A recent Auditor-General's report detailing massive tender corruption across South Africa's nine provinces once again illustrates just how easy it has become to manipulate government contracts. But, worse still, the report only lists tender fraud found in 247 projects worth R6.6-billion in the health and education provincial departments. In some instances, contracts were awarded without even going through the tender process while, in others, contractors delivered incomplete or shoddy work and still managed to receive substantial payments.
As Themba Godi, chairman of the standing committee on public accounts, said after receiving the AG's report last week: "So much has been spent and very little has been delivered." This is, indeed, the crux of the problem. For failure to deliver government infrastructure, particularly in the areas of health and education, goes far beyond the depletion of the public purse. It goes to the heart of service delivery. A clinic not completed in a rural area means that the poorest South Africans are denied access to basic healthcare. And a school that is never completed translates into hundreds of children being taught under trees or in mud structures.
Finance Minister Pravin Gordhan announced earlier this year a range of measures meant to curtail tender fraud. Along with publishing a blacklist of tenderers, Gordhan said Treasury approval would have to be sought for tenders in excess of R10-million. The AG's report shows just how entrenched tender corruption has become and how easy it is for both public servants and unscrupulous contractors to fleece the government. This must then raise the question - even with the purest of intentions and the greatest of will: can the tide be turned on corruption?
Source: Times Live
Showing posts with label SCOPA. Show all posts
Showing posts with label SCOPA. Show all posts
Monday, September 19, 2011
Wednesday, September 8, 2010
Hawks boss questions viability of arms-deal probe
The head of the Hawks, Anwa Dramat, on Wednesday questioned whether it was in South Africa's interest to pursue the only two remaining investigations linked to the arms-deal scandal.
Dramat told Parliament's watchdog public accounts committee, Scopa, that both cases were dependent on obtaining information from other countries, and could therefore take up to 10 years to conclude. "These two legs await information from other authorities. But even with information from the said authorities, the question is whether it is in the best interest of the country to pursue these investigations, which will take at least five to 10 years and cost more than R10-million." He added, to the outrage of MPs: "That is for Parliament to take an executive decision on."
Dramat was referring to investigations into claims that senior South African officials took bribes from German and British arms-makers who secured tenders to sell the country German warships and Hawk jet trainers. He confirmed that a single investigator -- former Scorpions members Johan du Plooy -- has been working on the complex case involving the German Frigate Consortium.
In order to obtain the help of the German authorities, the Hawks asked the National Prosecuting Authority (NPA) to appoint a judge to issue a request for mutual legal assistance. The matter has since been referred to the Special Commercial Crimes Unit. "Those dockets were presented to the NPA in June," Dramat said, adding that the Hawks had no choice but to wait for the NPA's next move.
The second case, involving claims of bribes from Britain's BAE Systems, appeared similarly stalled, with the police waiting for a decision from the NPA on whether or not to proceed with charges, or to request further investigation. Dramat said together the two cases involved alleged illicit payments of about R480-million.
Opposition MPs charged that the state of play suggested authorities were dragging their feet and might be under political duress to drop any remaining probe into the scandal, which dates from more than a decade ago. "It is my impression ... that what we've heard today [Wednesday] is that there is an investigation where there are 460 boxes of documents, 4,7-million computer-generated documents and one investigator apparently assigned to that investigation," David Maynier from the Democratic Alliance said. "I conclude or infer from that that what we are dealing with here is a non-investigation. The inference is always that we are in a situation like this because there has been some kind of political interference."
He asked Dramat and NPA head Menzi Simelane whether President Jacob Zuma and current or former ministers had ever sought to influence the course of the investigations. Both Dramat and Simelane strenuously denied any political meddling.
Dramat said he had only met Zuma in person on one occasion, "and there was no discussion of any investigation with the president at all. I can confirm that at least on my side there has been no pressure or undue influence that has been placed on me in terms of this investigation." Simelane added: "The answer is no, I have never discussed any matter in the NPA with President Zuma." He added that he would not rush the cases to suit the opposition either. "The matter will be dealt with in accordance with the law and as reasonably and possibly as we can. We are not going to do anything that compromises any investigation just because it suits any individuals or parties that are interested in this matter."
