Publication: IDASA Issued: Date: 2001-01-27 Reporter: Yacoob Abba Omar

Response to Colm Allan's article by Yacoob Abba Omar,
Deputy CEO, Government Communication and Information Services

 

Publication 

IDASA

Date 2001-01-27

Reporter

Yacoob Abba Omar

Web Link

www.idasa.org.za

 

All of us embrace Aristotle's entreaties to be vigilant against corruption as invoked by Colm Allan (The Sunday Independent, 21 January). The sloppy analysis of the strategic defence package by Allan and, indeed, much of the media, as well as their cavalier attitude towards fact, recalls Aristotle's equally important remark when he said of his older friend, Plato "although I love my teacher greatly, I love truth more".

Allan begins by claiming "a forensic audit was conducted by the auditor-general's office" a report of which was referred to the Standing Committee on Public Accounts (Scopa) which recommended that Heath Special Investigating Unit "be invited to participate in the investigation" into allegations of irregularities.

Firstly, the auditor-general has in fact not conducted a forensic audit though he has recommended one "or (a) special investigation". Secondly, whilst Scopa is in the process of clarifying its position the Parliamentary Law Advisers are in no doubt when they state that Scopa's report adopted by the National Assembly on 3 November 2000 "does not amount to a recommendation to the Executive to refer the matter in question to the (Heath) Unit for investigation".

A little later, Allan tells us that the cost of the package has risen by R13,9bn to R43bn due to "price escalations". This is nonsense, in fact. As Minister of Finance, Trevor Manuel was at pains to explain on 12 January "the cost price calculated in 1999 rands is R30,3bn. In keeping with standard government accounting practice, it is the actual payments to suppliers that represent expenditure of the state. Interest costs are part of deficit financing and not the cost of equipment. The annual payments take into account interest payments and other costs, which are normal in any financing mechanism, including a private mortgage payment. To infer from this that the costs have suddenly escalated is misguided."

Allan then compares the cost of the defence package to provincial welfare budgets. It's a cheap shot but underlying it, perhaps if one is to be generous, are the serious questions does South Africa need a defence capability and if so how should that be determined given the urgent, competing demands on the fiscus? Those with memories longer than Allan's will recall the fact that from 1996 to 1998 our country carried out a comprehensive defence review involving government, Parliament, nongovernmental organisations and the general public. Its purpose was to determine the nature, structure and purpose of the SA National Defence Force. This, in turn, established the nature of the equipment needed to develop that capacity. The review was approved in Parliament and supported by all parties.

Accordingly, the nature and quantity of the equipment government had to decide on procuring was determined both by the review and issues of affordability. Allan then goes on to endorse the Auditor-General's concerns on the potential conflict of interests in the awarding of contracts and the level of guarantees set should the contractors fail to meet their "offset" obligations. Whilst it is clear that both the auditor-general's review and the Scopa report show that there was not enough time to properly go into this procurement process, there can be no excuse for Allan's 'analysis' not to be better researched. Documents available on the government web site explain that "in all decisions there would be four national government departments involved.

Finance (National Treasury) dealt with budgetary implications, financial affordability and macro fiscal and economic implications. Trade and Industry dealt with the non-defence (and in part defence industrial participation) and assisted with certain economic implications. The Department of Public Enterprises dealt with aspects relating to state owned corporations. The Department of Defence dealt with the technical defence requirements, defence industrial participation and the specific budget of the Defence vote.

There were also four independent evaluation groups, each with a mandate and scoring system comprised of unique value systems for assessment. "A committee of the Ministers of these departments was chaired by the Deputy President (and later as President) and it decided on and prepared the final recommendations to Cabinet any corruption in the awarding of the prime contractors and many major subsystems would have to have infiltrated central departments and Ministers of the South African government.

"The deal was structured in this manner precisely to reduce the prospects or even incentive for corruption as they would have no prospect of influencing the deal." Allan perhaps lets slip his own motivation when he proclaims without substantiation that "a cynical view", presumably his own, would hold that the guarantees could be covered by "hiking up the initial price".

Whilst there is no evidence that prices have been "hiked" - in fact a comparison with other foreign buyers of the same equipment by defence analysts suggests the opposite to be true - the guarantees provided are in line with best international practice, actually twice the level in most instances. The deterrent losses that will be suffered by the prime contractors if the total obligations are not met are considerable.

The suppliers have placed their reputations on the line. If they did not deliver their "offset" obligations they would jeopardise billions of dollars of future sales worldwide. The South African contracts will be seen by other potential customers internationally as a test of the suppliers' credibility. Allan goes on to present his own case for the inclusion of Heath Unit in the investigation and to enlighten us on "what lies behind the government wanting to exclude the Heath Unit from the investigation".

He asserts that the judgement of the Constitutional Court "gave a one-year grace period in which the unit could replace its head with someone not a member of the judiciary". The Court thought the necessary processes might need that long, but said the situation should be addressed "without undue delay". In simple terms do it as quickly as possible and if it has not been done within a year the fate of the SIU will be what has already befallen the investigation into the Road Accident Fund. Further proclamations by the President would be tantamount to defiance and would invite challenges that would delay investigation.

The constitutional arguments are by now well worn but Allan argues against Minister Penuell Maduna's assertion that that the Heath Unit is already overloaded, countering that an investigation would require "a maximum of five unit members". At the same time, he says that the Public Protector's office is less suitable only having 27 investigators. Come on, Colm you can't have it both ways. Allan's assertion that the other public protection agencies "(can't) match the investigative resources that the (Heath) unit has" or that they will not act independently is profoundly offensive. As other commentators have remarked, all the agencies involved in the investigation have proven track records and are surely above such cynicism.

Government recognises that the Auditor-General and SCOPA have come to the determination that further investigations are necessary and respects this opinion. Relevant departments and Ministers will fully co-operate with such investigations. To the extent that there may be suspicions, government is as eager as anyone else that the matter should be thoroughly probed.

Allan displays a disappointing disregard for the facts. His conclusion then that the decision not to include the Heath Unit in the investigations "risks the onset of the creeping process of not so insignificant breaches of our hard won democratic constitution that may well lead to its eventual unravelling" is, not surprisingly, absurdly alarmist.

Yacoob Abba Omar

Abba Omar is the Deputy CEO for the Government Communication and Information Services. For more information go to Government On-Line www.gov.za

 With acknowledgements to Abba Omar and IDASA.