UNITED DEMOCRATIC MOVEMENT

Open letter to the Auditor General, Public Protector and the Directorate of Public Prosecutions
re Terms of reference brief for investigation into Arms Procurement Deal
by Bantu Holomisa as UDM President

2000-07-18

Auditor General
Public Protector
Directorate of Public Prosecutions

Dear Sirs,

TERMS OF REFERENCE BRIEF FOR INVESTIGATION INTO ARMS PROCUREMENT DEAL

You will recall that the 14th Report of SCOPA had recommended that the investigating Agencies together with SCOPA would draw up a Brief or Terms of Reference for the probe into the arms procurement deal. To date it does not appear that the recommendation has been carried out.

UDM has on a number of submissions insisted on the implementation of the 14th Report because we believe it carries the mandate of Parliament and the national consensus expressed through the public representatives in that body.

We note with concern that the Chairman of SCOPA expresses his reservations on the methodology of the hearing as adopted by the investigating Agencies and has hinted that he might not participate in it in its present form.

If SCOPA’s participation is in doubt and bearing in mind that it is the body charged with the responsibility of oversight over public spending and arms procurement in particular, with regard to which there is controversy,

a) To whom are the investigating Agencies accountable?
b) How do we view the Speaker’s contention that SCOPA cannot in law subcontract in the light of the on-going hearing?

The response to these queries will determine the credibility or otherwise of the on-going investigation. It is submitted, with respect, that the Agencies seek clarity on these issues from the President or Parliament, in particular SCOPA whose responsibility it is to oversee the process.

Notwithstanding the position the Agencies may adopt, UDM has definite views on how the process should proceed. We submit hereunder our suggested Terms of Reference that could be considered as guide to the current investigation:

The probe must be officially gazetted with clear Terms of Reference and time frames.
In the light of further revelations of the possible proliferation of irregularities in the entire deal, the investigations must go beyond examining sub-contracting procedures and cover the entire arms procurement transaction including the main contractors. What was the motive for the Cabinet Committee to opt for a British Aerospace expensive purchase against the advice of Defence and arms procurement negotiating team.
Attention must be drawn to the sub-committee, which was chaired by the President, which apparently positioned itself as the “Tender Board” in the allocation of contracts with the view to bringing clarity in its role in the whole saga.
The need to empower the investigating agencies with the same authority previously enjoyed by the Heath Special Investigative Unit i.e. powers to cancel irregular contracts, etc.
Were any monies paid to individuals or political groups by tendering companies in order to facilitate the granting of contracts to themselves, such as in the case of British Aerospace which paid the ANC an amount of R5 million just prior to the awarding tenders?
Special focus be made on the possibility of individuals or groups holding public office being beneficiaries of monies or shares from international companies which have been awarded contracts.
The role played by individuals in the sub-committee chaired by the President in the awarding of contracts and whether any of them received any payments or shares.
Are there any family members of the Mbeki sub-committee or close associates benefiting from the awarding of these contracts?
Whether the Black empowerment companies who were awarded sub-contracts have the capacity to perform or they were mere fronts for the main contractors?
What were the motives for EADS in subsidising 30 motor vehicles sold to politicians, Armscor/Dennel personnel, civil servants and Defence personnel as they have publicly confessed?
Whether the executive deliberately misled parliament and the public about the true cost of the arms procurement exercise when they quoted it at R30billion when in reality it is +R50 billion to date.
According to the Defence Review, R9.7 billion was focused for 1999 – 2006 financial years, as approved by Parliament. Who authorised the R30 billion expenditure? Did Parliament endorse this expenditure?  Whether the Defence Review, which identified the Defence needs which culminated in the current arms procurement was a genuine analysis of our national Defence needs or a smokescreen to cover self-enrichment by individuals in the ruling party circles.

(12.1)With special reference to the estimated R4 billion which ANC members who own sub-contracted companies in the arms procurement deal will earn and in particular the role played by the former Defence Minister, Mr J Modise and General A Moloi in establishing the following companies, as suggested by financial media:

-         African Defence Systems (ADS)
-         Futuristic Business Solutions
-         Applied Logistics Engineering
-         Nkobi Tom
-         Temoso Technology
-         M.K. Technologies
-         X Cell
-         Dynamic Cables

(12.2) Are these companies conduits for channelling arms procurement funds back to ANC coffers? This must be investigated.

(12.3) Were these companies lobbied by the main international contractors who were awarded procurement contracts? Were they paid any monies by them and if so how much?

(12.4)Did these sub-contractors lobby any members of Parliament and ministers? If so did they pay them any monies and how much?

It is a worrying concern that the public is only informed about the investigation through the media revelations because Parliament, SCOPA, the Executive, and the three investigating Agencies have failed to inform the public about the Terms of Reference of the investigation. What is being investigated is shrouded in secrecy.

Kindly advise

Yours Sincerely

Bantu Holomisa
UDM President