JOINT STATEMENT BY THE AUDITOR GENERAL, NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS AND PUBLIC PROTECTOR ON THE JOINT INVESTIGATION REPORT INTO THE STRATEGIC DEFENCE PROCUREMENT PACKAGES

15 November 2001

Today the joint investigation team headed by myself, Shauket Fakie, Auditor-General, Selby Baqwa, Public Protector and Bulelani Ngcuka, National Director of Public Prosecutions, presented our report into the largest investigation of its kind ever undertaken in South Africa, to Parliament.

BACKGROUND

On 15 September 2000, I, as the Auditor-General, issued the Special Review Report on the Strategic Defence Procurement Packages.

The Special Review was the subject of hearings and deliberations of the Parliamentary Standing Committee on Public Accounts (SCOPA). It was subsequently decided to conduct a joint investigation into the Strategic Defence Procurement Packages.

The investigation agencies received numerous allegations, many of which were of a criminal nature, some relating to mal-administration and others to financial irregularities.

A three-phase approach was adopted:

• The Public Protector conduced public hearings;
• The Office of the Auditor-General conducted the forensic investigation; and
• The National Prosecution Authority (NPA) conducted a criminal investigation.

As the different parts of the joint investigation involved many of the same role players and key issues, considerable care was taken to ensure that one part of the investigation did not have a negative impact on any of the other parts.

The joint investigation was unique in that the three organs of State, for the first time, conducted an investigation into alleged irregularities and criminal conduct simultaneously. This was by no means an easy task as all three agencies had to pioneer their way through uncharted and, at times, difficult territory.

The joint investigation was conducted in accordance with internationally recognised due process procedures and practices. This included gathering, studying, analysing and interpreting information. One of the many challenges, was to control and manage documents in excess of 700 000 pages, which were obtained from, inter alia, DoD. we furnished our draft report to the relevant and affected government agencies, offering the opportunity to make inputs/comment on the factual accuracy of the report before it was finalised and tabled in Parliament.

However, given the complexity of the criminal investigation it will still be continuing for some time. Thus far, 102 summonses to interview witnesses in the criminal investigation have been issued more than 57 statements have been taken and statutory records of 193 entities and numerous documents have been obtained. Various premises in France, Mauritius and South Africa have been searched and documents seized. In order to avoid disclosure of information sensitive to these investigations it has been decided not to make the details public.

Some of our key findings are as follows:

• No evidence was found of any improper or unlawful conduct by the Government. The irregularities and improprieties referred to in our report, point to the conduct of certain officials of the government departments involved and cannot, in our view, be aibed to the President or the Ministers involved in their capacity as members of the Ministers' Committee or Cabinet. There are therefore no grounds to suggest that the Government's contracting position is flawed.
• The decision that the evaluation criteria in respect of the Lead-In Fighter Trainer (Hawk) had to be expanded to include a non-costed option and which eventually resulted in a different bidder being selected, was taken by the Ministers' Committee, a sommittee of Cabinet'~. This decision was neither unlawful, nor irregular in terms of the procurement process as it evolved during the SDP acquisition. As the ultimate decision-maker, Cabinet was entitled to select the preferred bidder, taking into account the recommendations of the evaluating bodies as well as other factors, such as strategic considerations.
• The Affordability Team and International Offers Negotiation Team took adequate measures under the circumstances to present to the Government a scientifically based and realistic view on these matters. The Ministers' Committee was put in a position by Affordability Team to apply their minds properly to the financial impact of the procurement.
• There was a conflict of interest with regard to the position held and - role played by the Chief of Acquisitions of Department of Defence, Mr S Shaik, by virtue of his brother’s interests in the Thomson Group and ADS, which he held through Nkobi Holdi. Mr Shaik his capacity as Chief of Acquisitions, declared this conflict of interest in December 1998 to the Project Control Board, but continued to participate in the process that led ultimately to the award~-g of contracts to the said companies. He did not recuse himself properly.

Amongst the recommendations in our report are the following:

• We recommend that the policy document, developed during the Strategic Defence Packages Procurement process be further refined with specific reference to the lessons learnt from the acquisition process under investigation as reflected in this report. Tstaff of the Department of Defence and Armscor involved in procurement should be properly trained to ensure that they assimilate and fully understand the policy with a view to its effective implementation.
• The Department of Defence and Armscor should develop specific rules and guidelines to address conflict of interest issues and to ensure that personnel are properly informed in this regard. These rules and guidelines should be developed, taking into acnt the principles contained in the Code of Conduct of the State Tender Board and the King Report on Corporate Governance, 19g4, regarding improved ethics and probity as well as international norms in this regard. Steps should also be taken to ensure that a particular individual, irrespective of his/her position is not tasked with incompatible functions in multifaceted procurements. This will prevent a conflict or perceived conflict of interest, which could have a detrimental effect on the overall acquisition process.
• Parliament should consider taking urgent steps to ensure that high ranking officials and office bearers, such as Ministers and Deputy Ministers, are not allowed to be involved, whether personally or as part of private enterprise, for a reasonable periof time after they leave public office, in contracts that are concluded with the State.

In conclusion, I would like to say that the investigation was initially viewed with a certain amount of scepticism, which was not conducive to an enabling environment. However, as it progressed, confidence grew in the credibility of the process and role players and witnesses cooperated freely.

We thank all the government agencies, individuals, other role players and foreign governments who assisted us with search applications in various countries.