own version.

PUBLIC PROTECTOR: Whatever authority you are referring to, with respect, Mr Rogers, short of me telling Mr Kuper that he has got to challenge on that point of credibility of Anderson, and him not having done so, me saying, because you did not challenge, you cannot call Simpson, I am sure I would breaching those rights. I take the point that you are making, that you did not challenge. I do not think you can overemphasise that, but him not having put that, for me to say, because you did not question, you cannot call Simpson, because even as a person I am sure he is entitled to come and defend his credibility.

MR ROGERS: But then, when will it end, because when Simpson Anderson comes to say something which suggests that my client is not telling the truth, my client is now implicated. So he comes again, and then he gives evidence and somebody else - and so it goes round and round. Where does it end?

PUBLIC PROTECTOR: I will call an end at some point. You can be sure about that.

MR ROGERS: I just fear it is going to be called at a point where my client is left without his version properly tested.

PUBLIC PROTECTOR: Anyway, let us not make an issue. I think we are going to allow those two witnesses to be called, and possibly then allow that statement.

MR ROGERS: I mean, it is a question of - on the assumption, as you have indicated, that they will be permitted to testify as to whether at least basic fairness does not require that, like Dr Young, they should before testifying put up a written statement or summary.

PUBLIC PROTECTOR: Mr what is your view in that regard?

MR : Mr Chairperson, firstly in regard to Admiral Kamerman, he is stationed in Germany. He took off three weeks actually to attend this hearing, and to assist here. We cannot retain him indefinitely. We have those time constraints. We believe that - and it is our request to the panel that he be allowed to testify tomorrow, because otherwise we would lose him and we would not be able to put to the panel the version and the information.

PUBLIC PROTECTOR: There is no problem about his being allowed, but Mr Rogers's suggestion is that he would like to see whatever he is going to say in whatever summary form.

MR : Mr Chairperson, not before tomorrow. We would like him to testify tomorrow. I suppose a statement may be available first thing tomorrow morning. We will endeavour to make a statement available in the morning and maybe at that stage our learned friends may decide whether they - they would welcome him giving evidence tomorrow, which is our position, that he must testify tomorrow, and we believe that after perusing that statement tomorrow morning, they will be happy with him going ahead within the first hour.

PUBLIC PROTECTOR: Is that the same about Simpson?

MR ROGERS: Mr Chairperson, while he takes instructions on that, can I make my position in any event clear? I am in court in Cape Town tomorrow. So I certainly will not be able to cross-examine any witness tomorrow. I appreciate that the availability of counsel is not your problem, but I must say, I was not aware that we would be meeting witnesses of whom statements had not been given for cross-examination immediately after Dr Young's evidence. That is my position. I think the chances are that if these witnesses give their evidence orally tomorrow, that they will simply not be cross-examined on behalf of Dr Young. Then the position will be that probably the two or three most important witnesses that you might hear in this investigation will simply not have been cross-examined on the important issues at all, because that is thus far the case with Dr Young.

MR : Mr Chairperson, we think that if our learned friends insist on seeing a statement before the witnesses are called, we would make a statement available, or two statements available tomorrow, and with your permission then two witnesses can be called on Friday in that order. But we still submit that we shall be in a position to proceed with evidence tomorrow and if my learned friends are able to see the statements, say first thing tomorrow, at 09:00 and by 10:00 I am sure they will be satisfied that there is nothing in the statement that they would like to canvass at a later stage.

PUBLIC PROTECTOR: I will tell you what our attitude is to this position. These witnesses are not being called to come and testify on issues that were not dealt with out of Dr Young's aide memoire. Is that correct?

MR : That is so.

PUBLIC PROTECTOR: You are merely calling evidence in rebuttal, in other words, where they have been mentioned, they are here to react to that, whether it is correct or not in their view. Would that be a correct assumption?

MR : They will be called to rebut evidence that had been already before presented by Dr Young and other witnesses.

PUBLIC PROTECTOR: And that is the intention?

MR : The basis of their evidence, and as far as Admiral Simpson Anderson is concerned, he has already testified before, so his evidence - the bulk of his evidence is already there. He is being called on limited aspects.

PUBLIC PROTECTOR: Yes, if that is the position - our view is - let me allude to another subject. We would not be expecting anything near -with regard to those statements - the kind of bulk, about 70 pages of statement. Our view is that, since that evidence would be merely in rebuttal of what already has been canvassed, in the aide memoire and that was also canvassed in the questioning, that will be canvassed still today, that it is in the circumstances appropriate that you give that statement, but we would not have given a ruling that you do so, but that you will give, I think it is fair and we will allow that, but that because again it will be merely in rebuttal, we shall proceed in evidence tomorrow, and that therefore you should furnish those statements in the morning. The other parties will be given an opportunity to peruse them obviously, a reasonable opportunity, and that we shall proceed thereafter. In the absence of anything then, we shall proceed with the further questioning that was remaining of Dr Young.

RICHARD YOUNG (s.u.o.)

CROSS-EXAMINATION BY MR KRIEGLER: Dr Young, I do not propose taking you through some of the aspects covered by my learned friend Mr Kuper for the Minister yesterday, especially regarding the question of risk. I had intended doing so off my own bat, as it were, on behalf of ADS. That is incidentally whom I represent, and the interests of Thomson, but there are one or two aspects arising from the questions put to you yesterday by Mr Kuper which I will take up with you. The first is, if you will turn to paragraph 150 of your aide memoire, you will see there a convenient summary, if you wish, of what ADS's stance is in regard to the origin of the R40 million premium placed on using your products over Detexis's, and you will see the quotation there set out in the request for final offer:

"It is envisaged that the Combat Suite contractor ..."

That is of course ADS. Correct? -- Yes.

" ... will be a South African industry consortium wherein Altech Defence systems (ADS) plays a leading role, co-responsible for the overall design, integration and supply of the Combat Suite element."

You agree with that description of the role played by ADS, no doubt? -- (Inaudible)

What is the point you wish to make? -- That South African industry consortium was not envisaged to be the same as the European South African Corvette consortium.

Yes, but so what? -- I am just saying what is my understanding of that.

But it is a fair summary of the role which ADS played, not putting it any wider than that, as a contractor in this regard. Not so? -- No. This was prior to the ... of that primary venture.

Yes, I appreciate that, but the statement says that the role played by ADS is a leading one, a leading role, in which they are co-responsible for the overall design, integration and supply of the Combat Suite element. Is that not an accurate description of the role they ultimately were to play in terms of the contract awarded to ADS? -- No. You used the word "play". This is what was being envisaged.

I appreciate that, Dr Young, but I am saying, in retrospect, looking at it now, is that not the role that they ultimately ended up playing in terms of their contract? -- No. The South African industry consortium did not take the responsibility for the Combat Suite.

ADS, I am speaking about. I am talking about ADS, if you would just limit your answer to my question. -- ADS was just a member that was envisaged to be part of this consortium, which never eventuated.

Does ADS play that role today? -- They are the only one; they are not part of the consortium.

Then perhaps you and I are not understanding each other. That is what I am suggesting to you, Dr Young, nothing more and nothing less. As we stand today, that is the role that ADS plays, as described here. It is a leading role, co-responsible or responsible, in fact, for the overall design, integration and supply of the Combat Suite element. I would not have thought that that is a matter on which you and I should disagree, but that is ultimately the role which ADS plays as the contractor responsible for the Combat Suite? -- They are completely responsible. Here we envisage that they be co-responsible with other South African, the South African consortium.

DR RAMAITE: I think, Dr Young, the point Mr Kriegler is making is that it was envisaged that they would play a leading role. Is that not so? -- It was envisaged, but he also said that is the role they are playing. What was envisaged and what played out was not the same. That is what I am trying to say.

And with reference to that statement, we are really talking about possibly deleting "co" and saying responsible. That is what you are saying? They are responsible; they are not co-responsible.

MR KRIEGLER: But for the rest that is a fair reflection of what in fact happens today, as far as ADS is concerned, so ignore the other contemplated players in this consortium; it did not eventuate. Fair enough. I take your point. If you will turn to paragraph 275 please; it is at page 37 of your aide memoire. You say there:

"The IMS of C²I² Systems was initially classified as Category C by South African Navy. However, when ADS changed the whole Combat Suite architecture, ADS's CMS became central to the whole Combat Suite architecture and where the IMS would form the connectivity part of the CMS, the JPT decided that the IMS should be re-categorised as Category B, which meant that ADS had to take responsibility for the IMS as well as the whole integrated Combat Suite. So in effect, JPT forced ADS to provide a performance guarantee for our system."

Now, I think what you say there is really what you attempted to say a moment earlier. Your qualification to my question amounted to this. This is how it ultimately transpired, that ADS took responsibility for the IMS as well as for the whole integrated Combat Suite. So this is a correct statement, and I think this is what you attempted to convey a moment earlier. Is that correct? -- Yes.

Now, of course, that is something which ADS endorses entirely. One sees in the evidence which will be given later on, in relation to the nature of the contract which was awarded to ADS, this indeed transpired entirely. ADS did as the contractor responsible for the Combat Management Suite take full responsibility for the product, which incorporated the IMS or the function which the IMS would have performed, had it remained on board. Do you agree with that? Except instead of IMS, what came in its place was the Detexis bus, in other words, in the same way that it would have taken full responsibility for the performance of the IMS, it now takes full responsibility as the main contractor for the performance of one of the subsystems of the product which it supplies, namely the Detexis. Correct? -- Yes.

Now, you use the word here, that it takes responsibility for the IMS, in other words, for your product that was contemplated, as well as the whole integrated Combat Suite. Can you just give us an indication from your technical understanding of what you had in mind here when you referred to the integrated Combat Suite? If you can keep it relatively brief for our consumption. -- You are talking about Category C systems for which the South African Navy is taking at least part of the responsibility. They take the responsibility up until factory acceptance tests of those systems. Then they all get handed over to ADS, once ADS has accepted those systems working, and then ADS has to integrate them all together, and then take responsibility for them all working together.

So the system - it is no good for ADS to say to the end user, to the navy, or to the South African tax payer, well, the system does not work because the IMS does not work, or the system does not work because the IMS somehow was not effectively integrated into the Combat Management Suite as an entity. It takes responsibility for the whole lot, whether its subcomponents are to blame, which it itself provides, or whether the subcomponents which you provide are to blame for the system not working. The system must work. Not so? -- Yes.

And it is a system; it is a system that requires the subcomponents of the system to work in tandem, not so? -- Yes, but in the case of the IMS the subsystem was already working.

Yes, I appreciate that, under the old architecture. We will come to that. -- The base line.

The base line, if you wish. I will refer to it as the old architecture, because it was replaced by a new alternative. Ultimately the main contractor's function and responsibility is to ensure - it is not only a technical function, but its contractual responsibility is to ensure that the system works, which entails ensuring a proper integration of all its subcomponents. Not so? -- Ultimately (inaudible).

Now, what Mr Emmanuel Mary will say in due course is that there were very good reasons why the architecture was changed, one of the most important of which, and I would think that you would agree with this, was that there were difficulties envisaged with identifying corporate responsibility for the functioning of the subcomponents of the system. In other words, the system as it had been designed originally, the base line architecture, as you call it, was configured in such a way that it made it extremely difficult, if not impossible on short notice and in a crisis situation, to identify where the problem lies if the system as an entity did not function properly or had crashed altogether. Do you appreciate what I am saying? -- I understand what you are saying, but I do not agree with it.

Well, what he will be saying is that IMS had devised, in terms of the base line architecture, a databus system based on the local area network, the LAN, which you had proposed, based on the FDDI and the Multibus 2, which entail an already integrated by rather congested technical system in terms of which it was very difficult for an outsider, the main contractor as it were, to identify if something went wrong where the problem lay. -- That is completely untrue.

Is that untrue? That is perhaps a matter of opinion rather than a falsity, because Mr Mary will explain why, with reference to contemporaneous correspondence, how that was identified as one of the primary problems which resulted in the architecture being changed to an alternative. Do you say it is untrue or do you say it is incorrect? Is it false, in other words it is a lie, or are you suggesting that it is an opinion which you do not hold? -- Mr Mary was not part of the system design process for 1993 - 1999. All I can tell you is that we had done extensive studies, dataflow studies, aerobatic studies, etcetera, and we also designed special test equipment called the IMS bus tester that would have allowed a full technical visibility, that you are referring to, of this main contractor, into this - what you refer to ... happens to be a piece of equipment. So everything was designed to give a full visual visibility of an engineer with average competence ... it was very easy to determine exactly where the problems lay. So to say that that was a risk, I would disagree with. Furthermore, if it was a risk, why was it not raised as a risk in any of the opportunities of this multilevel risk management regime that was in operation right until the end? It was a risk ... but it only became a so-called risk later in the day, far, far too late for us to even challenge it.

I am not sure that that is an answer to my question. Do you recall the question? -- Yes, you said that Mr Mary said that the division of the responsibilities would not be clear with the IMS as it was designed.

No, that was not the question, Dr Young. Perhaps I can repeat it, so that you can respond to it. The question was whether you are saying that Mr Mary's statement is false, or whether it is a matter of disagreeing with it. In other words, was there or was there not ... -- I would go with disagreement.

As a matter of opinion rather than a false statement? -- (Inaudible)

What we then see here from the statement - and it is just a ready reference, there is a considerable deal of evidence beyond what you have set out in your aide memoire to show this, but what we see from for example the quote in paragraph 150 and your statement in 275 is that in fact - this was so, and you appreciate it, that the main contractor - and this is ADS's stance - took on this responsibility, and it took it on on a commercial basis. Now, whether you agree or disagree with the proposition which I put to you, which Mr Mary will testify about, as to what resulted in the old architecture being modified to a newer and alternative one, it did change; there was a change from architecture, and it was changed, he will say, for good reason. One of the reasons that he will say led to this change is, as I have said to you, it made it exceedingly difficult as it was configured originally to identify corporate responsibility from a technical point of view for where the problem may lie. You disagree with that? -- Yes.

Secondly he will say that the Multibus 2 was in fact an obsolete bus. -- It was not and it is not obsolete. The navy had decided to use it for ... with the other existing strike craft and submarine programmes. That was a given. We made many proposals to the navy to change to the ... standard. The navy designed the IMS, and the IMS today is working very, very happily on VME. It was designed at that stage to handle any of the technology standards. As I was saying in my one letter - we had effectively qualified on a Multibus platform. If we had to change to another platform, being proposed by ADS, it did not invalidate what we had done. We would have to requalify.

No, that is not what I am suggesting to you. I am suggesting to you that the Multibus 2 had become technically obsolete. -- That is not so.

And it needed to be changed? -- It is not technically obsolete.

Did it need to be changed? -- No.

Not at all? -- No.

That is a matter of disagreement then. -- The other base line documents call for Multibus 2. We were maintaining that.

Set out in 1997? -- Yes, but there has been no change. There is no document that says, now change to VME.

It is not about documents changing, Dr Young. It is about the change in technology and adjusting - would you please just allow me to put my question? I do not think we should speak at the same time. It is not about documents changing. It is not about red tape changing. It is about technology changes, and Mr Mary's statement will be to the effect that the the Multibus 2 has become effectively obsolete and for that reason it resulted in one of the important reasons which led to the JPT requiring an alternative proposal to the IMS which had been based on the Multibus 2. Do you disagree with that? Would you say it is false? Is that not the true reason that was stated at the time at least? -- No, the reason was given that alternatives would be considered for cost reduction, because VME is cheaper than Multibus 2, but Multibus 2 is not obsolete.

Are you saying that that was not raised at the time? -- Lots of things were raised; lots of things were discussed.

But that is my question. Was it or was it not raised as a basis for the consideration of an alternative at the time? -- Whether it is raised in meetings ...

Would you agree with it or not, Dr Young? -- I disagree. Can I make my point? It is not a matter about what is raised and what is said. It is about base line management. That is why we have things like RSA mill standard 003. We do not arbitrarily change from that to that based on what was discussed in and out of a meeting. We work according to documents that were signed, base lines which prescribe the requirements. You do not just arbitrarily change because somebody has got an opinion about whether they think Multibus 2 was going obsolete or not. You wait until the client - in this case Armscor - says, we formally instruct you to change from that standard to that standard. That is the position. We would design according to the specified base line.

Do you feel you have now answered the question? -- Yes.

I do not believe you have. The question was, was it at the time raised as a matter - whether it was justifiably raised or regularly raised or not, was it raised as one of the reasons contemplated for proposing an alternative, and a reason raised by the JPT at that? -- It was raised in meetings, but it was never formally ...

It was raised. Is that the answer to the question then? Thank you. By it, I am referring to the perceived - rightly or wrongly, perceived obsolescence of Multibus 2; rightly or wrongly, it was raised, Dr Young? -- But it is completely irrelevant.

Mr Chairman will decide what is relevant and what is not relevant. I am asking you a question, Dr Young, and if you would please care to answer it? -- (Inaudible)

It was raised. I think you have already answered it. Secondly, that FDDI, the much vaunted system which you say that your IMS was based on, was itself reaching a dead end in terms of technology development. That was also raised at the time. Was it not? -- No, it was not raised at the time.

You say it was not raised at the time? -- It was not raised at all formally.

No, not formally or informally. I am asking whether it was raised. Do not qualify my question if it is not put in a qualified manner. Was it raised or not? -- The matter of what we call obsolescence management was raised on a continuous basis.

With reference to FDDI as much as it was to Multibus 2? -- I cannot recall it being raised in any programme.

But can you recall it being raised at any other level, informally or otherwise? -- We tried to indicate at all times - when we were dealing with commercial ... technologies, we were advising the client that all commercial ... technologies eventually obsolesce. That is why we had obsolescence management plans, and I cannot recall any formal raising of the risks of FDDI becoming obsolete at that time.

I do not know why you introduce the word "formal", the qualification formal. It was not put in my question whether it was raised formally or not. Is it news to you that FDDI technology was scrutinised from the point of view of obsolescence? Is that news to you? Is it the first you have heard of it? -- No.

No what? It is not news to you? -- It is not news to me.

You see, what Mr Mary will say is that in the real commercial world, not only the real technical world, but the real commercial world, where corporate responsibility is placed on the main contractor, it is the main contractor, in this case the entity responsible for providing a combat management suite that works to the satisfaction of the end user, the navy in this particular case, a very strategic user in terms of South Africa as the public, not only had to ensure that things worked technically, but they took corporate and commercial responsibility for the end result, and the key element to that entire responsibility lay in integrating the various systems, the subcomponents of that system. I have made that point before. Do you agree with that? You can appreciate that technically and commercially, no doubt? -- Yes.

So therefore it is not a matter, Dr Young, of simply saying IMS based on a Multibus 2 and the FDDI and whatever else might have underpinned it, AIS, WCU and the like, it is not a matter of saying, the system works. The system must work within the broader configuration of the combat management suite devised by my client, ADS. You would appreciate that, of course? -- Not completely. I brought up the issue of the CS7 Mod 1 architecture, which was precisely conceptualised to allow this division of responsibilities.

But that was a devised architecture. Was it not? -- It was a devised architecture that was discussed amongst all the role players and then eventually with everybody's agreement was actually chosen.

Yes, including yours, which was a departure from the base line? Of course? -- Not really.

