By Andrew Feinstein

Former ANC MP and ANC Lead Member in SCOPA

November 2001

The Report of the three investigating agencies on the controversial arms deal is a disappointment. It is contradictory, avoids key issues and generally doesn't resolve this festering sore on South Africa's public life.

First, the report states that most of the key allegations around corruption are still under investigation. Until the public sees the fruits of these on-going investigations (in the form of arrests) or the reasons for why action might not be taken against certain individuals, we cannot form a conclusive opinion on the deal. Similarly, government cannot claim that anybody has been exonerated.

I, for instance, was approached with compelling verbal information about a person central to the process directing bidders to do deals with specific South African companies if they wanted to stand a chance of winning a contract. I passed this information on to the investigators and was assured they would be followed up. I would like to know what the outcome of these allegations is.

Second, the Report only exonerates former Defence Minister Modise of one allegation, that he "paid for shares in Conlog with a bribe received from a successful prime contractor." What of the other broader allegations against him of benefiting inappropriately from the deal? Are these still under investigation? Have they been dismissed and if so on what basis?

The unsurprising revelation that Chippy Shaik had a massive conflict of interest and didn't recuse himself from relevant meetings means, amongst other things, that he misled Parliament. At the Public Accounts Committee public hearings a year ago Shaik was asked specifically whether he had physically left the meeting rooms whenever issues relating to his brother's company were discussed. He replied emphatically that he had. He lied. What action will Parliament now take?

In addition, after the recent arrest of Shaik's brother on charges of having confidential documents relating to the deal in his possession does Minister Lekota still believe no action should be taken against Shaik? Does Minister Alec Erwin still believe, as he claimed at a meeting with the Public Accounts Committee earlier this year, that cabinet had known from the outset about Shaik's conflict of interest and that he was satisfied that the matter had been handled appropriately?

Third, and perhaps most critically, the Report finds interalia that "proper evaluation procedures were not consistently and diligently applied and a proper audit trail was not established throughout the procurement process", that "the time allocated for each evaluation and execution was insufficient to ensure that it was done properly and efficiently.", and that "various key documents had not been finalised and/or duly approved before the final contracts were concluded.". In auditing terms these are very serious failures. In fact, on numerous Auditor-General's reports such findings would lead to the Auditor-General expressing an adverse opinion or refusing to express an opinion at all. So why is this, the largest single procurement expenditure undertaken since the advent of democracy, treated differently by the Auditor-General?

The Report, while containing a very weak section on the costing and financing, avoids the key question posed by the Public Accounts Committee of whether cabinet were upfront with the SA public about the actual cost to the taxpayer of the deal, in other words, the cost over twelve years, including inflationary and currency related risks as well as the obvious cost of financing.

In short, the Report asks as many questions as it answers. It is now up to Parliament and the media to ask the hard questions and to demand answers. No amount of PR from government should convince the South African public that all the information is at hand to exonerate anyone in connection with this deal.

With acknowledgement to Andrew Feinstein.