Thabo Mbeki ignored arms deal advice

2014-05-18 15:00

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Before they finalised a single contract, former president Thabo Mbeki and some of his most powerful Cabinet ministers were explicitly warned the arms deal would be of no benefit to South Africa’s economy.

Analysts also warned the ministers committee considering the deal that the national investment projects – which were supposed to create thousands of jobs for South Africans – were not realistic.

Mbeki, his minister of finance Trevor Manuel and deputy minister of defence minister Mosiuoa Lekota are all expected to take the stand in the first week of June at the Seriti Commission of Inquiry into the multibillion-rand deal. Ronnie Kasrils, who served as deputy to the late defence minister Joe Modise, will also testify.

An affordability report, which was compiled in 1999 but that was declassified only last month for use in the Seriti commission, calculated the effects of the deal if it cost R25?billion.

»This was greater than the budget of the department of housing;

»About 50% more than the investment in municipal infrastructure; and

»Roughly a third of the total budget of the department of education. In the end, the arms deal cost South African taxpayers R46.6?billion.

The analysts warned that:

»South Africa’s government was ­already “edging towards the levels of borrowing and of debt service obligations which the international markets regard as the maximum acceptable, even without the defence procurements”; and

»There was no way to ensure the contractors would meet their obligations and actually create jobs in South Africa.

The latter was borne out by a City Press investigation in March, in which we revealed some national investment projects were bankrupt, some simply didn’t exist and many didn’t employ even half as many people as had been promised when the deal was signed.

Arms deal critic Paul Holden said the report showed clearly that it was a huge risk to go ahead with the transaction. “The report shows the context in which the whole arms deal was pursued.

There had been five years of very poor economic performance, massive unemployment, a deficit reduction strategy that limited the state’s RDP programme. Another major issue was dealing with apartheid-era debt.

“Despite this, there’s a decision to pursue a deal which we would be paying off until 2020. The affordability report is important because it illustrates the arms deals were ­undertaken in bad faith.”

Testifying before the commission in Pretoria this week, former defence secretary Pierre Steyn said there was an “unseemly hurry to procure arms”.

Steyn – who was defence secretary between 1994 and 1998, a ­position equivalent to director-general and responsible for the defence budget – said he was made to feel like a “nuisance” every time he raised concerns about the arms deal and irregular tender procedures.

Steyn left his job halfway through the negotiations in 1998, largely due to the irregularities which he said no one was prepared to control.

When contacted, Lekota said he was not in a position to comment on the report because those decisions had been made by a team.

“I can’t talk about this until I have consulted our legal team at the commission, and I don’t think that will be possible because everyone is busy with the elections,” said Lekota, who is now the leader of the Congress of the People.

He added: “And anyway, this was a long time ago. I would need to go through the minutes of the meetings we had at the time. These decisions were made as a committee and we would have to answer as a committee.”

Manuel is now the minister in the presidency in charge of national planning. His spokesperson Dumisa Jele said he was not in a position to ­comment.

Repeated attempts to contact Mbeki and Kasrils were unsuccessful.– Additional reporting by Xolani Mbanjwa

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