Press Statement by :

Economist Allied for Arms Reduction - South Africa

14 October 2003

ECAAR-SA
3B Alpine Mews
High Cape
Cape Town 8001

021-465-7423
ecaar@icon.co.za 

Economists Allied For Arms Reduction--South Africa has today served papers and at 10am on Thursday, October 16 will apply to the Cape High Court for an urgent interdict prohibiting the SAS Amatola from entering South African waters or ports until our litigation to cancel the arms deals is resolved. The corvette/frigate is scheduled to leave Hamburg on October 15, and to arrive in Simon's Town on November 4.

The Joint Investigation Team report into the arms deals was tabled in Parliament in November 2001. ECAAR-SA filed an application one week later in the Cape High Court for the foreign loan agreements which give effect to the purchases to be set aside. In March 2003 ECAAR-SA won discovery of the International Offers Negotiating Team and Financial Working Group documents that warned the cabinet of foreign exchange and other risks involved with the arms deals. Despite two subsequent notices for the President, the government and the Minister of Finance to be held in contempt-of-court, those documents have still not been handed over.

In August the Judge President instructed the legal teams to agree to court dates so that the matter could be resolved before the end of this year. As illustrated by its continuing non-compliance with the March judgment, the government has sought to stall and delay our litigation in a vain effort to exhaust ECAAR-SA mentally and financially. The intended arrival of the SAS Amatola prejudices our application to cancel the arms deals.

Press coverage as early as 1995 reported that [then] Deputy President Thabo Mbeki had improperly intervened to favour the German bids for the naval contracts. It subsequently became evident that the arms deals were government-to-government transactions in which the needs of the Navy, the Air Force and, most especially, of South Africa's people were irrelevant. Germany would win the warship contracts. Britain and Sweden would win the warplane contracts, and Italy would supply helicopters.

It is apparent that the corvette tender process failed both basic contract law and the South African Constitution. Section 217 (1) requires that government procurements must be conducted in accordance with a system which is "fair, equitable, transparent, competitive and cost-effective". The Supreme Court of Appeals in September set aside a municipal housing tender in Klerksdorp because it failed these tests.

In violation of this constitutional principle, the arms deals were predicated upon the economically nonsensical and internationally discredited proposition that expenditure of R30 billion on armaments would generate R110 billion in offsets to create 64 165 jobs. Offsets are prohibited by the rules of the World Trade Organisation because they cannot be monitored, and are notorious as an invitation to corruption. That the government now faces a major political crisis because of the arms deals is not unexpected.

Chapter Seven of the JIT report confirmed that the corvette tenders were riddled with irregularities and malpractices. Even Armscor's legal opinion recommended that the German Frigate Consortium should be disqualified, but this opinion was ignored. The JIT itself recommended that the corvette process should be recommenced from the Request for Offers stage and, in so doing, confirmed the tender process to have been a sham.

Accordingly, we have applied to the Cape High Court :

a) to set down our motion for a final order in terms of our application 9987/01 filed in November 2001 and,
b) to order that the International Offers Negotiating Team and Financial Working group documents awarded to us in March are made available forthwith and,
c) that the SAS Amatola is prohibited from entering South African waters until ECAAR-SA's litigation is resolved.

Terry Crawford-Browne