Joint Investigation Report into Strategic Defence Procurement Packages: Questions to the Joint Investigation Team

Meeting report

Introductory comments by the Chair
Seven committees were assigned specific portions of the Report and had to report to Parliament by the 6^th. He confirmed that the report need not be final. It is normally the practice to refer a report to a single committee but the Joint Report spills over into many areas that fall under the ambit of key committees. The joint interaction that will take place is invaluable because it prevents duplication and fragmentation. The Agenda was constructed so that it does dot detain members longer than necessary. Members can leave when they feel it is appropriate.

The Chair reminded the members that the Auditor General's Office and the Public Protector are Chapter 9 institutions and the National Director of Public Prosecutions falls under section 107 of the constitution. For this reason the members were urged to maintain the integrity and dignity of these agencies.

In concluding his comments he said that committees can have one-on-one discussions with the agencies at a later date.

Introductory comments by Deputy Chair
Dealing with process a proposal was put to the members on the format of questioning. The Chair will take 4 questions and the agencies will respond. Thereafter 4 follow up questions will be allowed by each member. In the next round of questioning different members will be given a chance. He indicated that if a question that has already been asked is repeated and is not recognised by the Chair then it will have to be submitted in writing. Members will be allowed 1 minute to ask the question.

Discussion
Ms Taljaard (DP) pointed out that the process on questioning is a unilateral decision because the chief whips have not been consulted. She said that the DP chief whip would take it up with the speaker. The member wanted clarity whether the rules on questioning will be rigidly applied because it will cause that that the process falls short of section 55 of the constitution and the oversight responsibility of Parliament.

The deputy Chair said that the meeting is not following the general rules of the house. Everything that has happened is as a result of negotiation. Committee embers were kept informed of what is happening. The proposal on questioning was put to the members for response therefore it is not a unilateral decision. What is done today is with the permission of all the Chairs of the seven committees.

Mr Ndlovu (IFP) replied that the Joint Standing Committee on Defence did not agree to or know about this procedure.

Mr Mashimbye (ANC) clarified the Defence position and said that they have drafted questions and will ask it as a collective.

Dr Koornhof (UDM) had no problem with the procedures but was concerned about running out of time before everything is dealt with. He suggested that members be given permission to submit questions in writing for the JIT to respond to.

The Chair indicated that he had no problem with this suggestion.

Mr De Lange (ANC) suggested that the members rather start asking questions because there are only 2 days to do the work. Towards the end of the two days an assessment can be made.

Adv Schmidt(DP) suggested that the committees be given an extension of a few days to sit and deal with the issues.

The deputy Chair replied that it was premature to judge the process at this moment. He said for now the full value of the two days must be obtained.

Ms Taljaard anted to correct a factual inaccuracy in that the process was not reached by consensus because the all members are not on the Chairpersons committee. she said that her concern with the process of questioning is that it is a contrived process. The process limits questioning.

The deputy Chair replied that Parliamentary procedure allows the Chair of Chairs and the deputy to interact with other Chairs not the individual members so any problems must be directed at the Chairs. Commenting on the allegation that the process was contrived he said it was unacceptable. The rationale is that everybody must get a equal opportunity to ask questions. We cannot move back and forth but must move from one section to another. He suggested that members see how the process works and if need be changes can be made.

Introductory comments by Auditor General
Mr Fakie said that he understood that he was at Parliament to provide clarity. He hoped that members would only engage on issues of clarity.

Introductory comments by the Public Protector
Mr Baqwa referred to media reports that suggested that members were going to grill the JIT and said that he did not believe that members would question the integrity if the JIT.

He thought it might be possible that all the questions will not be able to be answered and written responses would be needed but will try and avoid this.

Chapters 1 & 2 - Background and Methodology
Questions and Answers
Mr Smith (ANC) wanted to hear from the agencies on the issue of access to documents or lack thereof and how it impacted on their work. He wanted a sense of the support or lack of support from officials and departments.

Secondly he wanted the JIT to once and for all lay to rest any confusion about the draft reports submitted to 4 Cabinet ministers and the president. It is necessary to establish the integrity of the work done.

Ms Taljaard referred to the table at the end of chapter 2 that lists all outstanding issues more specifically outstanding criminal investigations. She asked if it was not premature to exonerate the executive with so much issues outstanding.

Secondly can the validity of the contracts be upheld.

Dr Koornhof said that in 1.1.7.1 under practical difficulties it states that certain documentation was not available to the JIT. He asked why the JIT could not get access and whether the JIT had access to documentation in the possession of the speaker.

In 1.3.1.2 that deals with allegation states 6 of the 8 allegations are still being investigated. The member said that so many issues are outstanding so who in the team decided that the Report would be final.

