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New arms-deal claim as Fakie defends report

21st August 2003

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As Auditor-General Shauket Fakie defended the final report of the arms deal investigation before Parliament on Wednesday, a new allegation emerged of irregularities in the awarding of sub-contracts.

Briefing the standing committee on public accounts (Scopa), the AG maintained that media claims of omissions and "doctoring" in the final report were unfounded, and impugned the dignity of his office.

He, again, called on the watchdog committee to protect the integrity of his office.

Fakie said the draft and final reports on the probe into the multi-billion rand deal differed only in style and format, and that the executive did not, in any way, influence the content of the report.

"I want to state categorically that due process was followed and that no changes were made to the report based on pressure from the president or the executive," he said.

The deal was investigated by the AG, the Public Protector and the Directorate of Public Prosecutions, who found no evidence of unlawful conduct by the state.

However, a new allegation emerged at Wednesday's hearing that African Defence Systems (ADS) changed their tender after the closing date, ensuring they secured a sub-contract over C2I2 Systems.

Democratic Alliance MP Nigel Bruce produced a letter showing ADS was allowed to drop their bid from R32.4-million to R29.64-million a day after the deadline for final bids, thus allowing the company to undercut the rival offer.

The C2I2 bid was R30,4-million, including a 13 percent management fee.

ADS and C2I2 were competing for a contract to supply the system management system of the combat suite for the South African Navy's four new corvettes.

Later in the proceedings, the AG said ADS had made a mistake with its figures and had been allowed to change their tender, but offered to report back to the committee to clarify the issue.

Speaking to reporters after the hearing, C2I2 MD Richard Young said the letter clearly showed that the price was reduced after the closing date.

He said a series of letters between ADS and the department of defence showed how its offer price had come down from an original R65-million.

The documents had formed part of a set of files received from the AG's office three weeks ago, in line with a court order.

"If he (Fakie) thinks he is off the hook, I'll tell you what, his problems have only just started," Young said, describing the letter as a "smoking AK47".

C2I2 is suing the government over losing out to ADS for sub-contracts related to the corvettes.

The department of defence's then head of acquisitions, Chippy Shaik, was found to have had a conflict of interest, in that his brother, Schabir, had links to ADS.

Earlier, in the hearing, Fakie refuted suggestions that investigators could make conclusions in the final report that deviated from initial findings.

"If anything was to be influenced, there had to be major collusion between the three of us, to be able to take anything out of the report or for any editing to take place."

At any particular point in time, there were between 50 and 60 people working on the various chapters of the report, including up to five independent audit companies.

Fakie said he had at no time breached his mandate to Parliament or the Constitution.

"At no stage during the investigation did I do anything, or participate in anything, that would have breached any of my constitutional mandates that have been trusted upon me."

The AG said "mistrust" among the public and the media started when the Special Investigating Unit, then headed by Judge Willem Heath, had been excluded from the probe.

Scopa chairman Francois Beukman said the committee would evaluate the AG's responses, as well as a legal opinion received regarding the media allegations, before presenting a resolution to the House.

The legal opinion, commissioned by Beukman, found that claims that the final report was doctored were not unsubstantiated.

Referring to Young's allegation, Bruce said in a statement that unless Fakie could satisfactorily explain why a potentially criminal act was glossed over in his report, the claim that the final report was conclusive and exhaustive would fall flat.

"The letter, itself, could be enough to warrant a further substantive investigation of the arms deal by an ad hoc committee of Parliament," he said - Sapa
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