Why do you hesitate to answer it, Dr Young? You know as well as I do that the CS7 Mod 1 was a number of steps away from the original base line. It was in fact devised to take account of the difficulties which were envisaged with the original base line, so as to accommodate IMS. -- To accommodate ... not the other way around. The IMS was the original base line.

Let me come back to the original question. Are you seriously suggesting that CS7 Mod 1 did not constitute a departure from the original base line architecture? -- It constituted a very minor departure, in the introduction of one small piece of equipment which connected two segments together. It was a very minor departure, in order to accommodate the ... system, not to accommodate IMS.

Was its function not to split the CMS functions from the IMS architecture by way of the unique function of the super gateway or the bridge, as it is known? Was that not the purpose of the CS7 Mod 1? -- (Inaudible)

And that was not a fundamental departure from the original base line architecture? -- It was not fundamental.

That is perhaps a point of disagreement between you and Mr Mary. But it was a departure nonetheless; you have conceded that? -- A minor departure.

Your stance, if you will turn to paragraph 256 please, is quite a different one from the stance which I have described to you ADS holds. You say:

"I further reject the contention that the reason why C²I² Systems did not get the contract for the IMS was that its system was not proven and therefore constituted a risk."

Now, just on the question of risk there, let me just pause for a moment. I will remind you of the exchange between yourself and my learned friend Mr Kuper yesterday, to the effect that I believe you had been driven to concede that the statement - not here but elsewhere -to the effect that there was no risk, was perhaps an exaggeration; it was not quite correct. You conceded there was some risk? -- I said tending towards zero.

Tending towards zero, yes, and in fact - I will just remind you, perhaps more accurately, remind you of some of the more important answers I believe you gave in relation to this line of questioning yesterday. You said all systems have residual risks. We manage risks on a formal basis. You say this is a matter which could not be assessed a priori. Is that a correct note of what your evidence was yesterday? -- I am not quite sure of the a priori.

I took down your statement, perhaps not with the sort of accuracy that our transcribers will, but it was an attempt nonetheless. Never mind that. The statement is that all systems have residual risks. We managed risks on a formal basis. Can you just explain what you meant by that? What I understood you to mean by that is that through the entire development of the IMS, that was a question which had, from an engineering point of view, had always been taken account of and you needed to work into the risk of failure, into the manner in which you approached this project. Is that what you mean by managing on a formal basis risk? -- What I mean by managing risk on a formal basis, in a formal way is that - of course, the IMS ... the first thing is that you divide risk into various levels, at the IMS level, at the Combat Suite level, and then internally. So we had three layers where risk was being managed. We also categorised risks into three different categories, performance, costs and time scales. Sometimes, especially when dealing with software, one has ... which are not going to be ultimate performance risks, but it takes a little while, especially when dealing with specified commercial off the shelf equipment, to resolve these things. Those things normally lead to ... Those are not ultimately risks that cannot be managed away. It just might take a few extra man hours or a few extra weeks or a few extra hundreds of thousands of rands, but you would manage them away, within the overall time scale. That is what I am saying. Risk was managed within ... high resolution and formal documents.

Yes. Sorry, I did not mean to stop you. -- Within this formal risk management regime, what I am saying is, there were no residual risks. That is why I can say there were no risks that were significant at that stage.

And this was risk based on the original base line? -- Yes.

And as long as one remained with the original base line, the technical base line as you have called it, all this risk would have been taken care of to the extent of a negligible degree of risk? -- I think at the same time the IMS had been designed in a very, very flexible way, that grew into new base lines like VME, were also not major risks.

Now, VME is an alternative for Multibus 2. is it not? -- Yes.

Why would you go to the alternative VME if Multibus 2 is not obsolete, just by the way? -- Because people have different ideas about things. So actually our design was not based intrinsically on a Multibus or VME. It was actually designed on another technical standard called BCI ... Card, which was completely compatible with Multibus or VME of what they call Contact BCR. All ranges of equipment were compatible with it. What I am saying is, we had qualified our system at that stage using the Multibus ... and cost us many, many millions of rands. If we had to requalify it on a VME to prove all the sub 5 ... all that kind of stuff, it would have meant a cost and a schedule implication which can be - if things go wrong can mean risk, but at that stage ... there were any risks, but we were going to spend some money to requalify the system on VME. But that does not invalidate what we had already proven on Multibus.

No, I am not suggesting that it had invalidated what you had already done and that one could then - should then draw a red line through all the hard and expensive work that you had done on it. I am suggesting to you that VME had been introduced because Multibus 2 had become obsolete. -- Multibus 2 had not become obsolete.

Why would you replace it then? -- We did not replace it.

You do not use VME? You did propose replacing Multibus 2 with VME? I thought that is what you were proposing or saying now? -- I am saying IMS was based on something that was compatible with Multibus or VME or industrial computer technology. It was not restricted to any one of those technologies. It was very flexibly designed, precisely for that reason.

Fair enough. What I did understand you to say, just to come back to the original point I was attempting to make, is that your evidence yesterday was that the technical base line had been set and it was based on the technical base line that had originally been set. Your answer to say that there was negligible risk in the IMS as it existed at the time, was in the context of the original base line. You could assure an end user from a technical point of view of the workability of your product based on the original base line? -- Yes.

That is what you said yesterday? -- In fact we provided a statement of conformance to the base line specification during our quotation, or with our quotation. So I was basically putting my money where my mouth was.

And we see, if you will recall yesterday, in the letter of 7 June at 131 of the bundle that Mr Kuper gave you, which you addressed to Mr Moinot, and we saw there, just to remind you, paragraph 1 - do you not have a copy? I can perhaps just read it to you, to save time.

"As we know, the SA Navy Corvette project team are attempting to finalise the configuration of the Corvette Combat Suite. This is clearly an extremely complex and demanding undertaking when considering the issues of performance, cost, risk and financing as well as the inevitable dependencies between these factors. It has become clear to us over the last number of weeks that the matter of the inclusion of the Information Management System within the Combat Suite is a particularly complex one in the context of being a South African development subsystem and one which affects the performance of the complete Combat Suite. The complexity of the matter is exacerbated by the fact that Thomson CSF has offered to provide financing and the performance guarantee for the entire Combat Suite. We understand that this would make taking responsibility for the IMS a difficult undertaking for Thomson CSF unless they had clear visibility into the IMS in terms of performance, completion status and risk factors."

Now, I think what Mr Kuper had established through you was at least this, that you conceded as a result of that statement that you had appreciated, albeit it not on the basis of the original base line, but you had conceded, you explained, that there was risk and it was a matter of complexity to put a number of value on the risk, but you said that that was in relation to the modified architecture. That was your explanation. Is that a roughly fair assessment or summary of what you said yesterday? -- No, what I said yesterday ... what I was saying that I understand a perception of risk from Thomson, but I want to emphasise my qualifying statement, the very last sentence here, unless they had clear visibility into the IMS in terms of performance, the risk factor ... that is the point I was trying to make in this letter.

For my sake you will have to clarify it a bit more. It does not speak for itself. -- If a new plan comes in, like Thomson, and they take the responsibility ... the South African subsystem is not there, they could, if they had no visibility, come to think that there are risks, but they would not if they had come down to our offices and our laboratories, with their technical people, and done a full technical evaluation and ... risk, then they would have been as happy as ... people who took the time to come and see what we were doing, looked at the documents ... that is what I was trying to say.

Are you suggesting that Thomson took a very superficial view of your technology and integrate it into their system? -- I say they took a very superficial view. In fact they did not actually come and do a technical review or risk review, yes.

When you say risk review, do you mean to say that they did not understand your system? -- No, they did not understand it.

Now, what we do see from this, however you may explain it, is that you appreciated on the alternative base line, new base line - you would not call it a base line at all, the new architecture, that you appreciated that there was risk, and it was a matter of complexity and something which ADS were entitled to be concerned over. I think that is quite clearly the upshot of your statement here. -- (Inaudible)

And they may have been at fault in not coming to grips with the extent of the risk or that they could well have found the answers readily if they had taken the trouble to assess your technology, but you did appreciate that it was a matter of some complexity for them to do at the time? -- It was not that complex. All they needed was to send one or two technical people to spend one or two days with the engineers and read the documents. It was not something that was beyond the bounds of possibility.

That is not what I am suggesting, Dr Young. I did not suggest to you that it was a matter which is beyond the bounds of possibility. You are trying to water down, I would suggest to you, the clear import of your statement in the second paragraph at 131 here, where you clearly acknowledge that there was a matter of complexity. Why do you attempt to water that down now? -- What I said yesterday is, the complexity was at the system level, not the IMS level.

Well, it is a matter of integration. Is it not, which was not your baby; it was ADS's baby? Why do you not answer? That is apparently so. Is it not? -- (Inaudible)

I put the proposition to you, and you remain silent? -- I did answer.

Well, would you care to answer it again? -- If you repeat the question again, I will try and answer it.

The complexity, you now say, which you clearly recognised at the time here, which was considerable, and exacerbated by a number of factors, is a question and a problem in the lap of ADS. It was its problem. Your problem was to ensure that the subsystem worked. Their problem was not only to ensure that to their satisfaction the subsystem worked. Their further problem was to ensure an integration and ultimately to ensure performance of the entire system vis-B-vis the user. Not so? That was the sort of complexity, the integration complexity which you envisaged, recognised and spoke of in this paragraph. That is plainly so? I think your statement was, that is true. I do not think the record picked up your statement. If you will turn to 261 of your statement please, just to remind you here of the debate you had yesterday with my learned friend Mr Kuper, where the debate went around the degree of risk contemplated at the time. You will see in 261 you say:

"Regarding the matter or risk, the JPT drew up a spreadsheet entitled Project Sitron Definition Audit: May 1999 where the 'Risk Assessment' of the 'Candidate Suppliers' is recorded. The costs and risk of the nominated subsystems of these 'candidate suppliers' is described in terms of a subtitle of the spreadsheet being 'Project Sitron Costing Estimate November 1998 (based on May 98 Audit Adjusted for Escalation, ROE and Design Changes May - Nov 98)'. Here the Risk Assessment of the 'Information Management System, including Network Interface Cards, Gateway Interface Unit' is recorded as 'Low'."

Then at 263, just to draw your attention to that:

"I believe that technically there was no risk, or very little risk ..."

to come back to your argument yesterday with Mr Kuper,

" ... certainly none that could not be expected in the development of a new Combat Suite and none that could not be managed within the programme's formal risk management regime."

To take that further, you say at 271:

"I about October 1999, ADS and Thomson-CSF also paid us a visit to our offices where we described and discussed the IMS. The feedback given to us from the Product Manager of Combat Management Systems, Emmanuel Mary, was as follows."

And you quote from the beginning of this feedback, as you call it, and you rather boldly rely on Mr Mary's opinion there, who describes you are rather brilliant. Then over the page he does say this:

"But the company is small (that means that if a problem occurs, it can become a big problem very fast), and what they want to do is very sophisticated, complicated and will take time to validate, tune and make sure it works.

I have been very interested by the discussion that I had on the bus and on C²I² with Lewis. I think we understand now much better what are the real constraints of the other one. For example, I think that it is clear now for Lewis that our concern is not a technical one, but the fact that we just cannot accept to be fully dependent on a non already proven technology for the system integration on such a big programme. At the same time, it is clear for me that Armscor cannot just forget what they invested in this technology (which can work)."

What he is saying there, with respect, is ... as I understand it, to a large extent what you acknowledge in paragraph 2 of your letter at page 131 of the bundle. You nod? -- Yes, I think (inaudible).

And what Mr Mary is saying here at the time, in October 1999, is, although there may be technical assurances given by an entity such as yourself, C²I², there are commercial risks to them as the main contractor which does not involve only a question of technicality. It involves a question of real commercial considerations which go beyond mere technical ones. In other words - and this is what Mr Moinot in due course, if necessary, will be saying, is that in arriving at a premium of risk, in this particular instance R40 million, it was not simply a function of whether your subcomponent worked or not to his satisfaction. It was not a matter whether it complied with user requirement specifications and looked very good in a laboratory. He said of course it is a function of that; of course it is a function of - and I am putting a proposition to you, so forgive me for it being rather lengthy, but you must have an opportunity to hear it. It is partly a question of technology, but if the technology plainly will not work, of course the risk would be a lot bigger, but if the technology and the laboratory circumstances appear to work satisfactorily, but of course it cannot be guaranteed that it will work, then the risk might be lower, but on top of that there is a second and equally important consideration, and that is, the consequence if something goes wrong; not the likelihood of it going wrong, which is really a technical question, but the consequences if it does, and the consequences include not only the obvious one to the user, which is lives or a failure in a war situation, but more importantly perhaps, if one looks at it from an expedient point of view to Thomson, is a commercial one of its reputation being tarnished in the international area, which is a massive risk, and of course the more immediate commercial risk of having to replace a system which cost it round about R40 million. For those reasons Mr Moinot will say they arrived at a figure, which is not a mathematically precise one, but it is a guesstimate, an estimate which an experienced businessman arrives at, in all the circumstances, which involves technology and it involves commercial considerations. That is how he arrives at the number of 40, not at a number of about R15 million that you arrived at. Can you fault him for that sort of reasoning?

MR ROGERS: Mr Chairman, before my client answers that question, he is obviously free to do so if he wishes, but I must say, in my legal career that comes pretty close to the longest question I have ever heard, and the witness may well have lost track of the beginning by the end. I am not sure if Dr Young feels he has got all the points of the question before he responds to it.

PUBLIC PROTECTOR: Yes, it seems what has happened is, Mr Kriegler has given the chronology of the reasons and the number of reasons on which a premium of R40 million was based. Dr Young, did you understand - it was reason after reason after reason. Did you get all that? -- (Inaudible)

If there is any clarification, you can ask him to qualify the question.

MR KRIEGLER: While Dr Young is considering it, I would appreciate just a response. I am rather surprised by the interjection. One would have thought that it is only fair to put to the witness as best as I can, admittedly not in the most elegant technical format, what goes into the assessment of risk as business people would. I do not know how my learned friend would wish us to put in fairness to the witness a proposition which will be developed by way of evidence through Mr Moinot in due course. How else? I do not have a statement for him in advance, but that is the gist of it. I would have thought that the earliest opportunity that I can put it to a witness, I should responsibly do so. That is the attempt or the purpose of it.

PUBLIC PROTECTOR: I understood it that way. The only thing that you cannot take away - I do not know whether to categorise it as an objection, is that it was a long question, but you have explained why it is long, and I understand. Dr Young? -- I just feel that if a premium was going to be added to the price of the IMS, would be greater than the price of the IMS itself, and that was going to disqualify the IMS from being chosen, then that should have been made clear to us up front, and then we could have built in those risk provisions right from the beginning, and not be disqualified at the end just because suddenly now the IMS also has to provide a risk - a performance guarantee.

MR KRIEGLER: It may well have been unfair for whoever was responsible for taking you so off guard, and changing the rules of the game, as you suggest, at the last moment. One can appreciate that perhaps, but the question is whether objectively there is anything wrong, conspiracy theories aside, with the commercial reasoning based on technology and on commerce which underpins an evaluation or a valuation of around R40 million as a risk premium for your product, and it is not only your product; it is your product as the nerve centre of the entire R300 million contract for the Combat Management Suite for which - R300 million is the risk which Mr Moinot will explain is the warranty that they had to provide in terms of the R2.5 million contract which they were in for, vis-B-vis the user. -- Yes, as I explained before, the risk was not at the IMS level. It was at the system level, and therefore the R40 million worth of risk should have been provided for within the risk contingency, within the system integration area and not just added onto the IMS.

That is the risk which they attached to your product, and the integration of your product into the system. One cannot look at your system, with respect, in isolation of the rest. The contractor's responsibility does not end at the end of your responsibility. It transcends beyond that into a responsibility not only for integration but for the working of the system as an entity, with massive commercial consequences if things go wrong, not to speak of reputation and lives to boot. -- My answer is that it was unfair to add on R40 million of risk to the IMS cost.

Yes, I know you have said that. -- That is my answer.

And that you just stick to your guns, although you have admitted that R15 million, even on your assessment, was a fair summary or a fair assessment of the risk attached solely to IMS at the time when this matter reared its head in middle 1999. -- Which matter reared its head?

The whole question of you facing the prospect of being pushed out, as you have put it, on the basis of your inability to satisfy the risk requirement. -- No, what I said was that when there were technical base line changes from CS7 Mod 1 to something else, then I said that you basically requalify the system to the same extent as we already had, it would cost about another R15 million ... I am not saying that there was R15 million of risk. I am saying in order to institute a risk abatement exercise on this new technical base line, it would cost about - managing risks costs something, effort or equipment or something ... So to change from the base line architecture to what I believe was the ... I was never aware of this so-called 7 April ... I had an idea, but I did not know what it was. I took also an engineering guess of what it would take to get to the same basis as we already had.

I appreciate that, and your words "an engineering guess" I think encapsulates rather effectively the very point I wish to make to you. Your guess is an engineering one; it is a technical one, and with all due respect to you, for all your technical ability, running a business in the same manner that ADS is accustomed to, on the scale that ADS is accustomed to, warranties, guarantees in the real commercial world is not perhaps your forte. Is it? -- I think as managing director of a company that in its own right is as successful as any other company. So we also take into account and manage risks.

I thought you had said that you had never estimated risk on the same commercial basis in the past in all of your contracts? -- (Inaudible)

Just on that score, could you perhaps on another topic just enlighten me, and we have your statement here to go on - if you will just bear with me a moment. You ran this company, you say, and you have done so, no doubt, very successfully by all accounts; one sees the praise flowing in on the product IMS - I am not facetious when I say that at all, and in fact one thing you will see from the experts is to fairly acknowledge that the IMS was a competent system, and certainly one which, but for the risk component, was one which in other respects would have been acceptable as an alternative to the Detexis system. Now, if you will just turn to your statement, paragraph 30 page 4 of the summary. We see there, you refer there:

"I was involved in these technology studies and system design efforts while working at what was then UEC Projects (Pty) Ltd [it later became Altech] between 1989 and 1991. In fact, I was responsible for the network technology studies and technology demonstrator development, with these projects being successfully completed by the middle of 1991."

Do you see that? -- Yes.

Would it be correct to say that what was finalised, as you put it here, completed by the middle of 1991, if I understand you correctly, was basically developing what you now call the IMS? -- It was basically a technology study based on FDDI, which had been specified by the US Navy.

Yes, that was the genesis of what is now the IMS? -- The genesis, yes.

And no doubt considerably developed and defined over the years, after you left, but essentially while you were at UEC, with the assistance you received - I think you acknowledged that - from members from Armscor, Mr Pierre Meiring and others, obviously within UEC, but Mr Kruger was an important person in this, I am told by for example Duncan Hiles that he was one of your right hand men, while this technology was being developed at UEC. Not so? -- Those guys ... (inaudible)

I beg your pardon? -- I said - when you said people like Kruger were my right hand men, he was one of the software engineers.

But it is yours, you say? -- I say the ideas came from me, yes.