Asked about his decision to order the Asset Forfeiture Unit (AFU) to abandon steps to freeze the foreign assets of former defence adviser Fana Hlongwane in the BAE investigation, Simelane again cited a lack of foreign cooperation among the obstacles encountered. Maynier quipped that the snail's pace at which both cases were proceeding suggested the "Hawks need a strong dose of investigative Red Bull".
The arms-deal investigations go back to the mid-1990s. In 2008, the Scorpions reopened the case involving BAE's sale of Hawk jet trainers to South Africa and raided the offices of Hlongwane and BAE's Pretoria premises at the end of that year. In February, Britain's Serious Fraud Office decided to settle bribery charges with arms manufacturer BAE Systems, raising concerns that the South African probe would hit a dead end. In March, Simelane ordered the AFU not to pursue an attempt to seize millions of rands held in Lichtenstein by Hlongwane, saying he was not convinced by the evidence against him.
Source: Mail & Guardian
Dramat told Parliament's watchdog public accounts committee, Scopa, that both cases were dependent on obtaining information from other countries, and could therefore take up to 10 years to conclude. "These two legs await information from other authorities. But even with information from the said authorities, the question is whether it is in the best interest of the country to pursue these investigations, which will take at least five to 10 years and cost more than R10-million." He added, to the outrage of MPs: "That is for Parliament to take an executive decision on."
Dramat was referring to investigations into claims that senior South African officials took bribes from German and British arms-makers who secured tenders to sell the country German warships and Hawk jet trainers. He confirmed that a single investigator -- former Scorpions members Johan du Plooy -- has been working on the complex case involving the German Frigate Consortium.
In order to obtain the help of the German authorities, the Hawks asked the National Prosecuting Authority (NPA) to appoint a judge to issue a request for mutual legal assistance. The matter has since been referred to the Special Commercial Crimes Unit. "Those dockets were presented to the NPA in June," Dramat said, adding that the Hawks had no choice but to wait for the NPA's next move.
The second case, involving claims of bribes from Britain's BAE Systems, appeared similarly stalled, with the police waiting for a decision from the NPA on whether or not to proceed with charges, or to request further investigation. Dramat said together the two cases involved alleged illicit payments of about R480-million.
Opposition MPs charged that the state of play suggested authorities were dragging their feet and might be under political duress to drop any remaining probe into the scandal, which dates from more than a decade ago. "It is my impression ... that what we've heard today [Wednesday] is that there is an investigation where there are 460 boxes of documents, 4,7-million computer-generated documents and one investigator apparently assigned to that investigation," David Maynier from the Democratic Alliance said. "I conclude or infer from that that what we are dealing with here is a non-investigation. The inference is always that we are in a situation like this because there has been some kind of political interference."
He asked Dramat and NPA head Menzi Simelane whether President Jacob Zuma and current or former ministers had ever sought to influence the course of the investigations. Both Dramat and Simelane strenuously denied any political meddling.
Dramat said he had only met Zuma in person on one occasion, "and there was no discussion of any investigation with the president at all. I can confirm that at least on my side there has been no pressure or undue influence that has been placed on me in terms of this investigation." Simelane added: "The answer is no, I have never discussed any matter in the NPA with President Zuma." He added that he would not rush the cases to suit the opposition either. "The matter will be dealt with in accordance with the law and as reasonably and possibly as we can. We are not going to do anything that compromises any investigation just because it suits any individuals or parties that are interested in this matter."
Asked about his decision to order the Asset Forfeiture Unit (AFU) to abandon steps to freeze the foreign assets of former defence adviser Fana Hlongwane in the BAE investigation, Simelane again cited a lack of foreign cooperation among the obstacles encountered. Maynier quipped that the snail's pace at which both cases were proceeding suggested the "Hawks need a strong dose of investigative Red Bull".
The arms-deal investigations go back to the mid-1990s. In 2008, the Scorpions reopened the case involving BAE's sale of Hawk jet trainers to South Africa and raided the offices of Hlongwane and BAE's Pretoria premises at the end of that year. In February, Britain's Serious Fraud Office decided to settle bribery charges with arms manufacturer BAE Systems, raising concerns that the South African probe would hit a dead end. In March, Simelane ordered the AFU not to pursue an attempt to seize millions of rands held in Lichtenstein by Hlongwane, saying he was not convinced by the evidence against him.
