JOHANNESBURG. Swedish-British arms exporters Saab AB andd BAE Systems has delivered 100 percent of its arms offset commitment to South Africa during 2004/2005, according to a report to the South African Parliamentary portfolio committee on trade and industry.
The Swedish-British non-defense industrial participation projects (NIP) included a start-up fund for small companies, a gold loan scheme for jewelers, a carbon manufacturing business; high-pressure die casting and a new ferrochrome smelter.
Yet another Saab-BAE project, a $6 million investment in a gold beneficiation project, adjacent to the Harmony gold mine in Virginia, has been less successful and has folded, the committee was told. Two employees were being investigated by the Scorpions, the investigation unit of the National Prosecution Agency.
The parliamentary committee was told that the arms offset programme as a whole, including Saab-BAE, French arms manufacturer Thales, German Ferrostahl and Thyssen, as well as Italy´s Agusta, was on track. It had so far delivered $ 3.5 billion (ZAR 22.9 billion) in value and created 8000 new jobs.
The value is based on a scorecard and does not necessarily reflect the ultimate, real investments or purchases that the contractors are delivering.
No breakdown figures for each project were given, but the committee was told that Thales was largely on track and that the German´s and Italians lagged behind.
According to the contracts South Africa has the right to cancel arms contracts if the offset obligations of some ZAR 100 million, thereof about ZAR 60 billion on behalf of Saab-BAe, in total are not fulfilled.
South African analysts are largely skeptical about the programme and believe that the massive offset obligations were simply put in place by the Government to justify the massive purchase of weapons for ZAR 43 billion – the contracts were signed in April 2000 and included jetfighters, trainer jets, submarines, corvettes and helicopters.
Other critics say that the values are manipulated, as it otherwise would be impossible for the arms exporters to live up to their commitments.JOHANNESBURG. Swedish-British arms exporter Saab-BAE Systems has delivered 100 percent of its arms offset commitment to South Africa during 2004/2005, according to a report to the South African Parliamentary portfolio committee on trade and industry.
The Swedish-British non-defense industrial participation projects (NIP) included a start-up fund for small companies, a gold loan scheme for jewelers, a carbon manufacturing business; high-pressure die casting and a new ferrochrome smelter.
Yet another Saab-BAE project, a $6 million investment in a gold beneficiation project, adjacent to the Harmony gold mine in Virginia, has been less successful and has folded, the committee was told. Two employees were being investigated by the Scorpions, the investigation unit of the National Prosecution Agency.
The parliamentary committee was told that the arms offset programme as a whole, including Saab-BAE, French arms manufacturer Thales, German Ferrostahl and Thyssen, as well as Italy´s Agusta, was on track. It had so far delivered $ 3.5 billion (ZAR 22.9 billion) in value and created 8000 new jobs.
The value is based on a scorecard and does not necessarily reflect the ultimate, real investments or purchases that the contractors are delivering.
No breakdown figures for each project were given, but the committee was told that Thales was largely on track and that the German´s and Italians lagged behind.
According to the contracts South Africa has the right to cancel arms contracts if the offset obligations of some ZAR 100 million, thereof about ZAR 60 billion on behalf of Saab-BAe, in total are not fulfilled.
South African analysts are largely skeptical about the programme and believe that the massive offset obligations were simply put in place by the Government to justify the massive purchase of weapons for ZAR 43 billion – the contracts were signed in April 2000 and included jetfighters, trainer jets, submarines, corvettes and helicopters.
Other critics say that the values are manipulated, as it otherwise would be impossible for the arms exporters to live up to their commitments. “It´s not in the interest of the Department of Trade and Industry to lose face, so they go along with this charade”, said one arms analyst. The scale of the agreed offsets, the analyst points out, is almost incomprehensible.
“An average internationally sized factory would cost in the region of ZAR 1 billion. It would mean that South Africa would receive in total the equivalent of 100 major factories by the 2011 deadline. It would mean that Saab-BAE should deliver 60 of those factories. It´s impossible”. Saab-BAE agreed to deliver three times the value of its ZAR 22 billion export of 28 Gripen jetfighters and 24 Hawk trainer jets.
Africascan comment:
South Africa´s ZAR 43 billion purchase of jetfighters, submarines, corvettes and helicopters was one of the larger international arms deals during the Nineties. The deal was controversial from the outset, designed as it were to contribute to redistribution of economic wealth to the country´s disadvantaged black majority.
The rumors about backhanders, nepotism, favoritism, cronyism, etc, started immediately. So far the top politicians and officials being caught or being forced to resign is quite impressive:
• ANC´s Parliamentary Chief Whip at the time, Tony Yengeni, had accepted a 50 percent reduction on two Mercedes Benz cars from Germany´s EADS.