You will not be - admittedly somebody coming from a commercial environment in which, to put it bluntly, was a protected environment in which the real commercial world did not really - the dictates of the real commercial world in 1991, especially in the military industry, were not the most important. In those days it was a protected commercial environment in which you were involved in studies aimed at assisting the South African Defence - it was not an open commercial environment at all, was it? -- Maybe not, but I do not see how that (inaudible).

Let me attempt to assist you. The technology you developed was done hand in hand with Armscor for use in the South African Navy. Not so? -- The technology was demonstrated; the commercial off the shelf technology was not developed; it was demonstrated and it could be used.

Why are you nitpicking, Dr Young? -- I am trying to be accurate. Is there anything wrong with what I say? Let me put the proposition to you again. The technology was being developed; whether you started from scratch or whether you took it from technology off the shelf, does not particularly matter. The technology was being developed at UEC hand in hand with Armscor for use in the South African Navy? -- That is right.

It had a strategic military purpose. Not so? -- It certainly had a military purpose. I am not a hundred percent sure of the strategic.

But these were classified projects you were working on? You enjoyed a secret, if I am not mistaken, clearance while working at UEC because you were working directly hand in hand with the military? -- Yes.

I would not have thought that any of this is that contentious. -- I am not quite sure where you are going.

Never mind where I am going, Dr Young. Just answer the questions. That is perhaps the difficulty in answering the questions, that you are anticipating where I am going with this. So when this technology was being developed, it was by the time that you left in February 1992, to all intents and purposes a completed project up to a point, certainly, which was the critical genesis of what is now known as the IMS. Not so? You could not have done so without that background. Could you have? -- No, not at all. I did a Master's degree in (inaudible)

And you do not acknowledge the role that UEC as the employer

played in providing you with an environment, with all the assistance of Armscor, the assistance of other people employed by UEC, putting up the capital, the laboratory, the technology at your disposal? You do not believe that that played an overriding role in enabling you to develop this technology? You believe it is yours? -- Not overriding. These technologies are not mine. They are commercial off the shelf technologies. They do not belong to anybody. You can buy them off the shelf.

How does that ... -- It is the way one puts them together which makes them useful, but I never took anything from UEC. They were all available.

No, I am not saying that. I will say that in due course. That is where I am going, by the way, that you certainly did take this technology, and you are obviously rather sensitive for that sort of allegation. But I am not there yet, if you will bear with me. What I am putting to you now is that the technology that you developed was developed at a time in an environment, with UEC as your employer who paid your salary, paid for your MSc, not so? Why do you have to think about that? -- Because my MSc took a long time. I think they paid for a few courses, but I finished it a year after I left UEC.

I am told they paid for three years. -- They paid for a few courses.

A few courses. Why do you want to underemphasise it, Dr Young?

MR ROGERS: With respect, Mr Chairman, my learned friend is attempting to get the witness to give answers that are not truthful. The witness is entitled to give careful, accurate answers, and my learned friend should not berate him for doing so. If the questions are sufficiently important to be asked, then presumably it is sufficiently important that they should be accurately answered.

MR KRIEGLER: Would you care to answer the question now, Dr Young, now that your counsel has given you an opportunity to think about it? Why do you pooh-pooh the question when I asked you - when I put it to you that UEC paid for your studies, and you say, they paid for a few courses? I am told they paid for three years of your studies. That is hardly an insignificant contribution. Is it? You know that that is the point I am making? -- It is a very small amount of money, a few thousand rand.

Comparative to what? -- The R2.6 billion (inaudible).

(Simultaneous talking)

MR ROGERS: The witness is permitted to answer the last question.

PUBLIC PROTECTOR: The last question was about whether the payment by UEC was for three years of your study. Is that correct? -- We were doing GEE courses and they paid for three years of that.

MR KRIEGLER: My second question after that, and which I am sticking to for the moment, is that your response, your glib response that paying for three years of academic studies, for a Master's degree, was insignificant compared to a R2.9 billion contract. It is not a glib; it is in fact a flippant answer, I would suggest to you. Is that a serious answer? -- We were talking about the comparative amount of money.

Is that the sort of reason that you apply to that sort of debate, that you would say ... -- I do not think this is at all relevant.

That is not for you to decide, with respect. -- It is not ... prejudicial to me, and I can refuse to answer it.

Of course you can. -- I refuse to answer it.

Fine, and we will go on and we will see where that gets you. Would you care to answer this question? Perhaps I should get your leave first. The following question is this: When you left UEC, are you prepared to acknowledge that you left UEC as you say in paragraph 30, having developed, well nigh completed, what is today known - which you call it your system, the IMS? -- No, what we were doing, we were proving the veracity of the FDDI method and technology. That is one layer, the ... system they talk about a seven layer model. The FDDI ... becomes layer one and two ... the commercial off the shelf technology, and we showed that it could be acquired ... at some stage, and we were showing that it could be acquired and the commercial off the shelf technology could replace the ... standard 50 53 technology that had been used on the submarine project, and of course all kind of, what we call, political risk, the availability of technology. That is what we did at UEC. The IMS is another five layers - from layer three upwards was not even thought about.

PUBLIC PROTECTOR: You say you completed that a year later? Was that your answer earlier on, that you completed ... -- We completed the technology ...

MR ROGERS: With respect, he said he completed his MSc a year later.

PUBLIC PROTECTOR: Oh, I thought this project. -- ... I completed my MSc.

MR KRIEGLER: You see, what I am really putting to you is a simple proposition, that when you left UEC, you left armed with technological development on the IMS system that was critical to the further development of the system, whether it was completed or not, it was strategically to you most important. Not so? -- No.

You will not concede that? -- No, I will not concede it.

It was not a spring board to the IMS which we see now? -- No, it was not.

Can I just read to you - and I am not going to take you by surprise when I do this. There is no secret about this. I am reading from your curriculum vitae, which is dated November 1991, which you obviously submitted to prospective employers at the time, prepared for purposes of submitting to prospective employers at the time, when you were still with UEC, and in your CV you state amongst other things, and I will make copies - unfortunately I do not have copies available for the moment. I have to read into the record the following; this is what you say: "UEC projects", departmental management, you tell them what you have done in the department, and then under project management:

"The applicant has also been responsible, as project manager and specialist consultant, for the requirements, analysis and concept design for the information management infrastructure for a major naval electronics system."

That is the genesis of the IMS. Is it not? -- As I said, what we had done so far was only the very basic FDDI technology. I want to also just - to answer that question. That CV was not prepared for prospective other employers. At that stage there was a change in branch management and candidates had to apply for an internal position, and that CV was prepared and submitted for an internal position.

So that is your answer? I do not think you have answered the question. -- That CV was prepared and submitted to UEC.

DR RAMAITE: I think, Mr Young, Mr Kriegler's question is, with respect, to what is stated in the CV.

MR KRIEGLER: Yes, whatever the CV was prepared for, I was taking a chance when I said it was prepared for a prospective employer. That is what I made the assumption on, but that of course is not the nub of the question, and you know it.

PUBLIC PROTECTOR: Maybe, in fairness also to Dr Young, there were two parts of the question that he responded to, because he said that with regard to that CV, he worked on the basic FDDI technology and then he went on to give us the fact that the CV was submitted for other purposes, not for general employers. So he did give two answers to the question.

MR KRIEGLER: In fairness, again, Mr Protector, I am not suggesting that the second half of the question was an unsatisfactory response to the question. It is the first answer which did purport to be an answer to the nub of the question, which stopped mid-sentence. He was attempting to answer it and I was asking him whether that was all he wished to say about that. Perhaps let us not quibble about it, put it to you again.

PUBLIC PROTECTOR: Maybe - you have been - I am not trying to curtail you, but he even went on to explain earlier on that FDDI dealt with the first two layers of IMS and that that is indeed what he did, and I thought his answer now, when he talks about the basic FDDI technology was referring to those two layers, and that the five layers later which then resulted in IMS, is what he had done. Are you pursuing something different?

MR KRIEGLER: I certainly want to suggest, and there is no secret about where we are going, is that this is not a building block as technology develops, which one starts at layers 5, 6, 7 and 8. One starts at blocks 1, 2 and 3, whether you take them off the shelf or not, presumably - Dr Young, I will put this to you. Presumably there was a reason why UEC spent a good deal of money and paying you a salary and paying Mr Kruger a salary, and why the government who Armscor had spent a good deal of money and allocated time to developing this project over a question of two years, from 1989 to 1991, is because something was being done which was later to be developed into technology utilisable and functional within the context of the navy? -- Can I explain it? ... a particular one-off project which was ... programme was cancelled, as I said in my testimony yesterday.

Perhaps I can just read to you a little further in your CV:

"Main projects: Fibre optic LAN system. The applicant was until recently responsible for the requirements analysis and concept design of a system which provides the total information management infrastructure ..."

I am told that that is nothing short of IMS, information management infrastructure, rather than systems.

" .. for a naval service combatant. The system consists of high speed 100 megabits local area networks (LAN) based on the fibre distributed data interface (FDDI), data based management and system share resources. The LAN provides the medium for data communications between the subsystems. The work involves system requirements analysis, data flow and data base studies and system concept design. The value of the applicable contract for which the applicant has been responsible to date is in the order of R1.2 million in 1991 over a period of one year."

It goes on to say, under 1.5.5.3, databus:

"The applicant was previously responsible for the development of a system which is a dual redundant controller for a specialised high speed local area network defined by Mill standard 1553B. The network provides the medium for data communications between the subsystems. The work involves specifying all possible bus messages and protocols for scheduling these messages according to system requirements under both normal and abnormal conditions. The controller consists of a hardware component and a software component. The hardware consists of a CPU, memory, bus, interface and general IO along with gas plasma display, touch entry, power supplies, cooling, housing and cabling assemblies. The CPU is Intel 80286 based, while the bus interface card is 80186 base."

I will skip a portion of this. I see this causes you great amusement, Dr Young, and your counsel, for that matter. Why is that? -- I do not see the relevance of it.

Yes, that may be so, but why does that amuse you? -- If you are going to spend all of our time quoting irrelevant stuff of 1991, a CV of mine submitted internally, and as far as I am concerned - I find it strange that you should read it.

MR ROGERS: Can I raise a question of relevance here? It appears to me at the moment that my learned friend might be attempting to question a relationship - that maybe UEC was unhappy with the circumstances in which Dr Young left them in 1991, but a tussle between UEC and Dr Young about that is, with respect, entirely irrelevant to you, unless it is going to lead to the very intriguing possibility, if UEC, which became ADS, ultimately rejected Dr Young's work in 1999, because they were cross that he had left them in 1991, I would respectfully suggest that this really is irrelevant and we have had enough of it.

PUBLIC PROTECTOR: Yes, let us say it may be in the realm of speculation. I have questioned Mr Kriegler about that, to what point -and I suggested to him that the point he is pursuing had already been answered. Of course, he answered to the contrary. As he read through it, I am waiting for the end part of that, or the relevance of the questioning, and I cannot presume that he is reading something that is irrelevant before I know what the end point is. So that is the basis on which I must - because he seems to dispute what has been given to him already, and this is the basis for it.

MR KRIEGLER: Yes, what I am raising is the relevance of what degree of development had been reached by 1991. How is that going to bear on the propriety of the programme in 1989 and 1991.

PUBLIC PROTECTOR: I do not want to speculate on the questions. If the suggestion, for instance, is that IMS had been developed fully by the time he left UEC, if that is the point he is making, which is contrary then to what he is saying, this may be the point that is developed.

MR KRIEGLER: I would have thought that that is an obvious suggestion, and it is so. Dr Young, Mr Hiles, who incidentally you refer to in your CV as one of your referees, obviously a man whom you held in some esteem at the time at least, will say that what you were developing at the time was nothing other than the critical beginnings of the IMS, but more than a beginning; it was a project which was done within the auspices of the development of military technology, under the auspices of Armscor, certainly in association with them, and it was nothing other than the IMS, and a critical spring board for your development of the technology later. So your trying to underemphasise the work that was done there, is simply not accurate, he will say. That is the first point, but the further relevance of this, if my learned friend will be just a little bit patient, will transpire in a moment.

PUBLIC PROTECTOR: Do you want to respond to what he has just said? -- No.

MR KRIEGLER: That in itself is of course very significant. -- I do not know what to respond to.

I put it to you that Mr Hiles, if necessary, will say that what I read out to you, a laborious and detailed as it may be, and as humorous as it may be to you, was a description of the critical technology and the development work that you did at UEC, which later became the very basis of the IMS which you say is your own technology. -- All we were saying at that stage is that we could use new high speed ... technology which could be acquired overseas and we showed that it could work.

And this was just something that you could pluck out of the air, or was it something that took time, expertise and money to do? -- It took - it did not take that long. It was a year project, funded by Armscor, and then the whole thing basically got cancelled, terminated when Project Falcon was terminated in mid-1991, and then we carried on with other things for the rest of that year.

If you will turn to paragraph 57 at page 7 of your statement, you will see here, of course it is to remind you, when you speak of the Combat Suite architecture based on an information management system or IMS,

" ... a term which in this context is a proper noun which was coined by myself. Overall, the IMS was conceptualised by myself, but significant contributions were made at the system level by Mr Pierre Meiring of Armscor and Lieutenant Commander Jacques Pienaar of the Navy, with the more detailed levels being done by members of my company, C²I² Systems."

I am suggesting to you that that, although not untrue, is more properly understood, or should properly be seen in the context of the genesis of the system, which was at UEC and the time that you spent there. Is that not a fair statement? -- If you used the word "embryo". I might agree with you, but "genesis" is going too far.

Fair enough, I am happy with embryo.

PROCEEDINGS ADJOURN FOR TEA

PROCEEDINGS RESUME AFTER TEA

RICHARD MICHAEL MOBERLY YOUNG: s.u.o.

CROSS-EXAMINATION BY MR KRIEGLER (CONTD): If you will turn to paragraph 45 please Dr Young.

CHAIRMAN: Did you say 45?

MR KRIEGLER: Yes 45 Protector page 6. You say there:

I established C²I² Systems in February 1992 and in early September of that year I was approached personally by Messrs Anton Jordaan and Pierre Meiring of Armscor's Command and Control Division, on behalf of the South African Navy, to find out whether I could assist in developing a new naval combat suite for the new frigates or corvettes under Project Diodon.

So do I understand correctly when you left, UEC that is and you established C²I², that one of the first projects that you took up was the further development, admittedly as you call it, from embryonic form, of the IMS? --- It wasn't actually, it was, as I said it was more than six months later and we already were running other projects at HOTECH and Progic Radar Systems.

All right, so I should read that in the context of 46 where you say:

Some months later we started getting contracts to develop the IMS as well as contribute to the design of the overall combat suite.

Is that what you are referring to. So it is within months of you leaving UEC.. (intervenes) --- No, probably about a year.

Well I am reading what you are saying: Some months later we started getting contracts.. (intervenes) --- No, some months after early September.

I beg your pardon, is that how I should read it? --- Yes.

Fair enough. Some months after September you start getting contracts for IMS.. (intervenes) --- About a year later ja.

Did you start working or did you continue working on IMS when you formed C²I² in February, when you started your company? --- No, no, no.

Was there a hiatus of some sorts? --- There was a hiatus of about a year ja except, except for my academic studies where I carried on looking at local area networks.

Now the people you left with at the time in February 1992, who were they? It was Kruger who is now a director of C²I² correct? --- He was but he is not any more.

He was but you left with him at the time? --- No I didn't leave, I actually resigned from UEC in December 98.. (intervenes)

I think that must be wrong, you must surely mean 91. --- Excuse me, yes 91, December 91, that is when I resigned but I stayed on for another two months as I was a departmental manager, to assure that there was a smooth handover. Gerhard Kruger joined us, I think it was May, May 92, I am not exactly sure but it was a few months later.

He followed you from UEC to C²I²? --- He did yes.

Who else from UEC joined you around about that time? I am told a number of others. --- I think there were two, I am just trying to think of the order. There was a guy called Rob Stemmet who probably joined us nine months later or so and a guy called Alan Hawthorne about a year or so later, I am not exactly sure. I am not prepared for.. (intervenes)

Stemmet, what was his function at UEC? --- He was a technician.

In this area? --- Yes.

And Stemmet? --- Who?

Stemmet. --- We just talked about.. (intervenes)

Sorry, Hawthorne? --- Hawthorne was another engineer in another department.

And Kruger we know, we see from your CV and I think you confirmed, was working closely with you, under your supervision on the information management infrastructure program at UEC at the time? --- Correct yes.

Is your statement in paragraph 45 correct there that, in fact I should put something else to you first, when you went to a matter troubling ADS and UEC at the time.. (intervenes) --- I beg your pardon?

Mr Hyles tells me, you will tell me whether this is right or wrong, that you attended a conference in the United Kingdom, a symposium on the Databus technology with Gerhard Kruger in December of 1991. Do you recall that? --- Yes I do.

Is that correct? --- Yes.

And you went at the company expense, at UEC's expense. --- Yes.

In order to represent UEC. --- Not really no.

I see. Who were you representing? --- Okay, things were a little difficult at the time politically. So we, in fact I was asked by Duncan I think it was, not to mention that we representing UEC.

Yes. --- Because there were embargoes.

Yes and who did you say you represented vis-a-vis the symposium goers in London? --- I said I was representing C²I² Systems.

Yes, was that the truth? --- No, it was something that I agreed with Duncan, you had to represent somebody. It was obvious you know I was not a man alone, working of this stuff. I had to say I was representing somebody.

So just to understand you correctly, you say you went to the symposium in December of 91, this was in the very month that you left or resigned rather. --- Ja.

You went with Gerhard Kruger your right-hand man, who was working on this very technology, Databus technology. --- Okay, Gerhard was actually on three months' leave. All our projects, all the frigate projects had already been cancelled and we were actually in quite a big hiatus. The whole team had actually been dissolved. Gerhard took a three month leave, he had a walkabout in Europe as he described it and he joined me from there. He was not sent.. (intervenes)

Oh I see, okay. All right fair enough but he was still an employee of UEC. --- He was yes, yes.

Now there is one discrepancy, I shouldn't say discrepancy, I should say there is one area of disagreement between what you have explained now and what Mr Hyles will say. He will say that you went to the conference at UEC's expense, the symposium, representing UEC. So far we are in agreement but he says you returned and told him that you had told the symposium goers or the conference goers that you were there representing C²I² in order to protect the identity of UEC, given the sensitivity from a political point of view and it wasn't his suggestion. --- It was something that we discussed before I went.

No he says it is something, I don't know whether his version is about it being before or after but he says it wasn't his idea, it was something which you suggested to him. --- For sure because I had to come up with some suggestion because I couldn't go there and say that we are from an arms company in South Africa. We probably wouldn't have been even allowed to give our presentation.

Fair enough but I mean, so the idea was yours. Surely it would be preposterous For Mr Hyles to come up with the idea of C²I² at the time.. (intervenes) --- Oh yes, that was my idea, yes.

Ja. Where did that idea come from? I mean it wasn't established you say until February 1992. Was it just an idea? --- Well I had an idea of a name in my head and I said I established the company as a going concern in February once out of the blue, I got a contract from HOTECH to develop some space technology.

Is that the truth? --- What?

Is that the truth? --- Which, what?

The statement that you established it in 92? --- Yes, as a going concern.

Oh I see. When did you establish it? --- The company had been registered previously.

