Issued by the Ministry of Finance
8 March 2002
The National Government has filed its response to the application launched by Ecaar South Africa and Terry Crawford-Browne ("the Applicants") in the Cape of Good Hope Provincial Division of the High Court for the review of the decision of the Minister of Finance to enter into loan agreements with international banks for purposes of financing the acquisition of the SDPs.
The response of the National Government, which is set out in the affidavit of Maria Ramos, the Director-General: National Treasury is that:
The decision to acquire the SDPs was properly taken by Cabinet in the exercise of its executive authority in terms of section 85 of the Constitution. It was preceded by a lengthy consultative process which culminated in both the White Paper on Defence and the Defence Review that was accepted by Parliament.
Once that decision had been taken, it was the responsibility of the Minister of Finance, in terms of the powers accorded to him under the Exchequer Audit Act, to give effect to consequential financial arrangements. The Minister's decision to enter into ECA finance loan agreements was rational and well considered. The Minister concluded, after considering the advice of the National Treasury and other financial experts, that the taking of ECA finance loans was the most, realistic, effective and economic way available for financing the SDP acquisition. It substantially improved the financing of the SDPs in terms of cash flow and exchange risks and produced substantial savings for the Republic of South Africa, amounting to approximately US$ 101,09 million.
The hyperbolic and polemical suggestions made by the Applicants, simply to advance an in principle opposition to the acquisition of strategic defence equipment, also conveniently ignore the fact that the total defence budget (inclusive of the loans for the acquisition of the SDPs) is 1,7% of GDP compared with 3,7% of GDP a decade ago. They also ignore the fact that prudent fiscal management on the part of government has resulted in lower interest costs thereby releasing some R10bn of additional resources for spending on services. Further, debt service costs (inclusive of the SDP loans) are expected to fall from 4,8% of GDP in the 2001/2002 financial year to 4,1% of GDP by the 2004/2005 financial year.
The application to review the Minister's decision is, in law, misconceived. It is brought before the Cape High Court when, given the fact that the loans were entered into in Pretoria, the executive capital of the Republic, it should have been brought before the Pretoria High Court. Further, it misconstrues a commercial transaction of raising loan finance from international banks as being an international agreement as envisaged by the Vienna Convention and section 231 of the Constitution. As a result, they have wrongly submitted that Parliament should have approved the loan agreements.
The National Government submits that Ecaar South Africa has failed to demonstrate that it is an entity with legal capacity and more particularly, the capacity to sue. Inquiries by the National Government's lawyers have revealed that Ecaar South Africa is an entity without a constitution and with Terry Crawford-Browne as its only office bearer. It is therefore most likely that Ecaar South Africa is simply Terry Crawford-Browne by another name.
There are a number of polemical, irrelevant, argumentative and, at times, mischievous submissions by the Applicants which appear to be an abuse of the court process. The contents of some of the paragraphs of the Applicants' affidavits are so vague and generalised; and so infused with polemical and speculative material as to be incapable of meaningful traverse. An application to strike-out such material will be made to the Court at the appropriate time. Many of those submissions also appear to have been calculated to question the sincerity of the National Government to its socio-economic rights commitments. However, it needs not be repeated that the Budget tabled by the Minister on 20 February is focussed on effectively dealing with poverty.
Contact: Logan Wort 083 443 7734