Source: Mail & Guardian
Sunday, August 8, 2010
Arms deal report outrage
The Auditor-general and the public protector failed South Africans in 2001 by not coming clean on the substantive changes they allowed politicians to make to their final report on alleged arms deal corruption.
These strong words come from businessman Richard Young, who was told last week that his testimony would no longer be required by Parliament's standing committee on public accounts (Scopa) when it deliberates on new allegations of corruption in the government's arms-acquisition package. Young questioned the conclusion of the troika of investigators appointed by former president Thabo Mbeki - then-auditor-general Shauket Fakie, former public protector Selby Baqwa and the national director of public prosecutions at the time, Bulelani Ngcuka - when they said no material or substantive amendments were made to their findings by the executive. He obtained several of the draft versions of the Joint Investigative Team (JIT) report on allegations of irregularities in the arms deal through a court order after taking the government to court over its reward of a sub-contract to a French company.
Last year he submitted to Scopa 700-odd pages of drafts and documents to Parliament after it made a public call for new evidence in the decade-long saga of allegations that politicians and officials have benefited fraudulently from the R60 billion deal. It coincides with Scopa's assessment of whether government departments and entities followed through on the recommendations made in the JIT report commissioned by Mbeki in 2000.
Young's copies of the draft reports point to possible interference by a ministerial committee to sanitise the JIT report. Among the changed portions are allegedly findings that indicate manipulation in choosing the final bidders, according to documents released by the DA last year.
Young told Independent Newspapers that the drafters had "cynically manipulated the report in the way that a ministers' committee ordered". "I would say the arms deal was the biggest act of corruption at that time, but the report's cover-up is the biggest act of fraud yet against the people of South Africa," Young charged. "The documents before Scopa are proof of that."
It includes a transcript of a two-day hearing held in Parliament after the finalisation of the report in which both Fakie and Baqwa deny that they were told to alter their report, except to accommodate matters of national interest and make it readable. "Because of the changed report the cabinet could wash its hands of any wrongdoing in the arms deal," said Young. Neither Baqwa nor Fakie - who both have executive positions in the private sector now - could be reached for comment.
Allegations that Mbeki's office was involved in the changes to the final draft have made headlines since 2003 and at one stage prompted Fakie to plead with Parliament to help protect the integrity of his office. Young said the names of arms-deal agents who were later investigated for fraud and bribery in Britain and Germany for graft were in the draft reports, but omitted in the final report. "You can look at the original and it says that the minister (of defence, the late Joe Modise) interfered in the Hawk and Gripen tenders. I would say that the final report was fundamentally flawed."
Scopa chairman Themba Godi said this was necessary because the police elite unit - the Hawks - first needed to return to the committee to answer questions on ongoing arms-deal investigations it inherited from the Scorpions, its predecessor. Godi said the meeting would be rescheduled once Hawks head Anwa Dramat was available.
The JIT report enjoined the Scorpions to criminal investigations into allegations of fraud in the deal, which has already led to the conviction of Schabir Shaik. It is, however, understood that there are tensions within the ANC over how much exposure the review should get. MPs who have studied Young's submission suggested that it wouldn't be plain sailing if they accepted his scenario.
In a written submission to Scopa, Young had suggested "that only about 25 percent of the content of the full report was disclosed". Copies of a purported draft version of the report showed sections that have been crossed out and handwritten amendments, including a revision of the team's conclusions. One of the additions includes the conclusion that "the joint investigation team found no evidence of impropriety, fraud or corruption by cabinet (or) government" - despite the finding in the original report that pointed to possible interference by officials of the Department of Defence and Armscor.
On Friday, arms-deal crusader Terry Crawford-Browne also delivered a raft of key documents on the deal to Parliament in a last-ditch attempt to ensure Scopa's inquiry did not founder. Crawford-Browne handed over pages of affidavits - including search warrants compiled by the British Serious Fraud Office and the erstwhile Scorpions which outlines allegations of bribes of R1,3bn that arms manufacturer British Aerospace (BAe) allegedly paid to secure a contract.