Lastly it is the impression that mainly government officials are guilty of misconduct, unfairness and non compliance. He said that normally officials do not work independently and it seems that there is a gap between what officials did and what the politicians are responsible for. He asked the JIT if they found that this gap existed.

Adv Schmidt referred to 1.3.2.3 and ask if the position in the last line of this paragraph could change. He asked if the statement was not premature given all the calculation errors, non conformance to critical areas, deviations from value systems and non consideration of legal opinions. The last line states that at present there is nothing to suggest that government's contracting position is flawed.

Response
The AG said that the access to documents is dealt with in 1.1.7.1 and it highlights the problems and procedures that had to be followed. Certain documents were classified and specific procedures had to be followed to gain access. Their was a secure room at DoD with all the documentation and it cannot be said for sure that all the documents were there but it cannot also be said for sure that there was clear evidence of the willful hiding or destruction of documents.

The impact of this is that there was a time delay. The JIT only properly started work in March 2001. The AG indicated that this is the only impact.

On the lack of support and cooperation he said that there may have been instances where meetings wee difficult to arrange. It cannot be said that there was a lack of cooperation. Because 3 agencies worked together and the witnesses and their legal representatives had to be present often meetings had to rescheduled or follow up meetings had to take place. Again the only impact was a time delay. The issue of availability caused delays. There are officials that went out of their way to help so it cannot be concluded that there was a lack of support and cooperation.

The AG mentioned that there are one or two cases with DTI where it was difficult to get documentation. DIT felt that the NIP and DIP agreements were outside the scope of the investigation but eventually access was granted.

As part of due process whenever certain facts were inferred from documentary evidence these facts were tested when oral evidence were given to see if the inference was correct. MINCOM was an integral part of the procurement so it was necessary to submit the draft report the president and the 4 ministers to see if it is factually correct. The AG did it's job in terms of section 4(6) of the AG Act. The section says that when a report is made on the expenditure of funds from the defence account the AG must consult with the President and Ministers. The historic reason behind this section is that there might be something in the report that is of national interests that the AG does not know about. Noting in the report was found to be of national interest. Only the Cabinet minutes were privileged, it could only be examined not quoted.

Mr Ngcuka said that the problem that Ms Taljaard has is that she does not know what he knows. Even if all the allegations are true governments position is not flawed. An objective criteria was set up to chooses winning contractors. The JIT stepped into the shoes of those who chose the winners and concluded that there are no flaws. Even if there are prosecutions the position of government will not be affected.

To Dr Koornhof Mr Ngcuka said that if any officials are involved in criminal activity, there is no link between the officials and the politicians. Any deviations is a matter for the department to deal with and does not fall under the criminal ambit. There are no grounds to conclude otherwise. The investigations are not yet finalised so maybe something will come up to change his mind but he doubts it.

Mr Baqwa said that when dealing with the contractual relationships we know who the parties are and the reasoning behind the contractual relationship. What needs to be looked at is the checks and balances built in. There are many committees and boards involved at the level before anything reaches MINCOM. Most of the allegations of corruption are at the lower sphere. No flaws were found so it cannot be said that the contracts are flawed. All the prosecutions are peripheral to the main contracts and have nothing to do with the main contracts itself. The reason why the table is included at the end of chapter 2 is because the JIT wanted to prevent being accused of sweeping things under the carpet and wanted to bring out all the allegations and inform the public and Parliament the status thereof.

The AG commented when the JIT got together an assessment had to be made of the skills and expertise so as to determine how best to complete the task. On the criminal matters there is little the AG and the public protector can contribute. The AG looked at the processes and identified the role-players. The director of public prosecutions deals with the conflict of interest and the criminal issues. The AG and the PP dealt with the process and highlighted where it is flawed so all has been done from the process point of view. For this reason the report can be seen as final.

He continued and said that even the small and minor errors were identified. The important question is whether the errors impacted on the procurement process. A re-evaluation was done and it was concluded that it did not impact on the procurement process. Where there was an impact it says so in the report. There is therefore reasonable justification to make the statements that were made.

Further Questions
Ms Taljaard asked if the AG could indicate whether separate reports or only one was submitted to the executive.

Dr Koornhof indicated that the gaps he referred to was not in relation to criminal issues but rather normal procedures, i.e. was it not normal procedure to interact with politicians.

Secondly he asked whether the final report submitted to MINCOM before it was tabled in November. Also was the special review submitted to MINCOM?

Mr Schmidt said that Mr Ngcuka and Mr Fakie were contradicting each other because the one says there are flaws and the other says there are no flaws. The member argued that it is exactly because of the flaws that a cautionary approach needs to be taken before stating that the contract position is not flawed.

Response
The AG said that a joint report was submitted but it had separate chapters. The first chapter was the work carried out by the PP. The second chapter was the work of the AG and the third was the work of the director of public prosecutions. This was the first stab at the report and contained lots of duplication. The final report combined the 3 chapters into the report we have today.

