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Hubert Khobane
 
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Arms deal Audit reveals major fraud.

06 June 2014, 12:32

Arms deal Audit reveals major fraud.


 A damning audit report about the economic benefits that South Africa was supposed to have received  out of the infamous arms deal, has revealed that the counter investments that were a criteria to be awarded a contract, was indeed a fraud and amounted to corruption par excellance.

An audit that investigated the counter investment program – contracts that obliged foreign companies were to invest in South Africa to create work in exchange for an arms contract – has been revealed for the first time.

Almost all of the work opportunities and investments that were promised by government, never materialized. To make matters worse, the South African government has now apparently even allowed those contractors that reneged on their counter investment, to write off the money that it owes South Africa.

Alec Erwin, the then Minister of Trade and Industries, that was one of the biggest supporters of the counter investment program , would be appearing in front of the Sereti commission that is investigating the arms deal. The audit about the supposed 121 programs that were to have been delivered revealed that only 40 actually did.

·         Arms dealers, of whom two were awarded big contracts to supply arms, were allowed to write off billions of rands that they owe South Africa as counter investments;

·         Only 3815 work opportunities were created in the promised 56 531 that was supposed to have been created;

·         The French arms dealer, Thales was given credit for $ 171.2 million , for a disastrous counter investment for a dumping site for medical waste amounting to $ 1,2 million;

·         The German submarine consortium invested €16.2 million less than they were supposed to have invested;

·         A failed project of the Aerospace/SAAB was never mentioned in the arms deal, and only came to light in the audit.

David Maynier, DA-MP, only now managed to get the report, dated October 2012, after lengthy failed efforts to obtain it.

Andrew Feinstein that resigned as ANC-MP over the infamous arms deal says that “the counter investment program was a major disaster – exactly what I said at the time. I told the government about the dangers of the counter investment program when I was still in parliament. They knew about these problems, but the bribery and fraud that could be committed was something that they couldn’t resist.”

Feinstein has for the past years been investing arms suppliers and dealers in the world, and says that these dealers and manufacturers hardly ever act on their promised counter investment programs that were part of the deal.

Paul Holden, a co-author of the book about the arms deal is ‘damning!’

“It shows that the true economic benefits were far less than that which was promised. At the time when the government concluded the contract, it was done on the basis of the counter investments that were to be forthcoming and the benefits that it would have given to South Africa. The report suggests and confirms that these benefits never happened.”

In the book The Devil in Detail  Holden and Hennie van Vuuren claims that BAES promised ten times more counter investments than any of the others who tendered, but were never awarded any work and or supply contracts.

The German consortium only invested €27.5 million, but were given credit (contracts) worth €1 285 billion.

Maynier says that the audit report is indeed damning and there is very little faith that the counter investment program was in actual fact a monumental fraud that underlines the whole arms deal as a vast opportunity used by some for fraudulent and bribery opportunities for self enrichment.

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