Arms deal jobs ruse

2011-09-17 18:34

R6.4 million. That’s how much South African taxpayers could end up paying for each job created as part of the controversial arms deal “offsets” scheme, linked to the multibillion-rand fighter jets deal.

Media24 Investigations, using access to information legislation, has obtained the first full and official account from the trade and industry department (DTI) of the value to South Africa of the Hawks and Gripens deals worth R41 billion at today’s prices.

International arms manufacturers BAE ­Systems and Saab benefited from these deals.

The details released by the DTI come as President Jacob Zuma this week announced a commission of inquiry into the arms deal, which is now thought to have cost the country more than R70 billion and which originally claimed to create more than 60 000 jobs.

The DTI’s figures, however, show that just 6 371 jobs were created in the BAE/Saab programme.

But even the DTI’s official figures are riddled with errors.

City Press can show job numbers have been vastly overstated, that “investments” were actually loans and that supposedly successful projects have disappeared without a trace.

But the DTI figures suggest each job cost South Africa R6.4 million, using the R41 billion price tag for the planes at today’s prices.

Using the original bill of R15 billion for the planes, each job still cost South Africa R2.4 million to create.

The return on investment and job-creation promises were a key political selling point to the South African public at the time of the deal, of which the fighter plane component took the lion’s share.

Saab’s role in the arms deal is currently under renewed scrutiny after it was revealed in June that it had been party to more than R24 million in payments to government-linked consultant Fana Hlongwane.

This week, one executive involved in an offset deal with BAE/Saab, said: “The offset agreement of the BAE/Saab consortium is the biggest smoke screen this country has ever experienced and has pulled the wool over the eyes
of taxpayers.”

The DTI figures list 44 programmes involving BAE/Saab, for which the two claimed an offset credit of about $6.87 billion (R51 billion).

These include deals which the government’s own investigations and our reporting have shown to be deeply flawed (see sidebar).

Activist Terry Crawford-Browne, whose Constitutional Court case asking Zuma to launch an inquiry into the deal is thought to have spurred the president into action, said he believed the DTI’s claim that more than 6 000 jobs were created was “grossly overstated”.

“There is no way of verifying that. DTI comes up with a wish list and nobody can actually investigate it. That has been the pattern right from the beginning because they (DTI) said the contract information is confidential.”

Paul Holden, the author of The Arms Deal in Your Pocket, said: “The offsets were presented as ‘the reason’ for the arms deal. The offsets were great for marketing.”

But in reality, he believes they had only a “marginal” economic impact.

Holden said the DTI’s figure of 6 300 jobs could not be trusted.

“I don’t buy those figures at all. They (the DTI) don’t aggregate those figures either. They don’t indicate if it is 6 000 direct jobs, they don’t indicate what sort of jobs have been created...It is a completely meaningless figure and the sense I get is that whatever figures have been reported are completely overstated.

“I’d be very surprised if the offsets created any jobs whatsoever. I think the actual economic benefits are marginal,” Holden said.

Requests for comment from the DTI, BAE and Saab went unanswered.

– Reporting by Jeanne Van Der Merwe, Anna-Maria Lombard, Jacques Dommisse, Thanduxolo Jika and Julian Rademeyer

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