Panel clears S. African Govt. in arms deal

By M.S. Prabhakara

CAPE TOWN, NOV. 17. The report of the joint investigation conducted by the Auditor General, the National Director of Public Prosecutions and the Public Protector into the South African Government's controversial multibillion rand Strategic Defence Package, has found that there were ``irregularities and improprieties'' in the conduct of certain officials involved in matters relating to sub- contracts.

However, the report which was released in Parliament on Thursday has found no evidence of any improper or unlawful conduct by the Government. The ``irregularities and improprieties'' found in the course of investigation ``cannot, in our view, be ascribed 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 report said.

The arms deal, estimated to cost rand 30.3 billion at the time of its signing in December 1999, is now estimated to cost rand 43 billion. Some projections put the eventual cost at rand 60 billion or even higher. The report which asks no questions about the necessity of such spending on arms notes that ``certain aspects of the financial and economic model...on the cost of the procurement can be criticised to an extent''.

The report's most striking finding in respect of the ``irregularities and improprieties'' is that there was a ``conflict of interest'' with regard to the position held and role played by Mr. Shamim (``Chippy'') Sheikh, a Chief Director in the Department of Defence who was appointed Chief of Acquisitions of the Department of Defence in May 1998. The report finds that there was a conflict of interest between the position held by Mr. Shamim Sheikh and the business interests of his brother, Mr. Shabir Sheikh, since companies controlled by him were involved in bidding for a slice of the action. However, though Mr. Shamim Sheikh in his capacity of Chief of Acquisitions declared this conflict of interest to the Project Control Board in December 1998, he continued to participate in the process that led ultimately to the awarding of contract to the companies controlled by his brother.

The finding is likely to have some political implications as well. There have been several reports suggesting that the brothers who were active in the liberation movement were involved during the period of transition in fund-raising activities on behalf of the African National Congress. The release of the report was an occasion for much political drama. In an unprecedented move, the Speaker arranged for the report to be presented to the National Assembly with a briefing by the heads of the three investigative agencies.

A media conference later addressed by the Defence Minister, Mr. Mosiuoa Lekota and other Ministers involved in the procurement process maintained that the report had vindicated the government and hence there was no question of any part of the arms package being cancelled. However, the follow-up action to the report that has been promised is bound to touch important public figures. Mr. Shabir Sheikh, with whom the brother of the Chief of Acquisitions, Mr. Shamim (``Chippy') Sheikh was identified in the report to have had a ``conflict of interest'', was arrested on Friday in Durban. Mr. Shabir Sheikh, found to be in possession of ``classified information'' has been charged under the Protection of Information Act.

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Section  : International
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