EXCLUSIVE: Armscor leaks reveal VIP jet windfall

2016-07-17 07:24

Johannesburg - Mystery surrounds the payment of R230m in just two years for the maintenance of the state’s VIP jets to private aviation firm Execujet.

News24 can reveal that Armscor, the state-owned arms manufacturer, paid ExecuJet millions to maintain the state's ailing fleet. The company also leases private jets to the state.

The ExecuJet invoices form part of a larger tranche of Armscor data dumped on the dark web following a breach of Armscor’s website by hackers claiming to have links to the global “hacktivist” group Anonymous this week.

Armscor said that the hack into their system had not revealed any classified information, but aviation experts told News24 the information was definitely commercially sensitive.

“This is a very competitive industry. These leaks might not be sensitive in terms of releasing defence information, but companies are worried this information will get out there. It is commercially sensitive,” said an employee of one of the companies named in the leak.

ExecuJet Aviation was recently in the headlines when it was revealed that a Bombardier jet hired from the company to fly deputy president Cyril Ramaphosa and a government delegation on an official trip to Japan was owned by Westdawn Investments, a Gupta-owned company who had President Jacob Zuma’s son Duduzane as one of its directors.

New R4bn presidential jet

The maintenance of the aircraft which fly the country’s executive, including the Presidential jet Inkwazi, has also been in the spotlight with Defence and Military Veterans Minister Nosiviwe Mapisa-Nqakula indicating this year that the Ministry was looking at buying a new VVIP jet for the presidency.

The DA has said the jet could cost as much as R4bn, labeling the acquisition “Nkandla Air”, but Mapisa-Nqakula has denied the costs that such a buy would be anywhere close to that amount of money.

Talk of a new aircraft being bought came after Inkwazi suffered a leaking fuel pipe while the President was in Doha, Qatar. Another technical problem had earlier left him stranded in Burundi.

Aside from leasing aircraft, which is done through Treasury, ExecuJet Aviation’s subsidiary company ExecuJet Maintenance has also received tenders to keep some of the South African Air Force’s (SAAF) ageing fleet of VVIP aircraft in the air. But until now not much was known about the spend of such maintenance contracts.

The R230m figure was contained in a series of invoices from ExecuJet Maintenance which were settled by Armscor between May 2014 and May 2016.

Although Armscor’s tender records to ExecuJet Maintenance show that the company is in charge of maintaining some of the SAAF’s aircraft, the publicly tendered figures do not amount to R230m in two years. According to Armscor’s tender records ExecuJet Maintenance in August 2011 secured a five-year R90m contract for the “provision of product support services” for the South African Air Force’s (SAAF) two Falcon 50 and one Falcon 900 VVIP aircraft. The contract should therefore come to an end in August this year.

Contracts

According to defenceWeb, an online news service for the defence industry, the ExecuJet Aviation Group also scored a contract in 2014 to refurbish the SAAF’s four Beechcraft King Air B200 planes. It is not clear which of Execujet’s subsidiaries secured the contract or whether Armscor also issued this tender.

Armscor’s contract records, also published on defenceWeb, shows that ExecuJet Maintenance secured further contracts from Armscor between 2007 and 2010 valued at about R40m.

The R230m in two years does appear to be a significant increase on earlier maintenance spends to the company. In 2011 it was revealed that the South African Air Force (SAAF) had paid R58.1m to ExecuJet Maintenance in six years to provide “product support services” to the presidential Boeing Business Jet (BBJ).

The Mail & Guardian reported at the time that then Defence Minister Lindiwe Sisulu in a confidential memorandum argued for two Boeing 767 VIP transports for the dedicated use of President Jacob Zuma, and two Boeing 737s for his deputy, as well as two smaller Challenger or Bombardier Global Express XRS jets for “former presidents and ministers”.

“One aircraft for intercontinental presidential travel is woefully inadequate,” Sisulu argued in the memo. “In the event that the BBJ [Boeing Business Jet] is unserviceable or in servicing, there is not another kind of aircraft that is able to fulfill presidential air transport requirements.”

Attached to the memo was a letter from ExecuJet, arguing that it would be cheaper to buy new aircraft than to continue operating those more than 10 years old. It was unclear why the company that was leasing and maintaining the VIP squad would also be making recommendations on whether to buy new aircraft or not.

Secretary for Defence at the time Mpumi Mpofu said the price of the lease had to be offset against the ever-increasing cost of maintaining the ever-more-elderly VIP-transport fleet as well as the cost of leasing when the BBJ, Falcon 900, two Falcon 50s and assorted smaller aircraft were either unavailable or unsuitable. She described the costs as increasingly “untenable”.

Mark-ups 'actually tiny'

Aviation experts told News24 this week that the R230m spend may not be an excessive amount as maintaining aircraft is extremely expensive. Much of the work is done outside of the country, parts cost a lot and payment is done in US Dollars. With the fluctuating exchange rate this could have increased costs in the past two years.

But this could only be judged if it was known how many and which aircrafts were included in the contracts. The numerous experts spoken to could only speculate which aircraft were being maintained by ExecuJet Maintenance and if the contracts included Inkwazi or not.

“It would be really difficult to make excessive profits from Armscor maintenance contracts, the mark-ups are actually tiny. Armscor insists on obtaining invoices from maintenance companies for the aircraft parts that were replaced, and sometimes they even demand proof that such invoices were actually paid,” said Lelani Jansen, client relations manager at Interjet Maintenance.

Both Armscor and Execujet refused to shed any light on how and what the R230m was spent on.

“We are not at liberty to divulge information on any of our suppliers as this will be a breach of confidentiality,” said Lulu Mzili, Armscor’s spokesperson.

“At the outset, we wish to state that we do not endorse hacking or the obtaining of information through any improper or unlawful means,” said Execujet’s Stephen Paddy, in reference to the Armscor data leak.

“Secondly, we respect the confidentiality of all our clients and are unable to reply to questions pertaining to clients' confidential information."

Read more on:    armscor  |  johannesburg

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