Some considerable light was finally shed on these transfers when Steenberg, Anwar and Hovsepian testified before the Commission in Berne.
This section does not present a comprehensive account of the flow of funds and it ignores the complex shenanigans that occurred between the foreign actors. The section concentrates instead on the problems which bear directly on the conduct of Armscor officials. The central issue addressed below [Section 6.4.2, 6.5.3 and 6.9] is whether any of these officials were guilty of financial negligence or misconduct.
The following people feature in this Section: Vermaak (manager of Armscor's stock sales department); Bronkhorst (Vermaak's subordinate, responsible for commercial tasks); Savides (Vermaak's superior); Smith (Savides' superior); Prince Anwar (the purchaser of the 1993 and 1994 shipments); Hovsepian (Anwar's business associate); Wazan (the agent of Armscor, of Anwar in 1993 and, ostensibly, of the Lebanese government in 1994); and Steenberg (the charterer of the ships).
Shipment Motivation Purchase price $ 350,175 1993 $ 800,000 1994 ---------- $1,150,175 [R4,013,500] Payments to Armscor from the buyer (Anwar) $ 510,000 1993 $ 902,455 1994 ---------- $1,412,455 [R4 929 468] Armscor payments to Wazan $ 52 500 1993 Commission $ 159,825 1993 'Shipping costs' $ 50,000 1993 'Advance payment' $ 120,000 1994 Commission $ 102,455 1994 'Shipping costs' ---------- $ 484,780 [R1,691,882] Payments to SANDF R 861,861 1993 R1,550,000 1994 ---------- R2,411,861Two curious patterns emerge from these figures. First, Anwar's payments to Armscor exceeded the purchase price in respect of both shipments. The overpayments totalled $262,280 (R915,357), or 23% of the combined purchase price.
Second, whereas Wazan was entitled to a commission of 15% of the purchase price from Armscor, he in fact received from Armscor 42% of the combined purchase price.
Two obvious questions arise: why did Anwar make substantial overpayments to Armscor? And were the payments to Wazan, over and above his commission, justified?
It will be noted that the SANDF, the owner of the weapons and ammunition, only received 60% of the combined purchase price. This was due to the deduction of costs incurred by Armscor in getting the consignments to the harbour (eg packing and transport costs, harbour fee, payment to the shipping agent etc).
On 20 September 1993 Vermaak, acting on behalf of Armscor, concluded a written contract of sale with Wazan for a consignment of AK-47s and ammunition. Delivery of the consignment was to take place in two shipments. The purchase price for the first shipment was $350,000.
On 20 September the buyer, Anwar, visited South Africa to inspect the goods. He indicated that he might also want to purchase several thousand G3 rifles at some later stage and took five samples with him at a cost of $175. Accordingly, the price of the shipment rose to $350,175.
Anwar paid Armscor $510,000 for the consignment in two instalments: a bank draft of $255,000 when he inspected the weapons and a second draft of $255,000 when the weapons were loaded on the ship in October.
Although the bank drafts do not reveal Anwar's identity, a report compiled by Vermaak in January 1994 confirms that he knew that Anwar was the buyer. Indeed, this was obvious from Anwar's visit to South Africa to inspect the weapons. Vermaak's documents consistently refer to Anwar as "the client" and to Wazan as "the agent". On 4 October 1993 Vermaak requested senior management to approve payment of $52,500 to Wazan, this being Wazan's commission of 15% on the purchase price of R179,550 [$350,000]. The payment was approved by Savides and Smith.
On 5 October one of Vermaak's subordinates sent a memorandum to senior management requesting Armscor to pay Wazan a further amount of $159,825. The memorandum states that "following the recent conclusion of a contract with Lebanon, the agent, Wazan, paid Armscor $255,000 for verskepingskoste (shipping costs). The actual costs of the shipment were only $95,175". The memorandum was signed by Savides.
For several reasons this motivation makes no sense: Vermaak knew that Anwar, and not Wazan, had paid for the goods; the memorandum begs the question of why an overpayment had been made; and Armscor was not involved in the shipping arrangements and had no knowledge of the amount of the shipping costs.
Vermaak confirmed that the memorandum had been drawn up on his authorisation but refused to testify further on the matter. Savides could not explain the content of the document. Counsel for Armscor claimed that the term verskepingskoste was "loose terminology" and referred to Armscor's internal "shipment costs" (although these were not known at the time). Counsel for the SANDF submitted that the motivation "is inexplicable".