Source: IoL
These strong words come from businessman Richard Young, who was told last week that his testimony would no longer be required by Parliament's standing committee on public accounts (Scopa) when it deliberates on new allegations of corruption in the government's arms-acquisition package. Young questioned the conclusion of the troika of investigators appointed by former president Thabo Mbeki - then-auditor-general Shauket Fakie, former public protector Selby Baqwa and the national director of public prosecutions at the time, Bulelani Ngcuka - when they said no material or substantive amendments were made to their findings by the executive. He obtained several of the draft versions of the Joint Investigative Team (JIT) report on allegations of irregularities in the arms deal through a court order after taking the government to court over its reward of a sub-contract to a French company.
Last year he submitted to Scopa 700-odd pages of drafts and documents to Parliament after it made a public call for new evidence in the decade-long saga of allegations that politicians and officials have benefited fraudulently from the R60 billion deal. It coincides with Scopa's assessment of whether government departments and entities followed through on the recommendations made in the JIT report commissioned by Mbeki in 2000.
Young's copies of the draft reports point to possible interference by a ministerial committee to sanitise the JIT report. Among the changed portions are allegedly findings that indicate manipulation in choosing the final bidders, according to documents released by the DA last year.
Young told Independent Newspapers that the drafters had "cynically manipulated the report in the way that a ministers' committee ordered". "I would say the arms deal was the biggest act of corruption at that time, but the report's cover-up is the biggest act of fraud yet against the people of South Africa," Young charged. "The documents before Scopa are proof of that."
It includes a transcript of a two-day hearing held in Parliament after the finalisation of the report in which both Fakie and Baqwa deny that they were told to alter their report, except to accommodate matters of national interest and make it readable. "Because of the changed report the cabinet could wash its hands of any wrongdoing in the arms deal," said Young. Neither Baqwa nor Fakie - who both have executive positions in the private sector now - could be reached for comment.
Allegations that Mbeki's office was involved in the changes to the final draft have made headlines since 2003 and at one stage prompted Fakie to plead with Parliament to help protect the integrity of his office. Young said the names of arms-deal agents who were later investigated for fraud and bribery in Britain and Germany for graft were in the draft reports, but omitted in the final report. "You can look at the original and it says that the minister (of defence, the late Joe Modise) interfered in the Hawk and Gripen tenders. I would say that the final report was fundamentally flawed."
Scopa chairman Themba Godi said this was necessary because the police elite unit - the Hawks - first needed to return to the committee to answer questions on ongoing arms-deal investigations it inherited from the Scorpions, its predecessor. Godi said the meeting would be rescheduled once Hawks head Anwa Dramat was available.
The JIT report enjoined the Scorpions to criminal investigations into allegations of fraud in the deal, which has already led to the conviction of Schabir Shaik. It is, however, understood that there are tensions within the ANC over how much exposure the review should get. MPs who have studied Young's submission suggested that it wouldn't be plain sailing if they accepted his scenario.
In a written submission to Scopa, Young had suggested "that only about 25 percent of the content of the full report was disclosed". Copies of a purported draft version of the report showed sections that have been crossed out and handwritten amendments, including a revision of the team's conclusions. One of the additions includes the conclusion that "the joint investigation team found no evidence of impropriety, fraud or corruption by cabinet (or) government" - despite the finding in the original report that pointed to possible interference by officials of the Department of Defence and Armscor.
On Friday, arms-deal crusader Terry Crawford-Browne also delivered a raft of key documents on the deal to Parliament in a last-ditch attempt to ensure Scopa's inquiry did not founder. Crawford-Browne handed over pages of affidavits - including search warrants compiled by the British Serious Fraud Office and the erstwhile Scorpions which outlines allegations of bribes of R1,3bn that arms manufacturer British Aerospace (BAe) allegedly paid to secure a contract.
Source: IoL
Friday, August 6, 2010
Sisulu digs in heels on defence reports
Defence Minister Lindiwe Sisulu is not budging in her battle with MPs, who she accuses of misunderstanding the rules of Cabinet and Parliament. Sisulu's acrimonious relationship with the National Assembly has been highlighted by her refusal to hand over to Parliament's defence committee documents of the Interim National Defence Force Service Commission until they have been endorsed by Cabinet.
MPs also accuse her of skipping committee meetings and refusing to give adequate responses to parliamentary questions. In the latest spat, seen as a key test of Parliament's ability to hold the executive to account, there have been calls for her to be summoned by the committee, and complaints have been forwarded to deputy president Kgalema Motlanthe, in his capacity as a leader of government business, and to parliamentary speaker Max Sisulu. The reports paint a grim picture of a defence force demoralised by poor salaries and working conditions.
