In view of continuing media comments and queries to government regarding the strategic defence procurement package and suggestions of impropriety on the part of Mr Tony Yengeni and individuals associated with the government, we wish to put the following on record:

I. DECISION-MAKING PROCESS ON THE AWARDING OF CONTRACTS

1. The Defence Review adopted by parliament gave broad strategic policy direction on the nature of the SA National Defence Force. There was no role in the procurement process for parliamentary committees, their chairpersons or any of the political party leaders in parliament.

2. Decisions on the procurement of the equipment involved four national government departments:

2.1 Finance (National Treasury) dealt with budgetary implications, financial affordability and macro-fiscal and economic implications

2.2 Trade and Industry dealt with non-defence (and in part defence industrial participation) and assisted with certain economic implications

2.3 Public Enterprises dealt with aspects relating to state-owned corporations

2.4 Defence dealt with technical defence requirements, defence industrial participation and the specific budget of the Defence Vote

3. There were also four independent evaluation groups, each with a mandate and scoring system comprised of unique value systems for assessment. A Committee of Ministers of these departments was chaired by Deputy President Thabo Mbeki (and later as President), and it decided on and prepared the final recommendations to Cabinet.

4. The deal was structured in this manner precisely to reduce the prospects or even incentive for corruption. Any corruption in the awarding of prime contracts and any major subsystems would have to have infiltrated central departments and Ministers of the government.

II. AWARDING OF SUB-CONTRACTS AND DEVELOPING THE SOUTH AFRICAN DEFENCE INDUSTRY

5. Because the reliability of performance of all equipment is mission-critical, the Department of Defence is obliged to hold one contractor liable for performance and delivery. As such, the policy of government is that it would not be responsible for individual subcontractors. This has to be the contractual obligation of the prime contractors as it is they who must deliver reliable equipment and guarantee performance and delivery obligations.

6. Government, nevertheless, through its White Papers on Defence, on South African Defence Related Industries and on Science and Technology has committed itself to preserving a limited defence industrial base to enable the South African National Defence Force to carry out its constitutional obligations. This is being facilitated by the Defence Industrial Participation (DIPs) part of the offset agreements which have accompanied the overall arms package.

7. Government remains convinced that the major international corporations who are prime contractors in this deal have ensured the quality of the subcontractors; and that they have handled the process with integrity.

8. In the complex and drawn-out defence procurement process, many companies bid for all kinds of contracts. Thorough research may indicate that some of those companies that are the subject of much media speculation could in fact have failed in some of their bids, and succeeded in others.

III PROCESS OF INVESTIGATIONS

9. Government fully supports the investigation currently being conducted by the Auditor-General, Public Protector and Directorate of Public Prosecutions. These agencies have been provided with all information in the hands of government, which they may need to carry out their mandate.

10. Government is as eager as anyone else that the investigation should be expedited so that the matter may be laid to rest.

11. Though we are fully convinced of the integrity of the process in so far as it involves government, and though we believe that all other processes were carried out with probity, we wish to reiterate that, in the instance that there may have been any wrong-doing, those responsible should meet their just deserts. Government will not protect anyone involved in corruption.

IV ANY SPECIAL STEPS NEEDED REGARDING MR TONY YENGENI ET AL

12. The matter of Mr Tony Yengeni is appropriately being handled by the political party concerned and Parliamentary structures in accordance with their own rules.

13. Government awaits the outcome of the official comprehensive investigation for it to respond in an appropriate manner. To deal with allegations piecemeal, simply because they have been made public, will muddy rather than clarify the substantive issues.

14. However, it needs to be emphasised that the information currently in the public domain does not even start to suggest irregularities with regard to the procurement process as it affects government.

15. In the course of the investigation anyone who can help in the understanding of the complex decision-making processes may be approached. And, as the investigation unfolds, it is to be expected that several allegations will be brought to the attention of the investigators whose mandate it is to establish the veracity of such allegations. This should not be seen as an indication of any individual's complicity in any wrongdoing.

16. We trust that the media, in carrying out their responsibility to inform the public, will take all these factors into account. It may make immediate editorial and commercial sense simply to disseminate these allegations among the public. But account should be taken of the fact that reckless airing of these allegations may not only have the effect of impugning the integrity of the individuals concerned; but it could in fact also complicate the investigation itself.

Issued by: Government Communication and Information System (GCIS),
30 March 2001

With acknowledgement to GCIS.