The real reason for the repayment lies in Wazan's arrangement with Anwar. Wazan, acting as a broker, had contracted with Armscor to 'buy' the goods for $350,175 and then arranged with Anwar to 'sell' them to him for $510,000. Armscor thus received a surplus of $159,825 and this amount was repaid to Wazan. Hovsepian confirmed in his testimony that the price as between Wazan and Anwar was $510,000 (plus shipping costs).
6.3.2 Finding
The Commission rejects the submission by Vermaak's lawyers that their client was unaware of the arrangement between Wazan and Anwar. Vermaak's diary notes of 15 September 1993, five days before the conclusion of the written contract, reveal that he knew that Wazan would 'resell' the consignment to an unnamed buyer at a higher price.
The notes, which were not shown to Armscor at the time, contemplate delivery of the consignment in three shipments at a cost of $705,000 each to the buyer. Vermaak breaks this amount down as follows: $300,000 to Armscor as the seller (including Wazan's commission); $195,000 for freight costs; and $210,000 for "other parties".
Vermaak would not explain this last entry. His counsel submitted, correctly in our view, that it referred to "commissions" to other parties. It is obvious from the repayment of $159,825 to Wazan that Vermaak knew that Wazan was one of these parties. Vermaak's non-disclosure of critical facts amounted to an act of deception against Armscor and the SANDF. In the absence of Vermaak's testimony, the Commission is uncertain why he did this.
It is possible that Vermaak believed that Armscor and the SANDF might object to Wazan earning an exorbitant profit on the deal: $212,325 ($159,825 plus commission of $52,500) on a purchase price of $350,175. In comparison, the SANDF, the owner of the goods, received roughly $250,000 (R861,861) once Armscor's costs were deducted.
It is significant in this regard that the Log 17 Pamphlet provides that "Armscor must at all times act to the best advantage of the State when negotiating the selling price [of surplus stock] on behalf of the South African defence force".
In the light of this mandate, Vermaak may have been concerned that full disclosure to his superiors would lead to them to conclude that the repayment to Wazan was unjustified and to the detriment of Armscor and the SANDF. This was indeed the conclusion reached by the SANDF in its final submission to the Commission.
On 18 May 1994 Vermaak sent a memorandum to Armscor's finance section a bank draft to be drawn in favour of Wazan for an amount of $50,000. The memorandum was signed by Savides and Smith.
Vermaak's motivation was that payment for the 1993 shipment had included an "advance payment" of $50,000 for the 1994 shipment. This excess now had to be "repaid to the agent because there is direct dealing with the client". Vermaak was referring here to the fact that, after the first shipment, Anwar had asked him to exclude Wazan from all further transactions.
For two reasons Vermaak's motivation makes no sense. First, he knew that Anwar had paid for the 1993 shipment; any 'advance payment' should therefore have been repaid to him and not Wazan. Second, there is no documentary evidence that an advance payment was in fact made on the 1994 shipment.
Vermaak declined to shed any light on the mystery. His lawyers submitted a defence on his behalf: the price of the first shipment had been reduced from $350,000 to $300,000. This submission is based on a fax from Wazan to Vermaak on 9 September 1993 and on various handwritten notes made by Vermaak. Vermaak's notes of 23 March 1994 state that Wazan had paid $350,000 in place of $300,000 for the first shipment.
6.4.2 Finding
For the following reasons, the Commission rejects the submission by Vermaak's counsel that the price of the 1993 shipment was $300,000.
6.4.2.1 Vermaak never informed his superiors or the SANDF, the owner of the goods, of any price reduction on the shipment.
6.4.2.2 Vermaak calculated Wazan's commission on a price of $350,000 and not $300,000.
6.4.2.3 Testifying on behalf of Armscor's Internal Audit Department, Ms Adendorff insisted that a scrutiny of the relevant files and records revealed no evidence of an advance payment.
6.4.2.4Vermaak's notes of 23 March 1994 were written on a fax, dated 10 March, in which he informs Wazan that Armscor had not received pre-payment for the second shipment.
6.4.2.5 Wazan's fax of 9 September 1993 anticipates the consignment being delivered in three shipments. The price of each shipment was $300,000, making a total of $900,000. However, this arrangement was superseded by the written contract of 20 September 1993 which provides for two shipments. The total purchase price remained $900,000, but this was broken down into $350,000 for the first shipment and $550,000 for the second shipment.