When? --- I think in 1990.

Yes, August 1990 isn't it? --- Yes.

We have the registration documents here. --- There is nothing wrong with that.

Well except that your statement in paragraph 45 says:

I established C²I² Systems in February 1992.

That is not the truth, is it? --- Okay, I registered it in 1990 but I established it as a company.

I see. --- Yes.

You see a difference there? --- Oh absolutely yes. I had just registered a, in fact actually, I am thinking of the actual details. That company registration number, I am not exactly sure but it might have been registered with another name and there was a name change but what I said, establish it as a going concern. I had no .. (intervenes)

No Dr Young unfortunately it is not that easy. It wasn't established under another name according to these records. I may be shown to be wrong in that regard but it does reflect both you and Kruger and Sean van der Walt as directors as early as August of 1990, of C²I² Systems.. (intervenes) --- No I don't think that that can be true because I don't even think I knew Sean van der Walt.

Well.. (intervenes) --- I think, certainly later.

I do beg your pardon, I am sorry, you are quite right about that. Sean van der Walt appears to have been appointed as a director only in 97 and Kruger in 1992, in April of 92. --- Yes.

I have copies of these documents, I don't believe you are challenging them but I, perhaps for the sake of the record, will hand you a copy and hand some around. Perhaps that can be, so far from it being a case of you establishing C²I² Systems in February 1992, it was a company established by anybody's understanding of that concept, already in August of 1990 and at a time when you were working for UEC Projects, not so? --- I registered it in 1990, in order that I had a .. (intervenes)

A vehicle. --- A vehicle by which to protect UEC's name when I, this was all agreed, I started, I was giving a presentation there, probably it took me many months to actually prepare that presentation to an international Royal Institute of Naval Architects actually.. (intervenes)

Are you suggesting Dr Young that you established C²I² in August of 1990 because you knew you were going to a symposium at the end of 1991, so that you can protect UEC's interests in doing so. Do you expect the Protector to believe that? --- I had no other reason to establish C²I² Systems.

I see. Did you disclose this to UEC? --- I did tell.. (intervenes)

No, no, that you had established a company called C²I² in August of 1990 or at any other time? --- No I didn't, I didn't at the time.

And you were doing this you say in UEC's interests and you don't even tell them? --- What I said is, when I was going to this conference, I said I was going to portray myself coming from a company called C²I² because I couldn't use UEC Project. In fact I think Mr Hyles had even got an opinion from the ALTECH of whether we could go in the name of ALTECH because remember that he had to get overseas travel authorization and they said what for and it was to present a conference. But this is going back quite a while now and I can't remember exact details and the exact order of certain things happening.

The important ones fortunately do remain vividly in your memory and in Mr Hyles's.. (intervenes)

CHAIRMAN: If we can, why did you establish the company in 1990? Was it for your own personal purposes or was it to protect UEC? --- I can't, I can't actually remember exactly. I certainly didn't, I certainly wasn't doing anything with C²I². It was just a registered company name. It was completely dormant, you can look at the trade, there was no tradings, there is no trading record.

Yes, so you say you can't recall whether UEC was a consideration when you registered it? --- Not when I registered it.

I see. It may along the line have become a consideration. --- Yes, for a .. (intervenes)

It became useful. --- Yes. But that I discussed with my line manager Mr Hyles.

I see. Yes.

MR KRIEGLER: But that evidence is at odds with what you have just told the Protector a moment ago, is that you had established it for the specific reason of covering UEC and now you say you don't recall. --- I.. (intervenes)

Are you retracting that earlier evidence? --- Yes I am retracting it.

I see because it appears to be nonsense, doesn't it, on the face of it, that you would establish a company, register it in August of 1990, not tell UEC about it, for their protection at the end of 1991 in the symposium in London. I would suggest to you that that defies any sort of reason. It is nonsense. It is a proposal put to you for comment if you wish. --- What I meant was that I used the name of C²I² Systems.

And what Mr Hyles will also say is that you certainly never mentioned to him that C²I² was a name which had in fact any sort of foundation in a company, in other words he didn't know that it was a company, let alone that it was a company that you had established. He had no idea. It was a name that you came up with as a ruse and he had subsequently appreciated that it must have been nonsense and that you had been to London, quite obviously to start making business connections for the company that you were about to run, in the very month that you resigned. --- Not at all. The reason why we went was to get an idea of what other people in the Navies were doing for the benefit of Armscor and the Navy. That is the reason why we went.

And that is the two of you, you and Kruger, representing UEC under the name of C²I², a company you had registered, within the same month that you resign and within four months of Kruger leaving UEC to join you? --- We had no idea that we were going to actually do any business together. I honestly said, when I resigned, it was in order to finish my MSc. Only later I was approached out of the blue by a company called HOTECH and they gave me a six month contract which I think I started on the, their work on 1 February. That is the truth.

Yes well I suggest to you Dr Young is what happened here quite plainly is that you saw the gap in an environment where technology didn't particularly belong to UEC, it really was in the state's domain, it belonged to Armscor, to the Naval programs. It was technology developed under their auspices admittedly but you saw the gap in this commercial environment, left with its own proprietary technology which it would have been in any ordinary commercial environment, set up business with its key people and passed it off in this environment, rather in this forum as being your concept and something which you had developed off your own bat. I suggest to you that that is false. --- That is completely untrue. The reason why I left UEC was because projects had come to a halt, there was a big hiatus in the company and in fact in projects in the Navy and Mr Hyles was promoted to Durban and a vacancy as branch manager became available. I was asked by the personnel manager to apply for the post. When I didn't get the post, I resigned. That is the reason why I left UEC. I was approached completely out of the blue when I was doing my master's dissitation, I got a phone call in those days before cellphones and I got a phone call completely out of the blue from my sister who said that Anton Jordaan had phoned and she passed on the message when I phoned her. That is the exact circumstances.

Yes. And for that reason you told the lie in paragraph 45 in saying that you established C²I² Systems in February 92, so as to create the impression that all of this was something which arose after you left UEC, well knowing that the company had been established in August of 1990. --- I wouldn't say this is a lie. I made a mistake in that. What I should have said is that I had registered earlier but what I said, I established it as a going concern. Before that it was a completely dormant non-trading entity.

Just on this business on the threat of legal action which you have debated with my learned friend Mr Cooper yesterday, I am not entirely sure that I got you, the gist of your evidence accurately when I took it down. But I understood you to say that you had decided not to pursue the litigation until fairly late. Perhaps I shouldn't put my own words into your mouth and ask you just to repeat what you did say yesterday. I think you said that there was some sort of delay or a decision to hold off issuing summons. Do you recall that yesterday? --- Yes.

Can you just relay it again please? --- What I said is that I held off with any litigation until first of all, we had exhausted all internal remedies and then we proceeded with external remedies.

Yes. --- The first external remedy was to cooperate with the special investigating unit and I didn't think it necessary to go the whole legal way on my own steam, without first approaching the statutory units within the country.

Yes, that is roughly how I recalled your evidence. I just want to remind you of something that you were reported as having said in the media which suggests something else, if I am not mistaken and that is that you said, you were reported as having said in the Business Day I believe it was, if I just find the reference now, bear with me a moment, but you intended issuing summons and the only thing that was holding up your issuing of summons was the status of Judge Heath and his investigating unit at the time. I will just read to you a passage here from.. (intervenes)

CHAIRMAN: Which Business Day is that?

MR KRIEGLER: It is Business Day 6 August 2001.

CHAIRMAN: Yes proceed. --- 6 August 2001?

MR KRIEGLER: Yes. Oh I beg your pardon, I am so sorry, this looks as though it was taken off the IBridge on Monday 6 August 2001. If you will just bear with me, I am a bit clumsy about how to read these things. I don't see a date on it regrettably Dr Young. Let me just read it to you and then perhaps you can say whether this is an accurate recording of your, in fact it wouldn't make sense if it were in August 2001. You were reported as this, you said:

He sought relief from the Public Protector (it is referring to you,) who advised him to go to court. Young plans to sue for damages of between 100 million and 200 million but has said he would only go to court if Judge Willem Heath's anti-corruption investigation unit was excluded from the comprehensive probe into the arm's deal.

Would that have been a roughly accurate summary of your intentions at the time? --- Roughly accurate.

That you would only go to court if Judge Willem Heath's anti-corruption unit was excluded. We know that he was excluded in January of this year. --- Yes I think that that press statement comes from around about then, ja.

Yes. Now some six or eight months, I beg your pardon, have now gone by since we know what has happened to Judge Heath's future in this inquiry. Why have you not in the last eight months or seven months, done anything about it despite this public assurance? --- Because as I said, the SIU handed over the complaints to the auditor general and I also brought this matter to the attention of the Minister of Defence via his special adviser Sue Rapkin and the secretary for defence and they said they were going to be instituting an inquiry. That is the reason why I have held off.

I see. No doubt that day will come that you have been threatening all along but we just don't see it yet, will we? --- I beg your pardon?

No doubt that day will come despite these threats of litigation, you will no doubt one day issue summons in this matter. --- I think it depends on the outcome of this joint investigation.

Now just as a matter of interest and this is the last topic that I want to debate with you, is the question of Detexis versus IMS. You see I had understood the upshot of your evidence in the aide memoire to be that Detexis really was, let me put it the other way around, that IMS was superior technology. I think you used that phrase from time to time. --- I have quoted that from the evaluation report as being the conclusion of both the GFC and Thomson.

Yes and it is the upshot of your statement, if one looks at the paragraphs around 280 and so on, where you report from the, where you quote from the report as we saw yesterday, quite selectively, from the special task team's report on the merits and demerits of your system over Detexis's, that yours is really the better system. But what we did see from the paragraph drawn to your attention and to Mr Protector's attention for the first time yesterday from this report, was that Detexis was hardly not capable of doing the job but at least met the baseline requirements. Would you at least go that far? --- No they didn't meet the baseline requirements. It is impossible.

So you would disagree with that statement. --- If the baseline requirements are those embodied within the baseline user requirement specification, then the Detexis system could not possibly have met.. (intervenes)

You know the Detexis system. You have studied it. --- To a certain, look I am saying if it doesn't conform to FDDI and SAFENET, it can't possibly conform. So the answer is yes.

I see. But the question really is, are you an expert on Detexis? --- Not on, I have got an idea of how it works.

No, no, that is not the question. Are you an expert on Detexis? --- I am not an expert but I have read various documents which describe what it consists of and how it works.

You heard Mr Cooper put to you yesterday that the Royal Navy had placed an order on British Aerospace for its new destroyer program and I understand that this was done some months ago, one or two months ago. Mr Protector sorry for that, I was just corrected, it was British Aerospace who two months ago or so, placed an order for use in the Royal Navy of the Detexis Bus, the very same Detexis Bus that is now being contemplated for use in the South African Navy Patrol corvettes. You heard that yesterday I understand for the first time. One can hardly then say that this is useless technology. Would you agree with that at least, I mean knowing the Royal Navy and knowing British Aerospace. --- Well I can, not having seen exactly what has been specified by British Aerospace, I can't tell you that it is exactly the same as has been proposed for our corvettes. I don't know that.

No well if it is true, let's assume for purposes of my question that it is true, that British Aerospace placed an order for the very Detexis Bus for purposes of a combat management suite to be used in the Royal Navy destroyer program, destroyer, it would hardly then be true to say that the Detexis Bus is useless or is poor or is inferior. Surely it does the job. --- It may or may not do the job.

Yes. --- May I tell you what I have heard about the Detexis Bus on the French aircraft carrier?

Yes you may. --- Okay, a senior manager of Armscor Pierre Meiring who has also got a master's degree in electronics, was at, was in France I think, certainly not at Thomson but probably at the shipyard DCN and he spoke to various I think French Navy people and .. (intervenes)

So this is third or fourth hand information? --- From Pierre Meiring, okay?

Ja but it is him from somebody else. --- Just a second, can I finish?

Yes I am just asking you, is this third or fourth hand information? --- It might be third.

Yes. --- Okay, anyway he asked: why has the aircraft carrier Charles de Gaul not been accepted by the French Navy, I think this was about six years later, after it has been launched and they said well there is something that doesn't work properly on the combat suite. He said that the Thomson people are not being absolutely open, what is actually the problem but they think it has got something to do with the non-determinism of the on-board Databus.

Gee Dr Young I would suggest even for you that is a very long shot. I mean what sort of weight does that carry? --- I asked if I could.. (intervenes)

Well you have heard the answer from your counsel. Do you want to repeat it? --- I beg your pardon?

You have heard the answer from your counsel, do you.. (intervenes) --- I didn't hear what he said.

CHAIRMAN: But Mr Kriegler, that is what you have asked.

MR KRIEGLER: Yes it is.

CHAIRMAN: The only information you can challenge the statement that it is inferior or poor or whatever. That is all he has and how good it is. Then it is for anybody to assess.

MR KRIEGLER: Quite, quite Mr Protector.

MR ROGERS: Also Mr Protector what I think my client did indicate is that he can't say whether what has been specified by the Royal Navy is the same Detexis system that has been proposed for the South African Navy but given his expertise, no doubt if my learned friends were able to make available what those specifications were, it would be fair to my client to use his expertise to say then whether it is in fact the same.

CHAIRMAN: Yes. Please proceed.

MR KRIEGLER: If you will just bear with me a moment Mr Protector. Now in a statement made in the public by you, one of many, you were quoted and in fact I saw you on Carte Blanche as saying that the technology which the South African Navy had acquired, the Detexis Databus or Detexis Bus, was in your words, extremely retrogressive. Old technology. Do you still stand by that? --- Okay I need to explain a little bit here. As I said in my testimony earlier, the Detexis Databus is a hybrid of two components, the ethernet part and the serial point-to-point connection system. The serial point-to-point connection technology was first used in the United States Navy, okay I thought in the sixties. When I had Rathion, a company with me about two or three months ago, after the Carte Blanche and they said no, that was actually the 1950s. So I was actually, I was ten years out. So I am talking about the serial part which is actually the important part from the combat suite other than the combat management system, is based on old technology, yes.

And you stand by your statement that what the Navy had bought was extremely retrogressive technology, old technology. --- Yes.

You stand by that? --- The use of serial point-to-point links is old technology and techniques.. (intervenes)

Extremely retrogressive? --- Yes.

I suggest to you, first of all it will be shown that your statement is not held by others who know how the system work, know how Detexis works, people who are truly experts at Detexis and have studied it, show that it is cutting edge technology, such that the Royal Navy finds it to be acceptable, at least for them and that it is mischievous for any person such as yourself to put out a message in public, to say that the technology that the Navy has bought, is extremely retrogressive or old technology and quite the contrary, that it is cutting edge technology and any bid is capable as performing the job as the IMS was. --- It is certainly not mischievous. I made that comment when I was being interviewed, it certainly wasn't mischievous.

It was ten years out. --- I beg your pardon?

But it was ten years out. --- No what I said was, it was, I used it, it is 1960s or 70s technology. I was told by people from Rathion actually that those techniques were used in the 1950s, that is what I said. It is not.. (intervenes)

And you believe that that message, the gist of that message sent out to the public was a fair summary of how Detexis, of where Detexis is at today as technology? --- What I am saying is the use of serial point-to-point links is retrogressive and it is not mischievous.

Not only to tell the public who is suspicious of these things that vast amounts of money were spent on the military but to plant in the public mind the idea that you didn't only spend this sort of money on arms but you spent it on a dud, something which is old technology and effectively accusing the Navy of buying outdated obsolete technology when that is far from the truth. --- I did not plant this in the public mind, I was interviewed as is my right to respond, by a legitimate public broadcaster and that was my response at the time. There was no intent on me to plant anything in the mind of the public that was mischievous or untrue. It was my opinion at the time, which I still hold.

CHAIRMAN: Is the serial point-to-point link the essence of Detexis or is it just perhaps a minor point? --- No it is, if we are talking about essence, it is not 100%, it is about half, 50% to 70% of the system connects via these serial links.

Yes. As opposed to IMS which connects to one point? --- Well every single collaborating sub-system connects directly to the FDDI ring, that is the way modern combat suite architectures are going or have been going for a number of years in major navies.

I see.

MR KRIEGLER: Perhaps to say this for the record Mr Protector that the response that Dr Young has just given, I am told, reflects his lack of understanding fundamentally, of how Detexis works and it.. (intervenes)

CHAIRMAN: Well put that to him.

MR KRIEGLER: Yes and it will be demonstrated in due course that the answer that you have given now, is either misleading or it is hopelessly misplaced. But those are the questions that we wish to put at this point, thanks Mr Protector.

CHAIRMAN: Any response? Yes, any further questions? Mr Mahon?

MR MAHON: Thank you Mr Chairman. Mr Chairman just at the outset I just would like to place on record our approach in this matter. Dr Young has given a lengthy memorandum or statement and my client takes issue with most of what is in that statement but for purposes of this inquiry, I intend only to deal with certain aspects thereof.

But in view of the fact that there has been reference to possible subsequent litigation, I merely wish for the record to state that the fact that we don't take issue with certain of the aspects, does not necessarily mean that we concede that what he said is correct.

CHAIRMAN: Yes.

CROSS-EXAMINATION BY MR MAHON: Thank you Mr Chairman. Dr Young yesterday my learned friend Mr Cooper put a question to you along the following lines, if my memory serves me correctly and that was he asked you whether, in your view, there were people in the Department of Defence who were maliciously or deliberately trying to undermine C²I². Do you recall the question? --- Yes.

And if I am correct, your response was that you didn't believe that to be the case. --- Well I said I was not prepared to go as far as use the word malicious. It might be in error but at the end of the day, mistakes were made, that is what I think I said.

So at this stage you say, you are placing it no higher than the fact that mistakes were made. Is that correct? --- That doesn't necessarily apply to every single person in this whole process.

So what you said yesterday was in fact not a correct reflection of what you are stating today? --- No what he was referring to, we were talking in the context of the evaluation report for the IMS and the subsequent report on the SMS and I was specifically referring to the officers and Armscor people working on those reports and evaluations.

And it was your view that the people so involved were not being malicious? --- Yes.

Thank you. --- I said may not be malicious. I can't use that term, I don't know what was going on in their minds. All I can see is the results.

Well Dr Young can I be a bit more specific then? If we could go to paragraph 303 of your statement. I think it is at page 44. Thank you Mr Chairman. At paragraph 303 you stated the following:

I am also concerned about the conflict of interest situation, information of which was disclosed inter alia at the SCOPA hearings of 11 October 2000 and 26 February 2001 as well as in the press.

Could you perhaps just be a bit more specific, could you explain to us precisely what the conflict of interest was that you were referring to? --- I think I said in my testimony yesterday that the conflict of interests to which I am referring was discussed at SCOPA, was that of I believe your client, Mr Shamin Shaikh.

Well could you just elucidate, could you just say what you believe that conflict to have been? --- Well I think he himself admitted in the SCOPA hearings that he had a conflict of interest because of his brother's directorship and shareholding in companies or in ADS and companies connected to Thomson.

The reference was to a possible conflict of interest, wasn't it? --- I, I haven't got the SCOPA transcripts in front of me but where, here I am referring to the conflict of interest situation as was discussed in SCOPA.

