The Department of Trade and Industry (DTI), which monitors the implementation of the civilian offsets arising from the R30-billion arms deal, would provide a comprehensive update on the programme’s implementation probably in September.

Speaking at a briefing in Pretoria on Monday, Trade and Industry Minister Mandisi Mpahlwa dismissed recent media reports suggesting that the German Submarine Consortium, and MAN Ferrostaal in particular, was failing to deliver on its offset obligations in relation to the supply of three submarines to the South African Navy at a cost of some R6-billion.

He said that there was already a lot of public-domain information about delivery against the National Industrial Participation Programme (NIPP), given that reports were tabled yearly before Parliament.

He added that work was currently under way on the next instalment, but suggested that the department would probably offer a more comprehensive update than usual at the upcoming Parliamentary briefing, which would take place in the next few months.

Mpahlwa’s response was in line with one delivered by his predecessor, and current Public Enterprises Minister Alec Erwin, last week. Speaking at a briefing specifically called to respond to some new accusations relating to the arms deal, Erwin said that the defence equipment suppliers were on track in meeting their obligations.

He added that, where offset obligations were not met, penalties would be payable. “The validity of those contracts and the strength of the penalty clauses were specifically addressed by the Auditor General in his investigation,” Erwin said.

He also insisted that the NIPP commitments had never been central to the procurement decision-making process, with the acquisition of the equipment itself having been the “prime objective”, and the defence and industrial spin-offs only a corollary benefit.

“There are documents that are tabled in reports to Parliament as to exactly how these have been met,” Erwin said, adding that R12,5-billion of defence-related offset credits had already accrued.

He was more cautious, however, about spelling out the exact size and nature of the nondefence offsets, or NIPPS, but was bold enough to suggest that 20 000 direct and 30 000 indirect jobs had been generated thus far.

For his part, Mpahlwa indicated that the investments were “real”, as were the exports and associated jobs.

Responding specifically to a Sunday Times article raising questions about the performance of the MAN Ferrostaal projects, Mpahlwa said his information on the offsets differed materially from that reported in the newspaper.

“My understanding about the projects that have been singled out is that they are projects that faced difficulties at a point in time, but . . . [that] these are projects that are actually functional. So we do not share the view that these are dead projects,” he added.

MAN FERROSTAAL RESPONDS
Meanwhile, the German industrial group broke its silence on the matter, making a statement from Essen, Germany, on Sunday, in which it described the South African media reports and allegations “are wrong and entirely unfounded”.

“MAN Ferrostaal never made any payments to South African President Thabo Mbeki, to Jacob Zuma, or to any other member of the ANC, or to any other public official,” the company said, responding to an accusation that Mbeki had facilitated a R30-million payment, R28-million of which had been directed to the ANC and a further R2-million to Zuma personally.

Speaking on Radio 702 on Monday afternoon, the group’s spokesperson Daniel Reinhardt pointed to a slew of factual errors in the Sunday Times report, including its basic description of MAN Ferrostaal as a shipbuilding giant, when it was, in fact, a provider of industrial machines and transport solutions.

He went on to dispute claims made in the report that it had sold arms to Libya, Nigeria, Angola, Congo and Zimbabwe. The group had, thus, requested that the newspaper publish a retraction, while keeping open its legal options.

Reinhardt stressed in the interview with presenter Chris Gibbons that its offset projects had made a contribution to the South African economy, and noted, in particular, that its investments have saved jobs at the Sames microchip facility, in Pretoria, and tea plantations, in the Eastern Cape.

He added that its investments had facilitated the revival of a fabrication yard for oil and gas platforms in Saldanha Bay, Western Cape, which was handed over to the local operator, a unit within Grinaker-LTA, late last year.

The yard was reportedly negotiating its first contracts, which Reinhardt said would give South Africa the possibility of participating in the booming African oil and gas market.

“The first yard will be supplemented by a second facility for the maintenance and service of oil and platforms in Cape Town harbour. The company is currently working on obtaining permission to build this second yard,” he added.

He told Gibbons that it was discharging its obligations as was required of any foreign supplier of goods to the South African government or State enterprises worth more than $10-million.

This was in line with the country’s NIPP framework, a contract that stipulated, according to Reinhardt, that the DTI, rather than the individual supplier, monitor and report on offset progress.