Sisulu's spokesperson, Ndivhuwo Mabaya, said that under Cabinet rules, any report Cabinet commissioned should be presented to the executive before going to Parliament. "Cabinet does not take kindly to its reports being taken to Parliament before it can see them. We were not asked by the portfolio committee to initiate this report; it was commissioned by Cabinet." Mabaya said MPs did not seem to understand the relationship between the executive and Parliament. "If they want the minister not to follow Cabinet rules, they should write to the secretary of Cabinet and ask for her to be exempted from them." It was a sad situation that decisions agreed to in a meeting held last Thursday, including giving Sisulu time to work on the report and get Cabinet to endorse it, were now being changed in unrecognised forums, he said.
In April Sisulu failed for the third time to appear before Parliament's public spending watchdog, Scopa, to answer questions about her department's poor financial state. All other ministers attended the Scopa meeting. Sisulu said she had not attended because she was accompanying President Jacob Zuma on state visits to Britain and Uganda at the time. After a public spat with Scopa chairperson Themba Godi, Sisulu announced that she would boycott the committee until it apologised to her. She has not been invited to Scopa since, has not received an apology and a meeting to resolve the tension has not yet been convened.
Sisulu and the committee have used separate legal opinions to back their conflicting positions. Parliament's lawyer, Mukesh Vassen, argues that MPs can summon ministers to provide information and reports, though it should be a last resort. Sisulu's legal advisers have attacked Vassen's opinion as "way off the mark and absurd", as seeking to give ministers the status of witnesses. They argue that demanding an interim report on which the executive has not formulated an opinion could amount to "scrutinising and overseeing executive action" and that a document not endorsed by the executive is not "executive action" or policy.
Parliament is processing the Defence Amendment Bill, aimed at creating a permanent defence force service commission. MPs argue that they need to know the contents of the reports before they can process the proposed amendments. Sisulu, however, denies concealment, emphasising that the findings do not reflect on her term of office, but on that of her predecessor, Congress of the People president Mosiuoa Lekota. Said her spokesperson Mabaya: "Politically, we have got nothing to lose. We would be happy to lambast Lekota, but it is not our business. Our focus is to improve the lives of our soldiers." The defence committee will meet next week to discuss ways of proceeding, including the option of summoning Sisulu to appear before it.
Source: Mail & Guardian
MPs also accuse her of skipping committee meetings and refusing to give adequate responses to parliamentary questions. In the latest spat, seen as a key test of Parliament's ability to hold the executive to account, there have been calls for her to be summoned by the committee, and complaints have been forwarded to deputy president Kgalema Motlanthe, in his capacity as a leader of government business, and to parliamentary speaker Max Sisulu. The reports paint a grim picture of a defence force demoralised by poor salaries and working conditions.
Sisulu's spokesperson, Ndivhuwo Mabaya, said that under Cabinet rules, any report Cabinet commissioned should be presented to the executive before going to Parliament. "Cabinet does not take kindly to its reports being taken to Parliament before it can see them. We were not asked by the portfolio committee to initiate this report; it was commissioned by Cabinet." Mabaya said MPs did not seem to understand the relationship between the executive and Parliament. "If they want the minister not to follow Cabinet rules, they should write to the secretary of Cabinet and ask for her to be exempted from them." It was a sad situation that decisions agreed to in a meeting held last Thursday, including giving Sisulu time to work on the report and get Cabinet to endorse it, were now being changed in unrecognised forums, he said.
In April Sisulu failed for the third time to appear before Parliament's public spending watchdog, Scopa, to answer questions about her department's poor financial state. All other ministers attended the Scopa meeting. Sisulu said she had not attended because she was accompanying President Jacob Zuma on state visits to Britain and Uganda at the time. After a public spat with Scopa chairperson Themba Godi, Sisulu announced that she would boycott the committee until it apologised to her. She has not been invited to Scopa since, has not received an apology and a meeting to resolve the tension has not yet been convened.
Sisulu and the committee have used separate legal opinions to back their conflicting positions. Parliament's lawyer, Mukesh Vassen, argues that MPs can summon ministers to provide information and reports, though it should be a last resort. Sisulu's legal advisers have attacked Vassen's opinion as "way off the mark and absurd", as seeking to give ministers the status of witnesses. They argue that demanding an interim report on which the executive has not formulated an opinion could amount to "scrutinising and overseeing executive action" and that a document not endorsed by the executive is not "executive action" or policy.