6.4.2.6 The only references to a price of $300,000 are in Vermaak's handwritten notes and Wazan's fax.
In contrast, the amount of $350,000 appears in the following official documents drawn up by Vermaak or his subordinates: the contract with Wazan; the price determination; the shipping instructions; the application for an export permit; Vermaak's report of January 1994; Vermaak's report to top management on 4 October 1993; and the Smith Report presented to the Minister of Defence following the Wazan debacle.
In the light of the above, the Commission finds that the payment of $50,000 to Wazan was unjustified and amounted to an act of theft against the SANDF.
On 1 October 1993 Vermaak noted that Wazan had made an offer of $500,000 for a package of G3 rifles. On 6 October the SANDF, the owner of the weapons, approved this price. On 8 October Vermaak signed a quotation for Prince Anwar in respect of the G3s at $550,000.
In January 1994 Vermaak met with Anwar in Geneva to discuss the transaction. According to Vermaak's report on the meeting, they agreed on a total purchase price of $835,000: $535,000 for the AK-47 package and $300,000 for the G3s. The price reduction on the AK-47s was apparently due to Anwar's dissatisfaction with the quality of the 1993 consignment. The price reduction on the G3s resulted from "hours of bargaining" with Anwar. Vermaak also noted that Anwar no longer wanted Wazan involved in the transaction.
The new price for the G3s was accepted by the SANDF on 7 February 1994. On 4 March 1994 Vermaak sent a 'pro forma' invoice to Anwar's business associate, Hovsepian. It quotes a total purchase price of $902,420: $602,420 for the AK-47 package and $300,000 for the G3s. These details were repeated in a fax from Vermaak to Hovsepian on 10 June.
The increase in the price of the AK-47 package from $535,000 to $602,420 appears to have been due to the inclusion of an additional three million rounds of ammunition.
On or about 21 June Vermaak allegedly rejected Anwar's proposal that the consignment be sold to Yemen. On 26 June Anwar and Hovsepian informed Vermaak that they were cancelling the agreement and would no longer be involved in the deal. Vermaak then noted that Wazan would be brought back into the transaction and that the Lebanese government was a possible buyer of the goods. On 28 June Vermaak's section communicated to Wazan the details of the transaction, including the purchase price of $902,420.
6.5.2 Price reduction and payment to Wazan
A document compiled by Bronkhorst and dated 1 August 1994 states that Wazan had contracted with Armscor in September 1993 to buy the second AK-47 package at $550,000; the shipment had not yet taken place, and Wazan now offered a lower price of $500,000 for delivery to the Lebanese government. The document was signed by Vermaak and approved by Smith. Accordingly, the total purchase price of $902,420 fell to $800,000.
There are two curious aspects to this document. First, there is no mention of the fact that the price of the AK-47 package had risen from $550,000 to $602,420 with the inclusion of an additional three million rounds of ammunition.
Second, Bronkhorst admitted to the Commission that he had drawn up the document sometime after 1 August. He could not remember the precise date but thought it was early September. Smith initially testified that he signed the document on 1 August but later conceded that this was incorrect. Smith was therefore aware that Vermaak had agreed to a lower price without the required approval of senior management.
On 16 August Armscor received a bank draft of $902,455 in payment for the AK-47s, G3s and ammunition. The draft does not disclose the identity of Prince Anwar as the purchaser. The addition of $35 to the purchase price of $902,420 was a minor ruse by Steenberg which is not material to this discussion.
On the same date Vermaak requested payment of $120,000 to Wazan, this being the agent's commission of 15% on the purchase price of $800,000. The request was approved by Savides and Smith.
Further on the same date Bronkhorst drew up a memorandum to senior management requesting the payment of an additional $102,455 to Wazan. The memorandum states that "following the recent conclusion of a contract with Lebanon, the agent, Wazan, paid Armscor $102,455 for shipping costs. Since the owner of the ship is in South Africa with Wazan, Wazan has asked that this amount be repaid to him so that he can settle the shipping costs directly". The memorandum was signed by Vermaak, recommended by Savides and approved by Smith.
Once again the motivation does not make sense: why would Wazan pay these costs to Armscor only to have them repaid to him? Further, the Armscor officials, Wazan and the buyer all knew that Armscor was not involved in the shipping arrangements and costs. Since the sale had taken place on a free-on-board basis, the buyer was responsible for these arrangements and costs.