Well at best we will get back to that but you go on to say in paragraph 304:

Although it is alleged inter alia by the ex-chief of the SA Navy during the Public Protector's hearings into the arm's deal that Mr Shamin Shaikh recused himself from the program meetings where his conflict of interest was relevant, I believe this not to be true.

Do you stand by that statement? --- Ja I added in the word, in my testimony I added in the word: all program meetings.

Sorry, all program.. (intervenes) --- That is what I said in my statement yesterday.

Sorry, I didn't hear you clearly? --- What I said yesterday was what you have read out, except in the second line, I added in the word: all program meetings.

And you expressed the belief that this was not true, am I correct? --- Yes.

Could you detail for me the basis of your belief that this was not true? --- Well for one thing, as I have said, Mr Kevin Hanafey told me face-to-face that the so-called recusal in respect of this conflict of interest, was certainly not handled in a formal manner or one which was considered normally acceptable. And you know when one, my understanding of recusal and I have canvassed the exact definition of this with other people, is that when one recuses oneself, one has nothing to do whatsoever with a particular matter and if one looks at what I said in.. (intervenes)

No, could we just stop there for a moment. Mr Hanafey, who is he employed by? --- Armscor.

Okay and you are saying that he made reference to the recusal as being a farce? --- Or words to that effect.

So I would put it to you then that he must have been aware of the fact that there was a recusal. --- There was a mention of a recusal but I am talking about the manner in which it was handled, yes.

Are you suggesting that there was a procedure which had to be followed in order to determine how these matters should be handled? --- I don't know the exact procedures but what I have been told of what recusal means and we also looked at for example the third cellular licence where the chairman had to basically recuse himself completely and he did not take part at any of the SATRA whatsoever. That was my understanding of what recusal meant.

Now Dr Young I have not spoken to Mr Hanafey but I understand from my learned friend who appears for Armscor that Mr Hanafey, for the record, vehemently denies that he had such a discussion with you. --- Well I for the record state emphatically that that is what he told me or words to that effect. I can't say he used the word: farce but words to that effect. But the point I am making here is what he told me, face-to-face in his office about .. (intervenes)

Okay, well we have now that one of the basis for your attacking Mr Chippy Shaikh or Mr Shamin Shaikh's involvement is on the basis of what you allege Mr Hanafey to have told you? --- One of them, yes.

Yes, what are the others? --- The others are what I have set out here in my evidence.

Well could you just spell them out again please? --- Okay, referring to the Project Control Board minutes. I am not going to read it out, in my paragraph 307.

Can we just stop there for a moment. You say the Project Control Board minutes. Which minutes are you referring to? --- The minutes of 24 August 1999.

Any other minutes? --- No.

You weren't part of these meetings, were you? --- No.

Are you prepared to say where you got a copy of these minutes? --- I have told the forensic investigators where I got a copy.

Are you prepared to tell this public hearing? --- Not unless I am directed to do so by the chairman.

Do you accept that the minutes were classified? --- As I have said here, they were classified as confidential.

Okay. Now with your access to minutes, did you have any other minutes in your possession or were these the only minutes? --- These were the only minutes that were relevant to the corvette .. (intervenes)

So these were the only minutes that were relevant? So you had other minutes. --- As I said, I was given a digital document which consisted of lots of documents. I haven't even looked at all of them and I have given back the original to, from whence it came, the source and I have also handed over a copy to the auditor-general's forensic investigators.

But what you are telling us is that you had access to a number of minutes but you, at the very least, went through them so that you could identify this minute to which you refer in paragraph 306, namely the one of 26 August. --- I said there were lots and lots of pages on a computer and obviously one doesn't even know what is on it and I looked at each page and what wasn't relevant to me, I didn't take detailed notes of the.. (intervenes)

And just as a bit of, stroke of luck you came across the minutes of 24 August which you decided to use? --- Yes.

I see. Okay, well perhaps we should go to that minute of 24 August. Do you have it in front of you? --- No. I don't have them any more.

You don't have them any more. --- As I said it was a digital file, I handed the original back to the source who gave it to me, a copy to the forensic investigator and I have deleted these files from my computer because for one thing they were taking up far to much space on my computer.

And are you suggesting that these minutes came out in digital form? --- No. That was a scanned document.

I see. Anyway, let's just go to the minutes of 24 August. You say in regard to that minute in paragraph 306:

In fact if one refers to the minutes of the PCB meeting of 24 August 1999, I can't quite make out the rest, is it classified.. (intervenes)

--- Classified as confidential.

Classified as confidential, one may immediately conclude that Mr Shaikh not only chaired the meeting in his capacity of chief of acquisitions representing the secretariat of Defence, but that he signed the minutes as chairman. There is no record of him leaving the room or recusing himself and there is no mention of handing over chairmanship of the meeting to the chief of Navy or anyone else for that matter. There is merely a brief reference at the end of the discussion on Project Sitron to a prior recordal of Mr Shaikh's possible conflict of interest.

And you say you will return to that hereunder. Now I would like to read to you from the minutes which you no longer have, what is stated in paragraph 15 and it is under the heading: ratification by the Board.

The following proposals by the project team details of which are contained at appendix F and there is a correction which I think should mean a, reflect that it should be appendix D, were ratified by the Board and in brackets it is stated: note, refer to chief of acquisitions possible conflict of interest as indicated in paragraph 13 of the minutes of the PBC held on 28 April.

Is that the brief reference that you were referring to? --- Yes, in my paragraph 3.9 I have repeated that, yes.

I see. --- 309.

And that reference also goes on to refer to the minute of 28 April. --- Yes.

Did you peruse the minutes of 28 April? --- I have never seen them.

Oh, so you just got lucky with.. (intervenes) --- Yes, absolutely.

And you didn't see any of the other minutes? --- I haven't seen any other minutes.

You didn't see any other minutes? --- I have not seen any, I have not seen any of these other minutes. 24 April or 4 December, I have not, the only one I have seen, Project Control Board minutes that I have seen is 24 August.

But I thought I understood you to say that you had perused minutes and that you had been lucky enough to see this particular minute. --- There were other minutes relating to other programs, to the LIFT program which I didn't take note of the contents. I saw it had something to do with another program, so I skipped over this one.

Well.. (intervenes) --- I do not have any other minutes for the Naval Project Control Board whatsoever, I would very much like to see the minutes.

Well we will come to some of the other minutes in a moment Dr Young. Perhaps we can go directly to that minute of 28 April.

MR ROGERS: Mr Chairman while my learned friend gets ready to deal with this, I wonder if he is going to put portion of the minutes to the witness, if it isn't fair that at least for the duration of the giving of the testimony, the witness should have a copy of the minute in front of him and possibly I would also appreciate one.

CHAIRMAN: Yes Mr Mahon, I did think that point might be raised at some stage. If you will put it to him, it is indeed fair that he .. (intervenes)

MR MAHON: As it pleases Mr Chairman, I don't have an extra copy but I will try to arrange, if we could stand down for perhaps five minutes, I will arrange to have copies in front of him.

CHAIRMAN: Yes I think because this is an important of this testimony and an important part of your client's version. We shall stand down for five minutes.

PROCEEDINGS ADJOURNS PROCEEDINGS RESUMES

RICHARD MICHAEL MOBERLY YOUNG: s.u.o.

CHAIRMAN: Yes Mr Mahon you may proceed.

MR MAHON: Thank you Mr Chairman. Mr Chairman just before proceeding, I have been asked by the state attorney just to request that these are classified documents and obviously what we would like to do is put a copy before the witness but they would then like them back.

CHAIRMAN: Ja, that is a reasonable request and I take it you have only copied the relevant portions?

MR MAHON: In fact there are copies of the whole minutes in fact.

CHAIRMAN: Yes but we will refer.. (intervenes)

MR MAHON: Only to specific portions of these minutes.

CHAIRMAN: Specific portions.

MR MAHON: Yes. Thank you Mr Chairman.

CHAIRMAN: Thank you. There should be one copy obviously for the representatives ....... Yes you may proceed the Mr Mahon.

CROSS-EXAMINATION BY MR MAHON (CONTD): Thank you. Dr Young we were dealing initially with the minute of the meeting of 24 August where you made reference in paragraph 306 to a brief reference at the end of the discussion of Project Sitron to a prior recordal of Mr Shaikh's possible conflict of interest. Do you recall that? --- Yes.

CHAIRMAN: You will assist us by referring to relevant pages .. (intervenes)

MR MAHON: Yes Mr Chairman. If one, of that minute of 24 August, it is paragraph 15 which is on page 3, at the bottom of the page.

CHAIRMAN: Yes.

MR MAHON: Dr Young if you could just have regard to paragraph 15, it reads as follows:

Ratification by the Board. The following proposals by the project team, details of which are contained at appendix F, I think that should be D, were ratified by the Board (note referred to chief of acquisitions. Possible conflict of interest as indicated in paragraph 13 of the PCS held on 28 April.

And you confirm that that was the brief reference that you were referring to in your paragraph 306, am I correct? --- Yes.

Did that raise with you the question of what was recorded in the minutes of the meeting of April 28. I mean did you believe that that statement required further investigation or .... --- Not particularly. It doesn't go against what I testified yesterday.

And you didn't canvass with your sources of documentation.. (intervenes) --- No.. (intervenes)

About what the content of the minute.. (intervenes) --- No I didn't.

Thank you. Well could you go to that minute of 28 April?

CHAIRMAN: On what page is that?

MR MAHON: I will be with you in a moment Mr Chairman. It is paragraph 13 and it is on page 3 under item 5, Corvettes is the heading. Do you have it Dr Young? --- Yes.

If I could just read that into the record. Paragraph 13 reads as follows:

The chairperson reiterated that due to possible and I emphasise possible, conflict of interest, he would recuse himself from any decisions taken on the combat suite.

--- That is what I read here.

And you weren't at that meeting so you are not in a position to dispute that that is what happened. --- No.

Thank you. If you go down to the note.. (intervenes)

CHAIRMAN: And of course, just for clarity sake, the chairperson referred to here was?

MR MAHON: Was Mr Shaikh.

CHAIRMAN: As reflected in the first page?

MR MAHON: That is correct Mr Chairman.

CHAIRMAN: Yes.

MR MAHON: If one could then go to the note at the bottom of paragraph 14, could you read that out for us please? --- Chief of Acquisition handed over the chair to C Navy, Chief of the Navy for the discussion on the combat suites. C Acquisition left the room.

And I presume that you do not dispute the correctness of that minute? --- No, no, no I don't.

So if one goes back to paragraph 15 of the minutes of the 24th and you read the brief reference to the recusal in paragraph 15, if you read it with what he said in paragraph 13 and 14 which has just been read into the record, you will I think agree with me that the question of the possible conflict of interest was raised and dealt with. --- It was raised and dealt with, within the context of these four decisions, A, B, C and D on page 4. It was not dealt with in the context of what had previously been discussed, certainly a couple of pages earlier under item 10(a) and 10(b). The recordal of the possible conflict of interest.. (intervenes)

Well we will get to (a) and (b) shortly but the point that I am wanting to make is that there is a clear reference in both the minutes of 24 August 1999 and 28 April to the recusal, to the possible conflict of interest and recusal. --- There is yes but it is specifically noted that the meeting of 28 April is that he handed, in this particular instance, he handed over the chair to the Chief of the Navy and left the room.

Okay. Now does that not fly in the face of your statement that you believe this not to be true? --- What I said is that it had been stated inter alia by the Chief of the Navy in his hearings that he recused himself from all program meetings. I think I will have, it is fairly clear from your own documents that you put in front of me, that he did not recuse himself from the particular decision on 24 August in regards of the discussions on the combat suite databus under paragraph 10(a) and 10(b). He has minuted the same things.

Well let's get to the minute of the 28th, you will agree that there it was appropriately dealt with, not so? --- What?

His recusal.. (intervenes) --- No I don't because it came, the recusal came later in the meeting and was only in the context of the decisions relating to four decisions which has got nothing to do with the IMS.

Well we will get to that in a moment. Could we then go to the minute of 4 December? Could you go to paragraph 5(a) on page 2 please? --- Yes.

There is a reference under paragraph 5(a) to paragraph 9 combat suite and I would just like to read it. Paragraph 9 combat suite:

The chairperson informed the meeting that due to a conflict of interest, he is to recuse himself from the combat suit element of the corvette and submarine requirement.

--- That is true. That is what I read here, yes.

Would you concede that the so-called conflict of interest was raised already on 4 December? --- I am not conceding anything. For the first time I am agreeing that this was recorded in these minutes. I am not conceding anything.

Well can I put it to you, if you are not conceding that it was recorded in these minutes, are you saying that that is not what took place at the meeting? --- No, not at all. I am, conceding means that I have made an error somewhere else and now I am conceding. What I am confirming is what you have read out, is what I read in these minutes, these signed minutes on 4 December, I confirm that that is what is in these minutes.

So do you accept that at the very least, as from 4 December, there had been a full disclosure of the so-called conflict of interest and that it had been dealt with at these meetings? --- Yes it had been recorded. Not full disclosure, I don't know that. All I can read from the document that it was recorded. I don't know about full disclosure.

Okay. Now, so if I have it from you, we now have Mr Hanafey's evidence on which you base this allegation of a problem arising from this conflict of interest and as I understand it, we have a reference to the minute of 24 August which I understand was the other basis for your allegation. --- I have two others. The, what is minuted under paragraph 10(a) and 10(b) and as well as what was recorded in a memorandum via Mr Fritz Nortje.

CHAIRMAN: 10(a) and 10(b) of which minute? --- Of 24 August which I have quoted in my paragraphs, the new version, 306 and 307 and then Mr Nortje's memorandum is 308.

MR MAHON: Well, is that the only other basis for this whole allegation by your abuse, and an orchestration by Mr Shamin Shaikh and or others, to prejudice you arising out of his conflict of interest. Are those the only two other basis for this. --- Yes in respect of the corvette combat suite, this is what I know.

And from the, in the minute you refer to in paragraph 307(a) and (b) and that is a quote from the very minute of 24 August? --- That is correct.

Where we have already established that the question of conflict of interest was raised under paragraph 15? --- That was raised later. It wasn't raised early enough and the minutes record that Mr Shaikh was not only involved in the discussions and the decisions but he is also actually participating and his pronouncements or discussions are actually quoted against him.

Are you suggesting that if he recuses himself from discussion on certain issues, that he has got to recuse himself from the meeting completely? That he has got to leave the meeting and that he can't participate in discussions relating to issues which are not decision making? --- What I am saying is that this particular decision is around the IMS.

Well could we just, could you just refer me to in paragraph (a), the one that you quote in 307, what your basis there is for the suggestion that Mr Shaikh was participating in the debate on the combat suite. --- Okay, what I have said, furthermore, Mr Shaikh participated in the discussions, so he was still there, he hadn't left the room and he hadn't handed over chairmanship.. (intervenes)

If you could just answer my question. I would like you to point out to me in paragraph (a), the one quoted under your paragraph 307. --- I understood your question, is it on what basis am I alleging that Mr Shaikh participated in these discussions and what I am telling you is that the basis on which I am alleging that he participated in these discussions is that he was in the room, he hadn't recorded his conflict of interest and he hadn't handed over chairmanship to the chief of the Navy at this stage. That only happened later.

CHAIRMAN: Maybe the point is, did he make any specific contribution that you can point out.. (intervenes) --- Yes, well let's look at paragraph 307(b).. (intervenes)

MR MAHON: No I would like to deal with 307(a) if you don't mind. --- Well, okay, paragraph 307(a) was an introductory one to 307(b) where I was saying just what I have said, that he participated in the discussions as chairman in a .. (intervenes)

He was present. You can't raise it more highly than that, can you Dr Young? --- Well the other minutes recorded him as handing over chairmanship. These one's don't. So all I can .. (intervenes)

Well I will deal with that in a moment. --- Okay.

But I mean can you, are you or aren't you able to point out to me in (a) a single reference in terms whereof Mr Shaikh participated or it is recorded that he had anything to say as far as (a) is concerned? --- As I have said, he was participating and that this particular paragraph is an introduction to the next one.

You cannot, can you Dr Young? --- I have stated what I am going to say.

Thank you. Well let's go to paragraph (b) in 308. Could you point out to me in that paragraph your area of concern which gave rise to as, well which formed the basis of these serious allegations which you have made? --- Okay, as far as I can remember in the previous hearings it is said that once this recusal had been recorded, that there was no further participation in any discussions, deliberations, decisions. Okay, what I am showing here is that Mr Shaikh as chief of acquisition, is specifically minuted as saying something about the IMS.

Well let's stop there for a moment. You say that this, can I just understand what you are saying the arrangement was or that what was put, that.. (intervenes) --- We will have to, can we refer to the transcripts of the previous days of the hearings?

Well we can leave it for the moment and possibly you can try and identify it.. (intervenes) --- No, it is important, it is important.

Well we can perhaps identify it over the luncheon break, so that we don't waste too much time Mr Chairman.

CHAIRMAN: Well something is quoted in paragraph 307 itself. Is that not what.. (intervenes) --- That is what I am saying.

That is what, what is quoted there in paragraph 307. --- Yes, it is directly, I mean you can, it is directly out of the minutes. The chief of acquisition is recorded as not only participating as an observer in the discussions but also contributing. That is not my understanding of recusal and it is certainly not the way recusal was described in the previous hearings and possibly even in SCOPA. I haven't checked the whole SCOPA documents but.. (intervenes)

Yes, what I am saying is that rather than check the record, you can read your, reread your paragraph 307 as your reply. --- Can I do that?

Yes, if that is your response? --- Okay. My paragraph 307:

Specifically with regard to the matter of the IMS, Mr Shaikh is recorded as saying the following:

(b) Chief of Acquisition informed the board that the CEO of Armscor had presented this matter to the AAC and that the minister supported the issue of the main contractor carrying the overall risk and the responsibilities for the sub-contractors. If the principle of the main contractor carrying the risk is changed, then the added difference in costs will have to be borne by the DoD. The principle of the main contractor carrying the risk must be adhered to. The AAC decided that the ceiling cost of the equipment must not be raised.

MR MAHON: Is that not just a report Dr Young by Mr Shaikh as to what was the attitude of the minister? --- It was in the context of the IMS.

But it was a report by the minister, it wasn't a discussion or a debate. --- It was a contribution from Mr Shaikh who had recused himself in this particular matter and the whole of paragraph 10(a), (b) and (c) is the combat suite database. So what I am saying is that he was contributing, recusal in my understanding, is having no part whatsoever. When you make an observation and you record it, that is not recusal in my mind, in my opinion.

Well Dr Young I don't want to debate with you what the legal affect of a recusal is but what I put to you is that what is set out in your paragraph 308 where you quote (b) is merely a report of the attitude of the minister, not so? --- In relation to the IMS yes.

Thank you. And in paragraph 15 there is the question of the, the recusal is raised by reference to the minutes of the 24th and for the record I want to put it to you that I understand that the change in the way these things were minuted, came about as a result of a new person taking the minutes and who merely tried to save himself some time by referring to procedures in previous minutes. Are you able to.. (intervenes) --- I can't make any observation on that.

Thank you. So we have at least Dr Young that as at 4 December 1988, the question of, sorry 1998, the question of the potential conflict was raised and dealt with. --- Yes.