• The Chief Administrator of the Offset deals at Department of Trade and Industri, Vasi Naidoo, had to resign after accepting a drastically reduced price on a Mercedes Benz 4×4.
• The Deputy President, Jacob Zuma, had to resign and now stands charged for having a “corrupt relationship” with his financial advisor Schabir Shaik and to accept a ZAR 500 000 bribe from France´s Thales International (formerly Thomson CSF).
In relation to Saab-BAE Systems the following unproven accusations have been made in public:
• That the now deceased former Minister of Defence Joe Modise, interfered in the tender process and paved the way for the Saab-BAE Systems offer despite that it was by far the most expensive one. Modise died from cancer.
• That BAE and Saab, encouraged by Modise, donated well over a million rand to set up a artisan school for former ANC guerilla soldiers – money that have not been accounted for.
• That BAE and Saab, according to a former member of the SA Parliament´s auditing committee, Andrew Feinstein, donated 35 million dollar to the ANC.
• That Saab-BAE´s agent in South Africa, the now deceased Richard Charter through his company Osprey Aviation received somewhere between ZAR 500 million to 1 billion in commissions after the ZAR 22 billion deal was concluded, paid out commissions to politicians (which he denied). Charter drowned while canoing in the Orange River with his son.
South Africa has the right to cancel any deal where bribes have been given to officials. However the likelihood that the arms deal will be cancelled is very slim. If so, it would probably not be due to further corruption cases, but, which is part of the contract, to the eventuality of a sharply devaluated currency.
South Africa can not cancel the purchase of Gripen and Hawk on the basis of non-delivery of offset projects. The most a defaulting party have to pay in fine is 10 percent of the purchase amount.
“It´s not in the interest of the Department of Trade and Industry to lose face, so they go along with this charade”, said one arms analyst. The scale of the agreed offsets, the analyst points out, is almost incomprehensible.
“An average internationally sized factory would cost in the region of ZAR 1 billion. It would mean that South Africa would receive in total the equivalent of 100 major factories by the 2011 deadline. It would mean that Saab-BAE should deliver 60 of those factories. It´s impossible”.
Saab-BAE agreed to deliver three times the value of its ZAR 22 billion export of 28 Gripen jetfighters and 24 Hawk trainer jets.
Africascan comment:
South Africa´s ZAR 43 billion purchase of jetfighters, submarines, corvettes and helicopters was one of the larger international arms deals during the Nineties. The deal was controversial from the outset, designed as it were to contribute to redistribution of economic wealth to the country´s disadvantaged black majority.
The rumors about backhanders, nepotism, favoritism, cronyism, etc, started immediately. So far the top politicians and officials being caught or being forced to resign is quite impressive:
• ANC´s Parliamentary Chief Whip at the time, Tony Yengeni, had accepted a 50 percent reduction on two Mercedes Benz cars from Germany´s EADS.
• The Chief Administrator of the Offset deals at Department of Trade and Industri, Vasi Naidoo, had to resign after accepting a drastically reduced price on a Mercedes Benz 4×4.
• The Deputy President, Jacob Zuma, had to resign and now stands charged for having a “corrupt relationship” with his financial advisor Schabir Shaik and to accept a ZAR 500 000 bribe from France´s Thales International (formerly Thomson CSF).
In relation to Saab-BAE Systems the following unproven accusations have been made in public:
• That the now deceased former Minister of Defence Joe Modise, interfered in the tender process and paved the way for the Saab-BAE Systems offer despite that it was by far the most expensive one. Modise died from cancer.
• That BAE and Saab, encouraged by Modise, donated well over a million rand to set up a artisan school for former ANC guerilla soldiers – money that have not been accounted for.
• That BAE and Saab, according to a former member of the SA Parliament´s auditing committee, Andrew Feinstein, donated 35 million dollar to the ANC.
• That Saab-BAE´s agent in South Africa, the now deceased Richard Charter who through his company Osprey Aviation received somewhere between ZAR 500 million to 1 billion in commissions after the ZAR 22 billion deal was concluded, paid out commissions to politicians (which he denied). Charter drowned while canoing in the Orange River with his son in 2003.
South Africa has the right to cancel any deal where bribes have been given to officials. However the likelihood that the arms deal will be cancelled is very slim. If so, it would probably not be due to further corruption cases, but, which is part of the contract, to the eventuality of a sharply devaluated currency.
South Africa can not cancel the purchase of Gripen and Hawk on the basis of non-delivery of offset projects. The most a defaulting party have to pay in fine is 10 percent of the purchase amount.
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