Bronkhorst testified that the motivation was merely a "wrong choice of words" and that the repayment was in fact due to the difference between the bank draft of $902, 455 and the purchase price of $800,000. Under questioning from the Commission, Bronkhorst conceded that the motivation amounted to a lie.
On 31 August Bronkhorst informed the Defence Force that it would receive R187,000 [$50,000] less than previously agreed for the AK-47 package because Armscor had incurred unexpected costs related to the verskeping (shipping or shipment).
Bronkhorst testified that this explanation was also fabricated. On 27 September, a month after the ship carrying the weapons had left South Africa, Bronkhorst informed the SANDF that his explanation had been incorrect and that a lower price had been negotiated with the buyer.
6.5.3 Finding
Bronkhorst's motivation to the SANDF for the price reduction on the AK-47 package, and his memorandum to senior management on the repayment of $102 455 to Wazan, entailed acts of deception by Vermaak and his staff. This is apparent from the documents themselves and was confirmed by Bronkhorst.
The deception makes the price reduction highly questionable. Addressing this issue, Armscor's counsel argued that the price reduction had indeed been agreed to between Vermaak and Wazan. However, this does not address the question of whether the price reduction was legitimate.
The Commission finds that the price reduction was not legitimate and therefore constituted an act of theft against the SANDF. This finding is based on the following cumulative factors:
6.5.3.1 The reduction occurred without the required authorisation of Armscor management.
6.5.3.2 The document dated 1 August 1994 motivating the reduction was deliberately backdated.
6.5.3.3 The document provides no reason for the reduction. An explanation was surely called for since Anwar, the initial (and actual) purchaser, had accepted a purchase price of $602,420 for the AK-47 package. The document makes no reference to this higher price.
6.5.3.4 The document was drawn up after Armscor had received the bank draft of $902,455. Smith and Savides therefore approved the price reduction knowing that the buyer had already paid the higher price.
6.5.3.5 It was entirely improper for Vermaak to have renegotiated a lower price with Wazan without confirmation from the buyer. Wazan was merely the agent; more importantly, he was the direct beneficiary of the price reduction.
It would have been prudent, to say the least, for Vermaak to have confirmed the reduction with the ostensible buyer, the Lebanese government. He did not do this, although he took the trouble to have a quotation for the 1994 shipment drawn up and addressed to General Lahoud of the Lebanese army. As noted elsewhere [Section 5.6.2], this document was never sent and was also backdated.
At the start of this section [Section 6.2] two principal questions were raised about the flow of funds relating to the Lebanon transaction: why did Anwar make substantial overpayments to Armscor on both shipments? And were the repayments to Wazan justified?
The preceding discussion has provided detailed answers to these questions on the basis of Vermaak's records and the Commission's assessment of the documentation.
At a more general level of analysis, the answers lie in a commercial scam, perpetrated by Wazan and Vermaak, of over-invoicing the buyer and giving the agent a kickback. The scam may be illustrated by way of a simple hypothetical example: the SANDF wants R100 for an arms consignment; Armscor's costs are R50; the purchase price is therefore R150; Vermaak informs the agent accordingly; but Vermaak and the agent quote a price of R200 to the buyer; the buyer duly pays this amount; and Vermaak contrives to get Armscor to pay the balance of R50 to the agent. The agent also receives from Armscor his commission of 15% on the purchase price of R150.
In the Lebanon transaction, Anwar paid a total of $26,280 (R915,357) more than the combined 1993 and 1994 purchase price, and this amount was repaid to Wazan. Wazan also earned an unwarranted amount of $50,000 on the first shipment.
The over-invoicing arrangement is described as a scam because Vermaak did not disclose the true facts to his superiors and the SANDF. On the contrary, his motivations for the repayments to Wazan were fabricated. The relevant documents could not be explained by Vermaak's subordinates who compiled them on his instructions, or by his superiors who signed them.
As noted earlier [Sections 3.2.2 and 6.3], Vermaak was obliged to negotiate the best possible price for the sale of surplus stock on behalf of the SANDF. This was also a specific mandate from the defence force in respect of the AK-47 package.