Okay and could I have the other basis of your suggestion that there, this question of the conflict of interest wasn't properly dealt with. --- Yes, may I re-read my paragraph 308?

CHAIRMAN: Yes. --- My contention that Mr Shaikh did not recuse himself from matters involving the ADS and the corvette combat suite, is supported by the following reference to a memorandum from the Program Manager, patrol corvettes, Mr Frits Nortje to Sipho Thomo, CEO of Armscor marked 11 February 2000 and I quote:

Furthermore, the matter has also been referred to and discussed at the Project Control Board (PCB) where the final decision not to use the CCII databus was exercised with Mr S. Shaikh indicating that he had cabinet support in this regard.

MR MAHON: Is that the other, the remaining basis? --- Yes that is yes, in terms of the corvette combat suite.

And do you have a copy of the document? Sorry Dr Young, what was your response? --- We are just checking.

Okay. --- We don't have any classified documents here.

CHAIRMAN: Mr Mahon, it is about lunch time but I would imagine that since the documents are going to be handed back when we adjourn, how long are you going to be still with it?

MR MAHON: I am not going to be a lot longer.

CHAIRMAN: I see, because then I wanted us to complete this, then the documents can be handed.. (intervenes)

MR MAHON: I think it is going to be too long to complete, I would imagine I am going to possibly be another half an hour with this witness.

CHAIRMAN: In that case you will give the classified documents back and they unfortunately have to be given back to us.

MR MAHON: My apologies for that.

CHAIRMAN: No, you can't help it.

MR ROGERS: Mr Chairman just before you adjourn, if the legal team gives the undertaking not to remove these documents from the room, I wonder if we may have the opportunity of keeping them and studying them during the break?

CHAIRMAN: Well it would only be, you see the whole idea about the documents classified being made available, the aspects that you would like to look at, it would only be under sight of representatives or in sight of the representatives from the Defence Force. If that is to happen, it would be in sight of the representatives of the Defence Force.

MR ROGERS: Yes, I am quite happy to sit in their sight.

CHAIRMAN: Is that acceptable? Mr Mahon?

MR MAHON: Mr Chairman the difficulty is not mine, it is really the difficulty of the state attorney. So I think that possibly an arrangement is that they can have a look at it but under, with somebody from the state attorney.

CHAIRMAN: Yes.

MR MAHON: And only the sections that we have referred to Mr Chairman.

CHAIRMAN: Exactly yes, that is the whole idea because we are not making the whole document available. So those sections can be read, in sight of a representative of the Defence.

MR MAHON: Thank you Mr Chairman.

CHAIRMAN: We will adjourn until 14:15.

PROCEEDINGS ADJOURN

PROCEEDINGS RESUME

RICHARD MICHAEL MOBERLY YOUNG: s.u.o.

PRESIDING OFFICER: We shall once more go through the drill of having the document. Before you proceed, the documents. Are these the only ones that you are going to refer to Mr Mahon?

MR MAHON: Yes Mr Chairman.

PRESIDING OFFICER: You may proceed then.

CROSS-EXAMINATION BY MR MAHON: Dr Young did I understand you correctly to say with regard to paragraph 15 of the minute of 24 August 1999 that the reference to conflict of interests and then the reference back to the minute of 28 April did not relate to the issue of the Corvette Combat Suite? --- No I did not say that. What I said was this recordal of the conflict of interest is specifically within the ratification of the four proposals within paragraph 15. What I am saying is that when the Combat Suite, they came up with the agenda, there had been no recusal by the time the Combat Suite and by the time Mr Shaikh is minuted as taking part in the discussions and contributing to the discussions.

Can I get you to agree then that the recusal in the conflict of interest relates to the ratification by the board as referred to in appendix D? --- In relation to the four proposals subparagraphs A, B, C and D which have nothing to do with the IMS or the Combat Suite Databus.

But it is a reference to appendix D, not so? --- Yes, well appendix

D I think probably is more detail of these four proposals.

Well could you go to the first page of that minute? The first page of the minute of 24 August. --- Yes page 2. Which paragraph?

Before the recordal of who is present at the meeting there is a list of appendices. --- Yes.

You will see the appendix D, Project Sitron, PCB ratification required. That is the one referred to in paragraph 15, not so? --- Yes.

Which we have identified as being the one which was impacted upon by the reference to the conflict of interests and the recusal as referred to on the basis referred to in the minutes of 28 April, not so? --- Yes.

Okay. Then in paragraph 310 of your statement when dealing with this same minute at paragraph 15, you state the following:

"Regarding Mr Shaikh's reporting of his conflict of interest I refer to paragraph 15 of the minutes of the PCB meeting."

And then you quote what we have already been dealing with at some length and then you say:

"The proposals under consideration have nothing to do with the IMS matter."

--- As far as I know that is correct.

I would like you then to go to appendix D and in fact the specific reference is to D3, that is appendix D to that very minute. --- Are we talking about 2786, that page?

2780 I think it is on mine, it is stamped 2780 but on the top, it may have been cut off by the copying process but there should be a reference to D3. In any event it is effectively the second, there is the first page D1 to appendix D, there is the reverse side of that which is D2 and the you get D3. The first paragraph of that relates to the combat management system, Thomson-ADS and the question of the Combat Suite is dealt with, not so, including the Databus. --- Paragraph D, that is correct.

So your statement is not correct, is it? --- Well just remember that there was a mistake in the minutes. When you are talking about appendix D, the minutes were actually hand modified. It reflected appendix F.

But you got the hand modified version Dr Young. --- Did I?

Well I mean that is the one you quote. --- I have got paragraph F, (sic).

Well and in your minute it is crossed out and where it was corrected to D. --- But where is that? Where do I say that?

PRESIDING OFFICER: Which paragraph are you referring to Mr Mahon?

MR MAHON: Paragraph 310 of Dr Young's statement. --- No it says here contained in paragraph F (sic). I do not talk about paragraph D do I?

Sic and then the reference to D ...(intervenes)

PRESIDING OFFICER: It is actually 309, not 310. --- We have different versions here.

Oh in the previous one, I see. --- I said appendix F (sic).

MR MAHON: The one you quote refers to it being corrected in manuscript D and sic. I mean, what does that mean? --- If I may refer back to the second part of paragraph 15. I talk about ratifications in terms of the following. I am going to read them now. I have talked about subparagraphs A to D and we are talking about:

"Combat Suite software only to be frozen by the delivery of the third vessel."

Sorry where are you referring to now? --- I am referring to your paragraph 15 of the minutes.

Okay, alright. --- I will read it again. Subparagraph A:

"Combat Suite software only to be frozen by the delivery of the third vessel."

That has got nothing to do with the IMS. Subparagraph B:

"Delivery of CAT-C subsystems to main contractor be extended by six months."

That has got nothing to do with the IMS. Subparagraph C:

"SAN takes delivery of platforms in Germany."

That has got nothing to do with the IMS. Subparagraph D:

"Navy accepts risk for CS equipment while in dockyard awaiting installation."

That has got nothing to do with the IMS.

Yes but Dr Young we have already established, and you conceded just now, that when dealing with that whole question of the so-called conflict of interest and recusal we were dealing with appendix D. --- You referred back to my minutes where I said appendix F and I have said the proposals under consideration have nothing to do with the IMS matter and I have just proven to you that those four proposals ...(intervenes)

You agreed that it was a reference to appendix D and I then took you to the opening page of appendix D and you agreed that that related to the Project Sitron PCB ratification required. --- The point is there was a mistake in the minutes. What I put in here in my aide memoire which I testified is correct. Appendix F (sic).

How do you know there was a mistake in the minutes? --- Because I looked at the ... I said sic because you go on in that same paragraph 15 to refer to proposals which have got nothing to do with it. So it was obvious by inference that there was a mistake ...(intervenes)

Are you suggesting that the digital form of the minutes that you got showed the manuscript D amendment on it? --- No I am not saying that at all.

Where did it come from in the document that you quoted? --- I can see from the fact that these four proposals have got nothing to do with the ratification, so it was obvious to me that there was an error in the minutes. I did not know it was paragraph D at the time, it just did not look right to me.

So you inserted the D did you? --- Where did I insert the D?

No, well you are saying that you knew there was a mistake. I would like to know how you knew there was a mistake. --- Well was there a mistake or not?

Just answer my question if you do not mind. --- Yes because if you go right to the first page you will see there halfway down, appendix F:

"Project Wills funding requirements for the logistics/engineering optimisation ECS and testbed."

Well what is the reference to appendix D then on that same page? --- Well I am just telling you that is how I knew there was an error. You are asking how I knew there was an error.

Do you still persist with your contention that you got these minutes in digital form? --- Yes absolutely.

Well how is it that you are quoting from a minute which was amended by the secretary who prepared these minutes? --- I am not, I am not, I am just saying that it was obvious by what is written here in printed text, that there was a mistake in your reference to the appendix designation. That is not too complicated to understand.

Well Dr Young what we have now established, as I understand you, is that all your allegations relating to the conspiracy to do you out of this contract involving my client arise from the minutes which you have referred to, namely which is only the one of 24 August, they arise from a hearsay allegation relating to Mr Hanafey which I have recorded, which my instructions are he disputes, and a reference in paragraph 309 to a letter in a totally different context which was written on 11 February 2000 and well after the contract was concluded. Do you persist with the allegations of this, that you were deprived of this contract as a result of machinations with my client? --- I did not think I made that allegation. What I said is that there are conflicts of interest and the so-called recusal which did not seem consistent with the few documents at my disposal.

Well now that you have seen the other documents which have been made available, do you agree that that theory of yours can no longer fly? --- No I completely disagree. I would like to quote from the transcript of the previous hearings where Vice Admiral Simpson-Anderson was testifying. May I do so Mr Chairman?

PRESIDING OFFICER: Yes. --- Okay. The first one:

"It was agreed that whenever the combat suites were discussed I would take over the chair and that Mr Shaikh would not take part in any discussions, consultations or decisions. This process in the Project Control Board was followed throughout the period leading to final contract signature."

And what I have proved, that from ...(intervenes)

Sorry, you said which part of the record, at page? --- Page 445 of the transcript dated 14 June and I have proof, according to the minutes, that Mr Shaikh was involved in those discussions. There was no recording of a handing over of chairmanship to Admiral Simpson-Anderson or anybody else and he is recorded as not only being participating but actually contributing. He is minuted as saying something. So I did not make ... You are putting words in my mouth when I said that this is the whole reason that I was treated unfairly. All I am saying is that it is inconsistent with what was said in SCOPA, and I have got the SCOPA transcripts here if you would like me to read them, and was said in the previous parts of the hearings.

MR MAHON: Are you then disregarding what is specifically in the minute of April 28? --- No I am not doing that at all. All I am saying is, all I have to do is find one instance where the so-called recusal process was not followed.

Do you agree that April 28 is not that one instance? --- That is not what I am saying. I am saying the one instance is 24 August.

Okay. You are saying the one instance was the 24th and what do you say then about the reference to the procedure as set out in the minutes of April 28? --- All I am saying is that it had been said in the SCOPA hearings that this was done for the first time on 4 December and which seems to be logical. If that is where you initiate the recusal, you always refer to the same one, you do not refer to the previous one, you refer to the official one, the first one, that is what I was giving in my testimony.

Well Dr Young the proof of the matter is, when Admiral Simpson-Anderson makes the comment that the so-called conflict of interest was raised and the procedure was decided on to deal with it and that it was thereafter followed, you are not actually in a position to contest that of your personal knowledge. Is that correct? --- I am saying with reference to a document which is signed, that to me it looks as though that process was not followed, that is what I am saying.

That is the best you can put it, it looks that way? --- That is what it looks like, a signed document which now has been proven to us are genuine and are signed and I would say that that looks ...(intervenes)

So you founded your allegations on a document that looks that way? --- Yes. I am looking at it and it looks that way to me. I am also, I am backing up my evidence, what I said, and you asked me to refer to the, you called it a letter, it is an internal memorandum, official memorandum of Armscor and it certainly would seem that was backed up with what Mr Frits Nortje said on the same issue.

If one could just go back to paragraph B of the same minute, the one that you have referred in your paragraph 308. I am not sure whether we have read the whole of that paragraph B into the record. Mr Chairman my recollection is it was just the first sentence that was read in and possibly we should ...(intervenes) --- Can we read the whole of paragraph 10 including the title of the section?

Yes. --- Would you like me to do it or are you going to do it?

No you can read it. --- Okay. The minutes of the Project Control Board on 24 August 1999, paragraph 10 under item 5, Corvettes. The paragraph is entitled:

"Combat Suite Databus

a. The project team categorised the C2I2 bus as a category B risk, i.e. the prime contractor retains full responsibility for delivery and performance of a fully integrated vessel which includes subsystems that have a critical effect on overall vessel delivery. Further acting POPS (that is Project Officer Sitron) informed the board that if the C2I2 Databus option was selected over the ADS Detexis Databus the project team would have to find the extra funds required to bring both options to a part with respect to risk coverage. This would result in lifting the ceiling price of the Corvettes."

Could you just stop there for a moment? The minute does not indicate who made that statement. --- No it does not. What I am saying is, I said before, it shows that Mr Shaikh was still in the room, he had not recorded his recusal, according to the minutes, and had not handed over chairmanship. Okay subparagraph B, "chief of acquisition", and if I may go back chief of acquisition is according to the attendance list Mr S Shaikh, chairperson, representing the Defence Secretariat, appointment chief of acquisition.

"Chief of acquisition informed the board that the CEO of Armscor had presented this matter to the AAC and that the Minister supported the issue of the main contractor carrying the overall risk and the responsibility for the subcontractors. If the principle of the main contractor carrying the risk of the sub-suppliers is changed, then the added difference in costs will have to be borne by the DoD. The principle of the contractor carrying the risk must be adhered to. The AAC decided that the ceiling price per equipment should not be raised.

c. Mr Swan and Rear Admiral Howell will meet with Mr Richard Young from C2I2 to discuss the matter with him. (Mr Swan and Rear Admiral Howell for action.)"

That is the end of that paragraph on Combat Suite Databus.

And the chief of acquisitions there was merely informing the meeting of the attitude of the ...(intervenes) --- He was participating in the discussions and consultations and decisions of the Project Control Board.

I do not want to take it further, we have already dealt with paragraph 15 where it is quite clear that when it comes to the decision making process he no longer involves himself. But I would like to take you ... Mr Chairman bear with me for a moment. It has just been drawn to my attention that in fact in appendix D7, D3 and D7 your company is actually named. So you will agree that the subject matter, that your statement in paragraph 310 that the proposals under consideration had nothing to do with IMS matter were not correct. --- No you are putting words in my mouth there. I am talking about what I read from the minutes, not from the appendices.

Are you suggesting one should ignore the appendices? --- But you may have made that observation but I am saying I was referring to what was in paragraph 15 which was referred to as paragraph F, which is incorrect. I am not referring to the appendices, in fact I am not familiar at all with what is in paragraph D.

MR ROGERS: Mr Chairman I think we should just correct what Mr Mahon put to the witness. C2I2 is not mentioned at D3 at all, it is mentioned at D7 in the context of the navigation distribution.

PRESIDING OFFICER: Yes Mr Mahon referred to D7.

MR ROGERS: He said D3 and D7.

MR MAHON: I apologise Mr Chairman but the Databus is referred to in D3 and in D7 C2I2 is specifically referred to.

PRESIDING OFFICER: Oh yes, alright.

MR MAHON: Mr Chairman I do not think I need to have further regard to these minutes for my further questioning. Can we arrange just to get the copies back? Thank you Mr Chairman.

MR ROGERS: Mr Chairman I may want them back when I re-examine or do whatever. I appreciate they are very closely guarded.

PRESIDING OFFICER: Do you have more questions Mr Mahon?

MR MAHON: Yes Mr Chairman, thank you. If one could go then Dr Young, if we could go to your paragraph 340, and I would like to read it to you. You state as follows in 340:

"Furthermore it appears as if Thomsen-CSF deliberately bought out Altech to gain control of ADS at the crucial time when the process regarding the award of the contracts was under way. In fact it would appear that this was planned from 1997 and possibly as early as 1994 with the knowledge and/or direct involvement of Schabir Shaikh."

Do you stand by that statement? --- Yes.

Now Dr Young do you know when Mr Shamin Shaikh became chief of acquisitions? --- I think it was in either 1997 or 1998, I am not exactly sure.

Are you suggesting that he was able to predict that he would be appointed as chief of acquisitions in 1997 as early as 1994? --- No but I think he was in the secretariat in charge of, or certainly involved in, planning, also involved in the defence review which determined the force designing.

Are you saying that that was in 1994? --- The defence review happened from 1995, 1996 I think, but just remember that Project Sitron was actually put on hold.

I would like just for you to explain how he was going to influence any decision, or contemplate doing that, back in 1994. --- I do not think I refer to Mr Shamin Shaikh in this particular instance, I am only talking about Mr Schabir Shaikh.

Well did Mr Schabir Shaikh then, are you suggesting that he would have known in 1994 when Mr Shamin Shaikh would become chief of acquisitions of the Defence Force? --- No but that he was going to be part of the secretariat of Defence.

What is your basis for saying that Dr Young? --- It is because I do know that Thomsen had expressed an interest in ADS from a long time back.

From back to 1994? --- I said possibly, I am not one hundred percent sure but at least ...(intervenes)

Well if you were not sure why did you refer to 1994? --- Because I said possibly. I have heard that, I have heard that from various people in the know and I cannot prove it on a piece of paper.

Would you contest the fact that Mr Shamin Shaikh was appointed as chief of acquisitions in mid 1997? --- Is that what he said?

That is my understanding of the situation. --- Yes but before that he was in an influential position in the Department of Defence.

From when? --- Probably some time just after 1994. Some time between 1994 and 1997.

Oh some time between 1994 and 1997? --- Yes.

Okay. --- Well you tell me.

Well I will, I will tell you. He was appointed in 1996 and not as chief of acquisitions, he was the director of logistics policy at that time. --- Sure, but as I said before I was not referring to Mr Shamin Shaikh in this context, I was referring to Mr Schabir Shaikh.

Dr Young this is just another one of your totally unfounded innuendos, not so? --- Which particularly?

Well the suggestion that a company should go and acquire control of another company on some sort of basis that people would be in a position to influence the award of contracts. --- No it is not innuendo. In fact as I said, previous directors of Nkobi Holdings, and I will name one of them, Professor Thembo Tsono, and I have read in the press that he was involved and there was talk of providing electronic systems for the Corvettes in that period, 1996/1997.

Dr Young if we could just go back for a moment. When was the contract relating to the combat system ratified by the PCB? --- I do not know.

It was at that meeting of 24 August, not so? --- I do not have it in front of me but it was not clear to me that the whole Corvette was ratified.

Well by 24 August you were already aware of the fact that you were not going to be getting the contract. --- We had been advised the day before, the 23rd, by the CEO of ADS that we were not going to get the contract.

Okay. In paragraph 19 of your statement you state that:

"On 27 November 1999 Thomsen-CSF International transferred 80% of the shares of Altech Defence Systems to Thomsen-CSF Holdings (Southern Africa) (Pty) Ltd and changed the company name to African Defence Systems, ADS."