Parliament is processing the Defence Amendment Bill, aimed at creating a permanent defence force service commission. MPs argue that they need to know the contents of the reports before they can process the proposed amendments. Sisulu, however, denies concealment, emphasising that the findings do not reflect on her term of office, but on that of her predecessor, Congress of the People president Mosiuoa Lekota. Said her spokesperson Mabaya: "Politically, we have got nothing to lose. We would be happy to lambast Lekota, but it is not our business. Our focus is to improve the lives of our soldiers." The defence committee will meet next week to discuss ways of proceeding, including the option of summoning Sisulu to appear before it.
Source: Mail & Guardian
Wednesday, February 7, 2007
Fidentia investment 'reckless'
The labour department has been urged to investigate the investment strategies of all sectoral training authorities after the Transport Education Training Authority (Teta) told the Standing Committee on Public Accounts on Wednesday that it had made a R250m investment in Fidentia on the advice of its lawyers.
The hearing by the National Assembly Standing Committee on Public Accounts (Scopa) saw Teta chief executive officer Piet Bothma being grilled by the committee chairperson Themba Godi, a Pan Africanist Congress Member of Parliament, and African National Congress MPs Pierre-Jean Gerber and Vincent Smith. Godi said the department should investigate the matter as "someone should be responsible for this mess" - referring to the report by the Financial Services Board that the Teta was unlikely to get its investment back from Fidentia - a black empowerment firm that has been placed under curatorship. Smith described the affair as "a seriously deficient investment strategy" on the part of Teta, while Gerber described the investment as "reckless". Gerber - who led the charge by MPs in the public finance watchdog committee - asked how it was that an investment of "a quarter of a billion rand" of public money had been made only on the advice of a company of lawyers - identified as SAB&T legal services.
Bothma replied: "We went through reference checks on the company and its directors and got legal advice on the mandate requested by Fidentia. There were checks and balances built in." Smith said that Setas were supposed to be "cost centres" and not investment or profit making institutions and suggested that it would be "crazy" if all 16 Setas had so much money on average available for investment. "Something is terribly wrong," he said. Gerber asked how the investment in Fidentia came about. "The name of the firm Fidentia didn't fall out of the air like a mosquito?" he charged. Bothma said the authority had been approached by Fidentia in "a marketing exercise". "After we looked at the proposal made... we went through reference checks on the company and its directors and got legal advice on the mandate requested by Fidentia," said Bothma.
Godi noted that what had been chosen was a newly established company and it appeared that the Teta had verified its business with Fidentia either without really looking at the detail or being caught out by the advice sought from the legal company. He posed the question why when doing a risk analysis the question of the company's track record had not been an issue.
Bothma said although there now "appeared to be gaps in that situation" the bottom line was that Teta had procured "an excellent company" - SAB&T - "that was given a mandate to do certain verifications and checks and balances". He noted that SAB&T had gone through a "three-quotation" process for this job. "They also at that stage (nearly four years ago) did work for us verifying contracts that we do for discretionary grants," he said. It emerged in the committee discussion that Fidentia offered Teta 10.5% interest on their 50-day investment against 8% from Standard Bank and Absa's 8.05%. Bothma said that Teta had last year requested a withdrawal of its funds in Fidentia - following the FSB investigation.
Godi said it appeared from the Teta's actions that it swung from "one extreme to the other" - first entrusting "such a large amount of money" in Fidentia and then suddenly after the investigation wanting to withdraw "all your monies". "This does suggest that at no point did you apply your mind," said the committee chairman.
The FSB report last week noted that it was its analysis that some R689m of some R1.5bn invested with Fidentia could not be accounted for.
Source: News 24
The hearing by the National Assembly Standing Committee on Public Accounts (Scopa) saw Teta chief executive officer Piet Bothma being grilled by the committee chairperson Themba Godi, a Pan Africanist Congress Member of Parliament, and African National Congress MPs Pierre-Jean Gerber and Vincent Smith. Godi said the department should investigate the matter as "someone should be responsible for this mess" - referring to the report by the Financial Services Board that the Teta was unlikely to get its investment back from Fidentia - a black empowerment firm that has been placed under curatorship. Smith described the affair as "a seriously deficient investment strategy" on the part of Teta, while Gerber described the investment as "reckless". Gerber - who led the charge by MPs in the public finance watchdog committee - asked how it was that an investment of "a quarter of a billion rand" of public money had been made only on the advice of a company of lawyers - identified as SAB&T legal services.