In the light of this obligation and Vermaak's deception, the Commission shares the view of the SANDF that "the repayment of the amounts of $50,000, $102,455 and $159,825 to Wazan were unjustified and to the detriment of the SANDF and Armscor". Given the gravity of the Commission's finding, it is necessary to address the arguments of counsel for Armscor and Vermaak on the over-invoicing arrangement.
6.6.2 Armscor's submissions
Armscor's counsel argued that it was not a problem for an agent to earn a commission or profit from both the seller and the buyer. As an independent actor, Wazan could legitimately contract with Armscor (the seller) on the one hand, and contract separately with Anwar (the buyer) on the other.
In support of this position, counsel referred to a paragraph in Armscor's policy document on agents which states: "Loyalty. Agents act for their own benefit. Armscor has no control over the additions that an agent makes to our prices and this can lead to us being priced out of the market".
It was argued further that the SANDF approved the lower price for its weapons and ammunition in respect of both shipments. Wazan's profit over and above his commission from Armscor was therefore entirely at Anwar's expense.
In the view of the Commission, these are curious arguments. The paragraph quoted from Armscor's policy on agents is clearly a warning. It appears under the heading "Dangers linked to quotations to unknown agents". The obvious problem, in addition to that stated in the paragraph, is that the SANDF may receive substantially less for its goods than the buyer is willing to pay.
It is conceivable that the defence force might accept this outcome if the role of the agent, as broker, is deemed essential. The Lebanon transaction may well have been such a situation since the army was extremely anxious to get rid of the AK-47s, and Vermaak was aware of this. It is also true that the SANDF approved the price reductions. But the approval was given in ignorance of the true facts and on the basis of deliberate lies by Vermaak's department.
The SANDF, in its final submission, puts the case more diplomatically: "It must be kept in mind that the [approvals] were done on the strength of information which was conveyed to the SANDF, and in the belief that Armscor (and in particular Vermaak) was acting bona fide". It is therefore untenable to claim that Wazan's profit was earned entirely at the expense of Anwar. The price reduction on the 1994 shipment was authorised by Armscor after the buyer had already paid the higher amount. In respect of the 1993 shipment, Armscor suffered a net loss of R145,339.
6.6.3 Vermaak's submissions
Counsel for Vermaak raised three arguments in defence of their client. First, they shared Armscor's view that the policy document on agents [Section 5.3.4] allowed for an over-invoicing arrangement. The Commission rejects this view for the reasons outlined above [Section 6.6.2].
Second, counsel argued that their client was unaware of the financial arrangements between Wazan and Anwar. The Commission rejects this argument for the reasons given earlier. In any event, the argument does not resolve the main difficulties: how does Vermaak explain Anwar's overpayments? and why did Vermaak construct false explanations for repaying the excess to Wazan?
Third, counsel pointed out that the over-invoicing arrangement with Wazan was not exceptional to the 1993 and 1994 shipments. In respect of a transaction with Wazan in or around August 1991, the buyer had apparently paid $115,000 to Armscor on a purchase price of $76,800; the balance of $38,200 was subsequently repaid to Wazan.
The Commission can make no useful comment on this matter since it did not investigate the financial aspects of any of the pre-1993 shipments.
According to Armscor witnesses, Wazan had purchased a consignment of ammunition from Armscor in 1991 but had not taken full delivery of the goods; the remainder had been left in South Africa. Hovsepian testified that he had been Wazan's principal in the transaction and was therefore the owner of the goods. The ammunition appears to have been part of Armscor's alleged sale to the Christian Militia in 1991.
The principal problem with the payment to Wazan is that 70% of the ammunition had not yet been sold by Armscor. It is therefore possible to conclude that Vermaak's memorandum contained another act of deception and that the payment to Wazan entailed an act of theft against Armscor.
Vermaak's counsel argued that a proper interpretation of the wording of the memorandum reveals that Vermaak did not claim that the ammunition 'had been sold', as Savides testified. Rather, the ammunition was 'in the process of being sold'. If this construction is correct, then Savides and Smith were also guilty of gross financial irresponsibility.
Counsel for Armscor and Vermaak claimed that no financial loss had been suffered on the transaction; in fact Armscor had made a net profit when the ammunition was finally sold. This in no way mitigates the problem raised above.
The Commission requested and received copies of Vermaak's bank accounts. Nothing untoward was found. Vermaak's counsel assured the Commission that their client had no foreign bank accounts.