And then in paragraph 20 you say:

"Thomsen-CSF Holdings (Southern Africa) was incorporated on 14 May 1996 with 80% of the initial shareholding owned by Thomsen-CSF of France, 10% owned by Nkobi Investments (Pty) Ltd, a South African company."

Now the 80% only went to Thomsen-CSF Holdings (Southern Africa) on 27 November 1999. That is on your version Dr Young. --- Yes.

Well it would seem that that question of a conflict of interest is rather thin, would it not? I mean at that stage there was no contract to talk about on 27 November 1999, on your version. --- I am unaware of having said that the conflict of interest extended back as far as here, this was just the history of who owned what. I have said that the conflict of interest with respect to the Corvette Combat Suite started on 18 November 1998 when the German Frigate Consortium was announced as the preferred supplier and subsequently when I found out that the German Frigate Consortium had proposed ADS within their contractual offer, the offer that ADS would be part of the consortium, then that conflict of interest could be extended back, I think I said it was 11 May 1998. That is what I have said.

Sorry, to what date? --- I said it would be the date that the German Frigate Consortium submitted their offer to Armscor, which I think was 11 or 14 May 1998.

Was there a combat suite issue at all on the table at that stage? --- Oh yes, in the request for information South African nominated combat suites had been documented with ADS as playing a leading role.

You are not suggesting, as I understand it Dr Young, that Mr Shamin Shaikh had any personal interest in any of these companies? --- I am not making a direct accusation, no. In fact what I am saying is that the conflict of interest arose out of his own reported conflict of interest involving his brother Schabir Shaikh.

So you are saying that if Mr Shamin Shaikh was over cautious in order to ensure that everything was on the table, in reporting something which he perceived as a potential conflict of interest, that necessarily makes it a conflict of interest? --- May I quote three sentences from the SCOPA transcripts on 11 October 2000?

I do not know what the status of those minutes are Mr Chairman.

PRESIDING OFFICER: Well we do not have transcripts or copies thereof. --- But they are available documents.

MR ROGERS: Mr Chairman it is just there sentences, as I understand it, of Mr Shaikh's evidence at SCOPA. Perhaps the witness should be allowed to read it and if people feel they need to look at the original then it can be passed around.

PRESIDING OFFICER: At least counsel for Mr Shaikh should have a copy, at least for now. We can have copies later.

MR MAHON: Can I understand just what the document is Mr Chairman, is it minutes or is it ... --- It is a transcript entitled "Standing Committee on Public Accounts. Evidence Department of Defence, 11 October 2000."

Could I just have a look at the document Mr Chairman?

PRESIDING OFFICER: Yes, that is what I said should be given to you, and if you perhaps have another copy we could do with one. Mr Mahon?

MR MAHON: Mr Chairman, yes. Could I just ask you how you came into possession of this document? --- Yes, they are publicly available documents. If you go to the, let us call it the secretariat of Parliament, you can go and get them, they issue them to you.

Are you suggesting that they issue them before they have been approved? --- They were e-mailed to us by Parliament as is.

PRESIDING OFFICER: It is a public document Mr Mahon.

MR MAHON: Yes Mr Chairman. The point I am getting at is it is not an approved, it is a draft which has not been finalised. So I do not think a draft document really takes matters any further.

MR ROGERS: Well with respect Mr Chairman no doubt my learned friend can ascertain from Mr Shaikh, who I think is sitting next-door to him, whether he has been correctly quoted.

PRESIDING OFFICER: We have a copy obtained independently of what the witness has and this was also obtained from Parliament, so on that basis I will allow it.

MR MAHON: Mr Chairman just the one point that I made, my understanding that there was already a ruling that one should refrain from quoting from this document because of the fact that it is not an approved document.

PRESIDING OFFICER: Well at this point in time we are testing, as you have Mr Mahon, the credibility of this witness arising out of this document. So that ruling was made earlier on when we did not have a similar situation here.

MR MAHON: Thank you Mr Chairman. Well possibly Mr Young can refer me to the point that he wants to make. --- Page 56, I will read three sentences. Under questioning by Mr Andrew Feinstein, Mr S Shaikh:

"I do not have a conflict of interest with FBS. I had a conflict of interest with ADS as a family member became a director this year in ADS and I have declared that conflict of interest."

The second paragraph:

"With regard to the Corvette programme that is the only area, I reiterate, that I have a conflict of interest."

PRESIDING OFFICER: Can you just hold on? You said page 56? What minutes are these dated?

MR MAHON: Did you get more than one version of the draft Dr Young? --- Not of the draft. I went to a SCOPA meeting and there was a pile of documents for everybody to take a copy and then later we got an e-mail version as well.

PRESIDING OFFICER: What are they dated, these minutes? --- This is dated 11 October 2000.

11 October 2000 and you said page? --- Okay on this particular version here, it could be different if it is a word processing document and it has been printed on a different printer for example.

What page on the one that you have? --- The one that I am referring to is page 56.

Can we have a look at that? The version that we have here which is headed "Standing Committee on Public Accounts, Wednesday 11 October 2000", does not tally with this and I do not think we can allow the question therefore and you would maybe like to see our page 56. --- I have got another version here which is printed out ...(intervenes)

(LAUGHTER)

MR ROGERS: With respect, there should not be this laughter about the versions. The witness has explained that there is different pagination, it is not that the substantive content of the documents is different.

PRESIDING OFFICER: Yes but in the light of that then there is a problem.

MR ROGERS: Perhaps the witness can find in your version of the same date the portion of the evidence in question.

PRESIDING OFFICER: You see the problem here Mr Rogers is that we need to refer to the same document. If before this hearing we have the same document from SCOPA showing different pages, I mean the suggestion could be ... I do not know, I do not want to impute anything to that but we do not have the same document and then there is a problem on minutes that purport to have come. You see I was going to allow it even though it is in draft form for as long as we had some commonality, now the difference causes problems. Now whether that is because that was transmitted digitally or whether we got whatever, it just causes a problem. --- Page 60. It is just printed on a different printer.

Yes, can we look at your page 60? I am informed Mr Mahon that there is a final version in my office of the document, not a draft version. So maybe the matter would have to stand down because I am not prepared to use drafts for as long as they are not the same.

MR MAHON: Mr Chairman that was my point, the witness wanted to refer to drafts. I have no particular need to refer to the document.

PRESIDING OFFICER: If the drafts were similar I would have used them because it would mean there is a commonality but if they are not the same I will not allow that.

MR ROGERS: Mr Chairman you said the matter would stand down. In what sense is it standing down?

PRESIDING OFFICER: My office is next door so we can get a copy of that final. We can proceed now.

MR ROGERS: And come back to it before the witness finishes?

PRESIDING OFFICER: We will come back to this yes.

MR MAHON: Mr Chairman I do not have any further questions for the witness.

PRESIDING OFFICER: Mr Dwyer?

CROSS-EXAMINATION BY MR DWYER: Mr Chairman thank you. For the record, Shane Dwyer, Shepstone & Wylie, Durban, representing the German Frigate Consortium. Dr Young I am afraid I am going to have to sort of peer around at you like that. Dr Young I am a shipping lawyer, so I am afraid I am lost when we get to the technologies that you refer to in your evidence but perhaps you can help me in clarifying some of them. Before we get there though I was interested in one of your replies to my learned friend Mr Kriegler's questions. Perhaps you can help us with that for a start. As I understood the evidence, referring back to earlier evidence from you, that you viewed this whole issue of legal proceedings against the background that you had decided first to exhaust internal remedies. Is that right? --- That is correct yes.

And that as I understood it was as you understood that firstly you would go to JPT or internally in Armscor and the Ministry of Defence. If you did not achieve anything there you would go to certain external options that you felt were open to you.. --- Yes.

And all of these presumably was to achieve what, what you felt was fairness or to achieve compensation or achieve appointments, rectification of the contract? What exactly was your purpose in these various alternatives? --- My first prize, if I can call it that, my first option if I could choose would be rectification by means of reinstatement.

I think that probably under Mr Kuper's questioning you indicated that it was still not too late. Is that right, is that my recollection? --- I was saying it is probably getting towards too late but you know you cannot quantify it in absolute terms, you know, when is too late. It certainly was not too late when the SIU first approached me.

Right. That was the first of your external options? --- Yes.

And I think Mr Kriegler put it to you that it had been publicly announced that they would not take part in this investigation, sometime in January this year, was it? --- I think that is correct.

But your response was, and this is where I need your assistance, I did not make very good notes, did you say that because it had then been referred to the Auditor General you felt that this took the place of the special investigatory unit? --- It was referred to the Auditor General who then referred it to the Public Protector and I also referred it to the Ministry of Defence who said they were initiating a complete investigation and that I must be patient because these things take time and I was going about it the right way.

So what are you hoping will come out of this investigation Dr Young? --- Well it would be good if the powers of the special investigating unit, including the powers of rectification, were embodied in one of these three members of the joint investigating team.

So that is what you are waiting for, you are hoping that either the Public Protector or the Auditor General are going to say to government you must cancel those contracts and you must substitute you, is that right? --- I can hope.

So your evidence here has to be seen, does it not, in the light that this is not a dispassionate answer of a call by the Public Protector to assist him in his investigation, that you have a motive, is that not right? --- The Public Protector invited me and notified me to attend and not all that long ago either.

Had you made any approaches to the Public Protector's office? --- As I said this matter was passed from the Auditor General to the Public Protector, I did not approach them.

Well I am sure the Public Protector will know whether that is correct or not. --- I would be very happy to refer to a letter from the Auditor General in that regard.

No, no, this is the Public Protector's inquiry, so he will know what the answer is.

Can I then go to your aide memoire, and I am really only going to pick up on three issues as they affect my client directly or possibly. The first is paragraph 270. You refer there to a visit to your premises by Klaus Katenkamp and Ranier Hohfeld of GFC. Now that was on 18 December 1998 prior to the best and final offer stage to inspect and assess the IMS, and we pause there. I suffer from the problem that my client sits in Germany and I sit here. I have not therefore been able to get a comprehensive instruction from them regarding that visit, but I have a shorthand message from them as far as they can recall, because this is some time back. Can you tell me, or tell the Public Protector, what exactly happened at that meeting, what did they look at, what did you show them? --- Yes. We first took them into the boardroom, I think with my co-director Gerhard Kruger and the IMS project manager, at the time Etienne de Villiers, and we gave them a presentation on the IMS.

What sort of presentation? --- As far as I can remember it was an overhead projection presentation on the IMS of how ...(intervenes)

The theory of it? --- Quite a lot of detail, there is quite a lot of detail about the protocols ...(intervenes)

Well I imagine theory can be details. Their comment is it was a theoretical presentation with the aid of transparencies. --- That is the first part.

Okay, and then? --- Then we took them to the laboratories and we showed then what we call the IMS testbed, which is a very comprehensive and very expensive set of equipment, lots of different equipment, we are talking about this Multibus, to all the equipment on which we had been instructed, for want of a better word, to develop the IMS on and we showed them all the different, we have got various bits of test equipment which proves that it is working, that shows that messages are being transferred and they specified allotments of time, the cable, our building consists of various parts and we have basically sort of tried to emulate a ship would be there, pieces of what we call the fibre cable plant in various rooms, we showed them that, we showed them that we had basically designed and actually had a system according to the theoretical design actually working. At that stage working according to the specification.

Would it be fair to say that, as I have been advised, that no functional data was presented? --- What does functional data mean?

I do not know, that is why I was saying I am just a shipping lawyer. I was hoping you could help me. --- Functional data. Data is normally what you capture from a test procedure, like a set of test results, and normally that is not all that comprehensible to people less, you know intimately involved, but you provide if you are talking about functional specifications, concept descriptions, system design documents, interface requirement specifications, system test plans. We certainly showed them. Whether they took anything away with them I cannot remember.

Well they say you did not show them, if that is what was meant, but I think the point that they are making is that it was merely the principle that you advised to them and that it was not in any great depth...(intervenes) --- Well they were not really there for that long.

That is really the point. --- A few hours.

In your statement here you say:

"They advised us that they were very satisfied with the IMS."

From that I presume you intend to denote that they were totally satisfied perhaps and that therefore you had sold them on the system. --- Yes pretty much so. I mean the thing that the Navy was talking to the GFC about was this concept of the integration of the Combat Suite based on a single FDDI LAN and it was talked about at various other fora and when they came down there and actually saw it they were fairly, can I use the word, impressed that this thing was not just a concept or a figment of someone's imagination, it was a real thing based on real commercial off the shelf building blocks, all the system design had been done in accordance with that evaluation report where one of the representatives was also Dr Wolfgang Vogel of GFC, who is Klaus Katenkamp and Ranier Hohfeld's boss, and basically the whole system was working, was feasible and there were no risks.

Well it was not really there problem though, was it, I mean they build the ship, they build the platform, Blohm & Voss. Is that not right? --- I do not think so because in terms of this ESAC agreement there is a single contract which is divided into three parts.

Have you seen this contract? --- No but I have heard about it. I also have been told that there is joint and several responsibility.

By who? --- I cannot remember exactly but probably Commander Ian Egan Fowler, his name springs to mind.

You cannot remember if it was him but you certainly have not seen it, it was a classified document. --- No I definitely have not seen it.

So that is speculation that there is joint and several liability, is it. Or hearsay at the very best. --- Hearsay from somebody who I think would know.

Can we then go on to 238 and I think we have to read that, do we not, with paragraph 501 of your final version, which was really your summary or your points of claim if I can call it that, and that is where you list where you list what your complaints are and where you say you have been unfairly dealt with and presumably where you are hoping that the Protector, or someone, is going to assist you and reinstate you as the contractor, presumably also for the supply of the IPMS simulator. Is that correct? --- Yes. Sorry, could you repeat the question?

Looking at 501, starting where we did that you said that you were hoping that the Public Protector or one of the entities would come to your assistance and reinstate you at best as the chosen, preferred or appointed contractor, or subcontractor. Do we assume that you are also hoping that you will be reinstated for the supply of the IPMS simulator? --- I certainly would hope so but I think more importantly in the context of this testimony what I was indicating is it would seem now, that because we are crying foul we are now being penalised on something where we had been selected. That is my point.

So you are suggesting that the GFC has intentionally deselected you because you had blown the whistle so to speak, is that what you are suggesting? --- I am saying it is possible. I cannot see any other reason, if we had been selected and we were being asked to extend our offer for, I think it is certainly more than a year, it might be going on for two years, why it should suddenly happen. There is no reason for it.

Who is Mr Knight? --- He is a director of my company, he is the technical director.

And it was he that went to Hamburg in April of 2001 was it not? --- That is right yes.

Have you got with you the minutes of the meeting that you held there? --- I do not know.

You have seen them though? --- I have seen them.

Signed by Mr Knight? --- He signed them there and then that day, yes.

And the purpose of that meeting, was it not, was to review your company's ability to provide the simulator? --- That is correct yes.

Can you tell us what the simulator does? --- The simulator is a training system for onboard maintainers of the ship's machinery.

And? Navigational equipment? --- I am not fully aware of ... The platform management system is a very, very expensive set of subsystems that control things from air conditioning to the diesel electrics, all kinds of things, so I cannot say whether it included the navigational equipment.

Did you not have anything to do with this part of it? --- I am the managing director, I do not have everything to do with the details of writing specifications or even evaluating subsections of quotation proposals.

Do you know to what extent this system would have to rely on subsystems purchased from outside or off the shelf? --- Yes to a certain degree, yes I know.

Do you know who did in fact get awarded this contract? --- I think Siemens.

Do you know where you were going to get your subsystems from for this system? Siemens was going to supply it? --- I do not know whether it was all of them. If you are talking about navigation equipment, then I do not know whether Siemens make navigation equipment. I do not think they do.

May I just remind you then and give you a copy of this minute? Perhaps to sort of formalise it, if you look on the second page do you see a signature above that of Mr Knight, is that his signature? --- Yes.

So you are happy that this is a version of the minutes of that meeting with which Mr Knight was satisfied, therefore presumably this inquiry can accept that it correctly reflects what was discussed at the meeting? --- I was not at the meeting, so I cannot say it accurately reflects it.

Well Mr Knight thought so, perhaps we cannot put it higher than that. --- It seems as though the other minutes also do not completely accurately reflect exactly what was said and done in meetings.

Can we accept that Mr Knight obviously thought that they did? --- I just want to point out thought that he went there and I think somebody was taking minutes on a laptop computer during the meeting and at the end of a hard day's meeting with ... These minutes were printed out, put in front of him, he scanned them probably for 10 or 0 minutes and initialled them. So I cannot ...(intervenes)

Did he tell you this, that he scanned it for 20 minutes, that he had had this long meeting and did he say to you I am terribly sorry, I actually signed some minutes in Germany that I did not really think reflected what went on there? --- To be quite honest I would much have preferred if the minutes had been sent to us by fax and that we would have had time to ...(intervenes)

Well how do we know that they were not? --- They were not because he signed them there and then.

And did he bring a copy back? --- I think he did yes.

Okay. Well let us just take it then at face value that these are minutes, or purport to be minutes, they certainly are signed by Mr Knight. You say they probably, or may not, reflect what happened at that meeting because he had travelled all the way there, he was tired, they whipped them off and then they made them sign them immediately, if we put it in that context.

PRESIDING OFFICER: But Mr Young this meeting according to these minutes was held earlier this year. --- That is right yes.

Are you aware, and Knight works with you? --- Am I aware that he works with me?

No, Knight works with you? --- Yes he does.

And if there was anything wrong between then and now he would definitely have pointed it out to you, would he not? --- Well actually there is something wrong in that I think that these minutes were used to justify our deselection and I immediately wrote a letter to them asking for a proper justification of the deselection and if they wanted now to refer to the minutes they could easily have done so.

You say they were used to justify your deselection? --- Maybe.

When you say you wrote to them, who did you write to? --- I wrote to Mr Thomas Stern, who is also a signatory to these.

MR DWYER: Sorry Mr Protector. If you look at the third page, is that a letter from Mr Stern? --- Yes.

PRESIDING OFFICER: When you wrote the letter obviously you had discussed the matter with Mr Knight? --- Yes, sure, yes.

And when you had that discussion, that discussion must have had reference to these minutes. It must have. They only had one meeting in Hamburg that we are talking about, is it not? --- Yes he gave me a copy of the minutes, whether he did it right then or we got it by fax, I did not sit there with him and we read the minutes together.

Yes. This was an important minute in the sense that you were even complaining and saying it was used to deselect, or was the basis for deselection. So it was an important minute to that extent. --- Well I asked for a reason.

A reason for your deselection? --- That is right yes.

But you did not say for instance if in that minute which you used as a basis for deselection, it is not correct in some respect? You did not say anything to that effect? --- I did not refer to the minutes.

You did not refer to the minutes? --- In my letters I just asked for an explanation.

Yes but the point I am trying to get to Dr Young is that if something was wrong in the minutes, Mr Knight would have certainly said even that minute which was used against us is not correct or is inaccurate in some respect, nothing was ever said to that effect? --- Okay, one thing that I was not all that happy with was what is said here: "Projects of this complexity for ship simulation have not been realised by CCII in former times."

You were not happy with it, but was Mr Knight happy with it? --- He as not all that happy either.