Bothma replied: "We went through reference checks on the company and its directors and got legal advice on the mandate requested by Fidentia. There were checks and balances built in." Smith said that Setas were supposed to be "cost centres" and not investment or profit making institutions and suggested that it would be "crazy" if all 16 Setas had so much money on average available for investment. "Something is terribly wrong," he said. Gerber asked how the investment in Fidentia came about. "The name of the firm Fidentia didn't fall out of the air like a mosquito?" he charged. Bothma said the authority had been approached by Fidentia in "a marketing exercise". "After we looked at the proposal made... we went through reference checks on the company and its directors and got legal advice on the mandate requested by Fidentia," said Bothma.
Godi noted that what had been chosen was a newly established company and it appeared that the Teta had verified its business with Fidentia either without really looking at the detail or being caught out by the advice sought from the legal company. He posed the question why when doing a risk analysis the question of the company's track record had not been an issue.
Bothma said although there now "appeared to be gaps in that situation" the bottom line was that Teta had procured "an excellent company" - SAB&T - "that was given a mandate to do certain verifications and checks and balances". He noted that SAB&T had gone through a "three-quotation" process for this job. "They also at that stage (nearly four years ago) did work for us verifying contracts that we do for discretionary grants," he said. It emerged in the committee discussion that Fidentia offered Teta 10.5% interest on their 50-day investment against 8% from Standard Bank and Absa's 8.05%. Bothma said that Teta had last year requested a withdrawal of its funds in Fidentia - following the FSB investigation.
Godi said it appeared from the Teta's actions that it swung from "one extreme to the other" - first entrusting "such a large amount of money" in Fidentia and then suddenly after the investigation wanting to withdraw "all your monies". "This does suggest that at no point did you apply your mind," said the committee chairman.
The FSB report last week noted that it was its analysis that some R689m of some R1.5bn invested with Fidentia could not be accounted for.
Source: News 24
Thursday, August 21, 2003
New arms-deal claim as Fakie defends report
As Auditor-General Shauket Fakie defended the final report of the arms deal investigation before Parliament on Wednesday, a new allegation emerged of irregularities in the awarding of sub-contracts.
Briefing the standing committee on public accounts (Scopa), the AG maintained that media claims of omissions and "doctoring" in the final report were unfounded, and impugned the dignity of his office.
He, again, called on the watchdog committee to protect the integrity of his office.
Fakie said the draft and final reports on the probe into the multi-billion rand deal differed only in style and format, and that the executive did not, in any way, influence the content of the report.
"I want to state categorically that due process was followed and that no changes were made to the report based on pressure from the president or the executive," he said.
The deal was investigated by the AG, the Public Protector and the Directorate of Public Prosecutions, who found no evidence of unlawful conduct by the state.
Scopa chairman Francois Beukman said the committee would evaluate the AG's responses, as well as a legal opinion received regarding the media allegations, before presenting a resolution to the House.
The legal opinion, commissioned by Beukman, found that claims that the final report was doctored were not unsubstantiated.
Source: Polity.org
Briefing the standing committee on public accounts (Scopa), the AG maintained that media claims of omissions and "doctoring" in the final report were unfounded, and impugned the dignity of his office.
He, again, called on the watchdog committee to protect the integrity of his office.
Fakie said the draft and final reports on the probe into the multi-billion rand deal differed only in style and format, and that the executive did not, in any way, influence the content of the report.
"I want to state categorically that due process was followed and that no changes were made to the report based on pressure from the president or the executive," he said.
The deal was investigated by the AG, the Public Protector and the Directorate of Public Prosecutions, who found no evidence of unlawful conduct by the state.
Scopa chairman Francois Beukman said the committee would evaluate the AG's responses, as well as a legal opinion received regarding the media allegations, before presenting a resolution to the House.
The legal opinion, commissioned by Beukman, found that claims that the final report was doctored were not unsubstantiated.
Source: Polity.org
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