However, in November 1993, shortly after the completion of the first shipment, Wazan made a donation of $8,000 to a Pretoria school for children with cerebral palsy, attended by Vermaak's daughter. Vermaak did not declare the donation to Armscor as required.
Wazan alleged, in a statement taken by Armscor's lawyers shortly after the debacle occurred, that he had made other donations in Swiss Francs to the school. He had also furnished Vermaak with entertainment receipts which Vermaak could then claim from Armscor as his own; the payment on these receipts would be given to the school.
In a statement taken by Armscor's lawyers on 8 October 1994, Vermaak admitted that he had received money from Wazan for his daughter's school. Initially these sums were all paid to the school in local currency. But in 1994 Vermaak used the money to finance his family's overseas holiday. He planned to draw a cheque for the requisite amount from his annual bonus, and wanted Wazan to hand the cheque personally to the school when Wazan visited South Africa in November 1994.
Vermaak added that he had not declared the gifts to Armscor because they were for his daughter's school and not to his personal advantage. He was unable or unwilling to recall the amounts involved. Finally, he denied that Wazan had given him entertainment slips to claim from Armscor.
Vermaak refused to testify on this statement. The Commission was therefore unable to test its accuracy and take note of any corrections that Vermaak might have wished to make.
There is no doubt that Vermaak had a particularly close relationship with Wazan. On one occasion Wazan asked him to get medicine, apparently for Wazan's child. On another occasion, with the approval of Savides, Vermaak and his family spent a holiday at Wazan's bungalow in Cyprus.
The Commission draws three conclusions from its consideration of Vermaak's motivation for withholding facts from Armscor and securing unjustified payments to Wazan.
First, the Commission agrees with the submission by Armscor, albeit understated, that "the close and cordial relationship between Wazan and Vermaak developed into an improper one". Vermaak's receipt and use of donations from Wazan were particularly improper.
Second, it is possible that Vermaak was motivated more by a desire to sell weapons, boost his sales figures and reward Wazan for assistance in this regard, than to enrich himself personally. A submission by the SANDF is apposite here: "From portions of Hovsepian's evidence, it would appear as if Vermaak was doing his best to sell the weapons at the highest possible prices, but that his motivation for doing so may have been to benefit Wazan rather than to benefit the SANDF and Armscor".
Third, the school attended by Vermaak's daughter was an innocent recipient of donations made directly and indirectly by Wazan. The school is in no way implicated in Vermaak's chicanery.
The Commission accepts this submission.
Counsel argued further that it would be unfair to hold Smith and Savides accountable for the deception: "it would have been unrealistic to expect of Smith or Savides when they were asked to sign [the relevant] documents to embark on a lengthy interrogation of Vermaak with a view to expose the full history behind the repayments [to Wazan]. It is submitted that not even an experienced cross-examiner, let alone a manager in Smith's position, would have been able to expose the layers of deceit regarding the end-user that underlies these documents".
The Commission does not accept this argument and finds that Savides and Smith are accountable, along with Vermaak, for the deception and acts of theft against the SANDF. This finding is based on two considerations.
First, Vermaak was obliged to obtain senior management approval for financial transactions involving large sums of money. This was not a whimsical matter; it was clearly intended to serve as a control mechanism. Yet Smith and Savides failed to apply their minds, in even the most cursory fashion, to the content of documents they signed. They endorsed patently nonsensical motivations for the repayments to Wazan, and were later unable to explain these motivations to the Commission.
Second, Smith and Savides ignored or tolerated a situation of administrative and financial chaos in Vermaak's department. As outlined elsewhere [Section 5.6], the maladministration was evident in countless documents which were incomplete, misleading, inconsistent and riddled with arithmetic mistakes.
Some of the Commission's concerns in this regard were shared by Armscor's Finance Department. According to Ms Adendorff, finance experienced many problems with Vermaak's section: documents contained errors, lacked proper substantiation and were frequently presented late; there were various deficiencies in internal controls; and amendments to purchase prices were motivated after they had been affected and not while negotiations were still pending. Savides and Smith did nothing whatsoever to address these problems. As a result, mischief flourished undetected in Vermaak's department.
As noted previously, the administrative and financial problems in Vermaak's section were sufficiently serious and obvious to have warranted concerted management intervention. Whatever the deception perpetrated by Vermaak, this was not a case of a sound organisational system being thwarted surreptitiously. It was rather a total breakdown of the system.
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