Are you saying it was incorrectly recorded or you were not happy about what it said? --- Well it does not accurately reflect the capability of, or lack of capability of, our company.

But he did not say it does not accurately reflect what was discussed? --- We did not challenge the minutes, I think that is what you are trying to say. We did not challenge the minutes directly but I did write a letter asking for our deselection.

And if something was recorded incorrectly you definitely would have challenged it? --- I am not so sure that. I have been much more busy with the IMS matters. This was more his department.

MR DWYER: Well can we just look at this? In fairness if you want to say now it is wrong despite the minute then you will have an opportunity of saying so. Let us skip down to the last paragraph on page 1. Just read that paragraph. --- "CCII clearly defined", that one?

Yes. ---

"That the offer is limited to cover the simulation software and the hardware. The software development tools, the IPMS software package, parts of the software source code and the support for interface development are to be considered to be provided by Siemens free of charge."

Okay, so Siemens was expected to pay for these component parts, right? --- Oh no, you see what Siemens is developing is the IPMS itself, okay, but there is a big overlap, so things that they are already doing, like software source code, they also give to us so that we can then implement that in the simulator. It is not as though they are paying extra, they are just allowing us to use it, otherwise you have got no idea of how to interface to their equipment.

Okay, let us go over to the second page, the second paragraph. Read that. "CCII stated..." ---

"to use for the simulator software C plus plus and realise that a conversion for the Siemens software tool X-MAT is required and that a detailed interface clarification would be necessary."

The third one is the one that you said is the one you were not all that happy with, Mr Knight was not all that happy with. Where it says "equal automation plants for simulators have not been built or developed yet", is that what I understand that to mean, that you have not done this before? --- We have not built an IPMS simulator before but we have been involved in the IPMS, the project, the SAS Trackensberg and helicopter control systems for the Agulhas which are of equal complexity and very, very similar in nature both in terms of ...(intervenes)

But you have not built a simulator like this before? --- No we have not, no. We do not do this every day, we very seldom ...(intervenes)

Absolutely, but the point that was obviously decided or agreed between Mr Knight and the BNV people was that you had no previous experience in building a simulator like this before and that is what that records, does it not? --- We had not had the experience of building an IPMS simulator before, no, but things very, very similar. That is why we were chosen by the Navy to do so.

Then we go on to the next paragraph:

"Preconditions for start of the software development is the availability of the IPMS ship software package."

That you say would have to come from Siemens and Siemens presumably were still developing that, I do not know. Do you know? --- Well they developed these things for lots of different ships including commercial ships, so you know they have got certain versions but they are developing the technology all the time, so there could be smaller changes in the previous version they had to the actual one, so they certainly had it, or most of it.

"The delivery time of 30 months including hand over has been verified and could be shortened to 24 months with employment of additional specialists."

Do I understand that to be that the best you could do was 24 months? --- That is what Mr Knight said.

And Mr Knight is in charge of this programme? --- He is the projects director.

And you indicated that you are managing director and have other things, so you do not really know all that much about this particular project. --- No I said I did not know whether it included navigation equipment. It is the first time it has come to my knowledge.

And it seems then from, as it goes on, that the software would be available mid 2002 and this implies delivery of the system in the first half of 2004. Right? That is what it says there. --- Yes. Where are we now?

Same paragraph. --- Third paragraph?

Fourth. --- Okay, yes.

Do you know when the first of the platforms is to be delivered in terms of this contract? --- Platforms to be delivered?

Yes to the ships. --- Yes, I think it is towards the end of next year.

That is 2002. --- Yes.

The next one, do you know? --- I think it is a year later.

2003. So what are we going to use the system that if you are going to now be reinstated you hope to build, when we have got a ship arriving in 2002, another in 2003, we have personnel that have to be trained to navigate these vessels, what do you think the Protector should do in reinstating you about getting the crew of the South African Navy trained on this simulator that you are going to build? --- I am afraid you are completely wrong on these points. When the first ship gets delivered to us at the end of next year, then it gets handed over for fitting of the Combat Suite which will take a year, between a year and two years to do the Harbour Acceptance Trials and the Sea Acceptance Trials, okay. The initial operators of the ships will be trained to sail the ships from Germany and navigation equipment is not something that requires extensively trained people. Those people were be able to sail the ships and there are people trained in the Navy already to get the ships from Germany to here. This simulator was something to support the ship for the next 15 to 30 years and in any case, what is most important here, I am quite surprised by your question, is that we supplied our first offer about two years ago. It was GFC who requested two extensions amounting to I think close to two years. So if time was such a critical thing why did they suddenly shift the schedule risk from them to us if this was going to be a problem?

Is that an answer to something, this question you have just raised? --- Yes because you said what are they going to do with the ships. They are going to drive them here and then they are going to fit the Combat Suites. They do not need to have this simulator straight, straight away.

Well I am sure in the evidence tomorrow we can canvass that with representatives of the Navy. Price, I see it has increased 36, 29%, then with escalation by 36%. --- Yes that is when one adjusts figures for escalation, remember I said our first offer was done about two years before this and it is typically in the industry there is between 11% and 15% of real escalation per year. So when one is quoting at 2001 rands compared to 1999 rands it is definitely not beyond the pale to have an increase of price in this order of magnitude, but moreover when we first quoted we had not been provided with final requirement specifications so we actually had to guess what they wanted and when we finally quoted we were given the requirement specification and what I did is I made sure I gave it to another engineer who then did the planning down to a very, very detailed level so that his new estimate was not polluted by what was on our minds before and he determined that there was a slight increase in the level of effort and the scope of work required. So a small percentage, I would say 5% or 10% came from the extra level of effort required to meet the new specification, only provided to us this year and the other came from quite justifiable year on year price adjustments due to inflation.

Okay sorry, it has been pointed out that in fact 1999 through to this quote is actually a 56% increase. --- It is divided into two areas. One was an extra level of effort and the other one was based on a new specification.

Would it surprise you if you were told, and I am not saying that is the case because I do not know, that issues such as the late delivery, the 2004, and the increase in price could well have had an impact on the approach, would that surprise you? --- I would think that it was not late delivery, I think we had always quoted approximately the same. What one normally does in instances like this is you quote 30 months ARO, that is after receipt of order or after EDC, effective date of contract, and if the contract comes two years after your initial offer you cannot make up those two years, it starts then. We in good faith said that if the time scales are so critical we will apply extra people to meet the time scales. I think that that is quite fair.

You would be a subcontractor. As we discussed was the case with ADS, Blohm & Voss, or the German Frigate Consortium would be responsible for your assistance and protect the time element, is that not right? --- Yes.

So that if there are milestones set in any contract for provision of sections or completion and delivery of the total system, your timing would impact on the obligations of the main contractor in so far as those milestones are concerned, right? --- Yes but they should have taken that into account when they are the ones who asked for repeated extension. We cannot make miracles ... We would declare the preferred supplier. We cannot make miracles and deliver something in six months when we had previously estimated and quoted 30 months, we cannot do that. It was them who changed the time scale baseline, not ourselves.

So you still say that the reason you were not chosen, or the reason that you were deselected, if in fact you were selected, I am not sure that that is correct, you say is because you had rocked the boat? --- It would appear so. I am not stating it categorically but that is the feeling one gets.

But if there were reasons such as the ones I have mentioned, you would have to agree that that had nothing to do with it. --- I do not feel that those reasons were valid to deselect us. I did not mention the price, you asked me about the price. We in good faith provided a new price, not that outlandishly different from the first one and ...(intervenes)

56%? --- Well if you take into account the new requirements and two years worth of escalation, but anyway these things are subject to negotiation. If we had misinterpreted the requirements then there is no ... If you have selected a preferred supplier you do not immediately disregard somebody based on the first quote. Mr Knight actually never went overseas to see Blohm & Voss, he went on other business, and almost as a matter of courtesy he said we might as well go and see them at the same time. But it is very normal actually when new requirements are provided to a selected preferred subcontractor that you then get to negotiate the exact requirements, including interpretation thereof.

Can I take you to 340? Then if I can take you to 351. Have you got a copy of this contract with you? It purports to be a contract between Thyssen and FBS. --- I do not think we have it here.

Where did you get this from? --- I got it, I saw it two different places, one on the same set of digital documents.

You are saying that the FBS-Thyssen contract was part of the suite of documents that some deep throat sent you from somebody with classified documentation? --- That is what I am saying, and I will say that this was a draft, it was not a signed document, but we understood it to be legitimate because I know that Marion Evans of ETV challenged Thyssen South African on the authenticity thereof and it was not denied. So I am of the opinion that such a contract does exist, well certainly there is a draft of it and I am quite happy to make a copy available and I can tell you the forensic investigators from the Auditor General's team have copies of it.

Why did you destroy some of these digital leak documents and some not? --- I said I got it from two different sources.

So there are two deep throats? --- Probably. Well it could be the one source but you get it from two different secondary sources. This was not a classified document and I am quite happy to see whether we can find a copy.

Well my instructions are, and I have to say in fairness to you that I am not saying I can lead evidence because my evidence is in Germany. If it becomes critical I am sure the Public Protector, if he asks us to make that evidence available we will do so, but from the German side where my instructions come from, that document was the first draft of a conceptualised idea that never went any further, that no contract of that sort was ever concluded and what is more curious Dr Young, you need to talk to your deep throats, is that document was one of a number that were reported stolen in a burglary of FBS's premises. So I suggest before you start drawing assumptions and making innuendos based on documents the authenticity of which you have no evidence whatsoever, that you look very carefully at your sources before you make these allegations again. That is all I have to say. --- Well I can say I certainly had nothing to do with the sourcing of these documents, they came to my attention and I believe that they have actually been in the public domain for quite a while, probably for at least a year to 18 months.

PRESIDING OFFICER: Is that all Mr Dwyer?

MR DWYER: It is, thank you.

PRESIDING OFFICER: Thank you. Mr Webber do you want to ...(intervenes)

MR WEBBER: Mr Chairman yes I think I can easily finish, I only have two short aspects to cover.

PRESIDING OFFICER: Alright, please proceed.

CROSS-EXAMINATION BY MR WEBBER: Dr Young do I understand your testimony thusfar correctly on the basis that you say that Armscor had over a period of time invested a considerable amount of money in supporting you in your development of the IMS and related products? --- Yes I said approximately R20 million. I heard yesterday a quantified figure of 23.

Yes I have certainly had it on my notes to say it was somewhere between R20 million and R30 million and probably from 1994. Would that be reasonably accurate? --- Correct.

So it would be true to say that Armscor obviously had a reason to see that your company was in some way secure, they had invested substantially in you? --- They were secure at that time but what eventually happened has actually put ... That security is no longer there because of the huge investments that we put in terms of our own money and time for a development which has not come to fruition. So although there was a temporary security at that time, actually the future is now at risk because there has been no realisation of our own investment. That is the issue I was trying to make.

Just as a matter of interest, would you say that your investment in these projects matched that of Armscor, was greater than Armscor? --- No I think I have said in the region of R10 million at selling prices.

Okay, so I mean it would be true to say then that it would be Armscor's intention to try and support the local industry and to try and keep C2I2 operational? --- Certainly at that time. It no longer appears the case.

Well bearing that in mind and referring back to the minutes of the PCB meeting of 24 August 199 which we have referred to earlier, so I do not think we have them out again, you have read them a number of times, and particularly in regard to the minutes number 10A and B. --- Yes.

In that minute it seems to appear that what was discussed at that stage was the potential risk in the Databus, would that be correct, in A and B? --- The potential risk yes.

Nothing was minuted as saying that Armscor or the PCB were afraid of potential litigation as a result of your so-called deselection? --- They did not say so in those minutes.

It does say in C though that Mr Swan and Rear Admiral Howell were to meet with you to discuss the matters raised in the minute. --- That is right.

And litigation was not mentioned in the minute? --- In?

In those minutes? --- Not in those minutes no.

So if Mr Swan says that after the meeting was arranged and he came down and discussed with you two aspects, that as far as he was concerned the major aspect which needed discussion was the potential risk and the fact that a performance guarantee was looked for, would that be correct? --- It is completely incorrect.

Okay. So the fact that the minute says that is what Mr Swan should discuss with you is always incorrect? --- Incorrect yes.

And if Mr Swan said that he indicated to you that he was extremely concerned about the potential loss of expertise as a result of your deselection, would that also be incorrect? --- I cannot remember him saying that.

But would it be consistent with the fact that Armscor had spent substantial money in your company in order to maintain that capability? --- Are you referring to Armscor as a whole or Mr Swan?

No clearly Armscor, Mr Swan is not Armscor. --- Okay, because Mr Swan has certainly never expressed that Armscor sentiment to me.

So it was not discussed at that meeting, that he was worried about the fact that you might lose, that South Africa might lose that expertise? --- I remember two things. It was not a minuted meeting and it was not really possible to take notes and I had also confirmed with Mr Swan, it must have been May this year, what we did discuss, and he certainly did not bring that up again, he basically confirmed what ...(intervenes)

Can we come back to that, because that is the second aspect that I would like to discuss with you. --- I cannot remember him expressing that sentiment of being very concerned about ...(intervenes)

Okay but you cannot disagree with that either? --- I cannot categorically deny that.

But certainly there were two issues that were cardinal in the discussions. The one was the provision of performance guarantees ...(intervenes) --- No I said not. I said as far as I am concerned the only matter of importance was us withdrawing our threat of legal action. As I said in my testimony yesterday, once we had conceded to that, therefore effectively the meeting adjourned as a meeting and thereafter we made small talk where Mr Swan talked, and he reiterated this to me in our telephone conversation, he said Richard in my personal capacity if I was the CEO of ADS or Thomsen then I would have asked you for a performance guarantee and he confirmed that to me. He never said as the CEO of Armscor I am asking you for a performance guarantee, will you give me one. That never happened.

But is that version consistent with the fact that you ... Well I do not know whether you do accept that 10A and B reflect what was discussed and what instructions were clearly ... Of the, sorry, of the minutes of the PCB meeting of 24 August are correct. I do not know whether you accept that as being correct or not but at face value on the document, would you accept that that was what Mr Swan was instructed to discuss with you, because C follows A and B, is that not right? --- Yes.

But you do, albeit that you perhaps have a different way of interpreting how things transpired, you do concede that the provision of a performance guarantee was discussed. --- No. Mr Swan said if he was the CEO he would ask us for a performance guarantee for the whole Corvette.

But then you are admitting that it was discussed. --- Yes but that was almost in jest. You do not ask for a performance guarantee from a company for R300 million. He said Richard, this was just something that he made an observation on, it was not something that he came ...(intervenes)

Dr Young my question is just so simple. Do you not agree that the provision of a security bond, sorry a performance bond, was discussed, whether it be in jest or otherwise? --- I am going to give you a qualified one. It was in the context of a complete Corvette, not in the context of an IMS at R38 million.

I did not actually ask you, all I asked you was a performance discussed. --- I have answered it. Yes, with that qualification.

Okay, and in regard to the litigation, did Mr Swan say to you that he could not in any way stop the programme and that if you chose to get involved in litigation the best that Armscor could do to try and assist you and to keep your capabilities running and C2I2 still in business, he would endeavour to find you alternative work? --- He did yes.

That was discussed? --- Yes that was discussed.

And did he then say to you that what he would arrange is a meeting with you and ADS to see whether that could be achieved? --- That is right yes.

And was that meeting arranged? --- There was only one meeting where we discussed the idea of the strike craft and IMS going on the strike craft.

So a meeting was arranged and was that a meeting arranged by Mr Hanafey? --- No I think it was arranged between myself and Mr Moynot.

Well I do not think it takes it any further. My instructions are that it was arranged by Mr Hanafey but be that as it may. --- No not as far as I know. Now you are talking about a different meeting. That was the meeting where we had the whole team, where we asked the question is the IMS selected yes or no. That is a different issue.

Okay then may I turn to paragraph number 388 of your aide memoire? You are referring there to a letter dated 4 October 2000 addressed by Mr Llewellyn Swan to Mr Chippy Shaikh at the Department of Defence. --- What is the paragraph number?

Mine is 388. I do not know, we seem to be working off different ... Sorry, it might be 387 on yours. What it says is:

"In the light of the aforegoing I seriously question whether Mr Swan actually compiled this letter."

That is what I am referring to. --- Yes okay.

If Mr Swan says that is his letter and that that is his signature, would you accept that? --- Yes.

Well I put it to you that is in fact what he does say and then can we on that basis accept that perhaps the innuendos which you have put in from paragraph 380 to 388 are incorrect? --- Okay, that he compiled the letter, is that what you are saying?

That he compiled the letter and that he signed it. --- He compiled it and signed it?

Yes. He did not physically type it and you are quite correct that there is a spelling error in his name. --- If he says that I cannot deny that. I mean I do not know, I was not watching while it was happening. It just seems ...(intervenes)

Mr Swan says he did ...(intervenes) --- Okay then I cannot deny it.

And therefore all these innuendos can fall away? --- Yes.

I have nothing further.

PRESIDING OFFICER: Yes, I think that should bring us to the end of the day. I have a page 60 and if at all, depending, it was just the three lines, three sentences, maybe that could be put. Could you hand over these pages?

MR ROGERS: Mr Chairman just while that is being done, can I enquire ... Oh is there somebody else?

PRESIDING OFFICER: Mr Maseremule?

MR MASEREMULE: Yes, I just wanted to establish via the witness if he is going to be available tomorrow.

PRESIDING OFFICER: Which one?

MR MASEREMULE: Dr Young.

PRESIDING OFFICER: Yes.

MR MASEREMULE: Unless we finish today but it does not look like it.

MR ROGERS: Mr Chairman that is what I was going to raise. I have indicated my difficulty, my own difficulty, tomorrow and I was hoping that we might get an indulgence from you and perhaps sit until 16:30 and finish with Dr Young.

PRESIDING OFFICER: Is there a chance that we could finish at 16:30?

MR ROGERS: There was a chance that I could finish, I am not sure how long my learned friend is going to be, if he wants to ask some questions. He had said yesterday I understood not, but ...

PRESIDING OFFICER: Are you still going to?

MR MASEREMULE: I do have a few questions.

PRESIDING OFFICER: You see then 16:30 goes out. You see I would not have, depending on counsel and if there is a chance that we could finish Dr Young today, that would be for the (indistinct) of everybody. So it is between, what is the feeling of counsel? Should we finish with Dr Young today which might mean 16:30 or somewhere around 17:00? If that is acceptable ... Ms Dreyer?

MS DREYER: Mr Chairman I would just like to say that I have no questions on behalf of the Ministries of Finance and Trade and Industry.

PRESIDING OFFICER: Thank you Ms Dreyer.

MR MAHON: We have no objection at all and we think it is a sensible suggestion, with respect, thank you.

PRESIDING OFFICER: Yes. Then may we deal with this matter then Mr Mahon, we have stood it down, of these three lines and then see how the rest of the counsel ... This I have it now as the final version and it comes from my office and this is out of direct communication with SCOPA Mr Mahon.

MR MAHON: Thank you Mr Chair.

PRESIDING OFFICER: Are you ready Mr Mahon? Sorry, you would like a few minutes? --- Yes I have to have a five minute break, sorry.

Yes I think it is a fair request. We will take five minutes and please let us make it five minutes.

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