In relation to the gaps between the officials and politicians the AG said that in any office views would be given by officials that were not taken to right through to the top structures. The structures and the committees that took the decisions needs to be looked at. There might be individuals that had different views in the committee but the committee would make a decision. There was no gap between the final decision of the committee and what was to taken to higher level.

The AG just wanted to clarify that the Joint Report in its final form did not go to MINCOM the only other person to have it was the speaker. Not even the heads of teams in the AG's office had the final copy.

The special review was a different process and dealt with the DoD only. It was just a review and criticism was levelled because there was no consultation with other role players like DTI.

The Report is clear in the errors that it points out. But the committees accepted the amended procedures in certain situations. Except in the case of Lift and Alfa everytime the question is asked if the bidder who one should have won then the answer is yes. For this reason the contract position is not flawed.

Mr Baqwa said that no substantial part of the report is the view of the executive. The value that was added by the executive relates to the format. The AG might say things differently to the other agencies so everything was consolidated into one report.

Further Questions
Mr Bruce (DP) reiterated the link between the officials and the politicians. He referred to the formulas in 4.3.7 and said that it tends to suggest that scientific method is used and is therefore objective. But the formula is based on values. Nowhere in the report is the weighting discussed? The weighting is subjective and included lots of values that are formulated by low level officials who will give their views to politicians.

Adv Schmidt continued with the lack of co-operation and referred to 12.2.3 where the AG could not give an evaluation on the implementation of NIP due to the lack of access to certain documents.

The Chair interrupted and said that this will be covered in chapter 12.

Adv Schmidt replied that the question was about co-operation not about NIP.

Mr Frolic asked how the information subsequently supplied by DTI would be dealt with as a matter of procedure.

The AG agreed that NIP & DIP could be canvassed later.

The subsequent information was factored in because it was received before the report was concluded. An example is that comment is made on how Armscor manages the DIPS, the infrastructure that is in place and the achieving of the milestones. In item 6 under 1.3.1.1 - a view is given whereby the auditing of the realisation of the NIP & DIP will be done in the normal cause of business i.e. when the AG does the annual audit of the department is done.

Mr Ngcuka said that the impression must not be created that there was widespread corruption. Some officials did receive a benefit, there were about three of them. Some did not sit on SOFCOM. It is correct to say that the values and the weighting is subjective but it was discussed in the committees that consisted of high level officials, Generals etc., then the process continued to SOFCOM so it was not just a matter of junior officials making subjective decisions.

The AG commented that the procurement was a big process done in a short space of time. There were no procedures, existing procedures were used. As the process went along there were realisations that certain things had to be changed. A policy was developed that evolved as the process continued and will be used in time to come. The formula mentioned by the member was one example. The formula was revised because it was incorrect to use the financial index as a denominator because it favoured the bidder with the worst financing. The problem was fixed by changing the formula.

Ms Taljaard expressed her concern about the flawed nature of the process. There was not enough cross examining. She referred to 2.2.3 dealing with the standards and methodology and wanted comment on this. She also wanted the AG to elucidate the disjuncture between the substance of the report and the findings.

Mr Mabeta asked if it was not odd that Mr Van Dyk and Shaik occupied several leading positions in that they had to negotiate and report to Cabinet.

Adv Schmidt said that if the value added by Cabinet relates to procedure then he wanted to know if it was possible to get a copy the minutes and if not why not.

Dr Koornhof referred to media reports that state the AG must make its terms of reference clear. There were also reports that the terms of reference had to be cleared by the executive. The member wanted clarity on this.

The AG said that Parliament does not interfere with the other work of the AG's office. If there is a problem evidence must be put on the table . the investigation was done in line with internationally accepted forensic investigation standards. The whole process needs to be understood. The findings are a minor issue. There are no specific recommendations. The report is designed to make findings not recommendations. Parliament can make the recommendations were it is felt it is needed. The report is clear. 14.2.12 states that the incompatible functions are not ideal and should be prevented because it can give rise to a conflict of interest. This has been dealt with and no comment is necessary.

Mr Baqwa replying to Adv Schmidt said that the committee is not a conduit to convey documents. The documents requested are classified. He mentioned that when Mr White testified from Washington he referred to classified documents and that caused a big controversy.

The AG said that the terms of reference was determined by the JIT and nobody interfered or contributed to it. The concerns raised by SCOPA and the allegations were the first terms of reference.

The Chair said that chapters 1 & 2 are no complete and that the discussion should move to chapter 13.

Ms Taljaard said that she has many more questions and that she will lodge them with the AG.

Adv De Lange replied that this was unacceptable. He accused Ms Taljaard on casting aspersions on the process all morning and the Chair should let her ask her questions.

The Deputy allowed the members to ask further questions on the first two chapters.

Ms Taljaard commented that she had many questions and was happy to ask them and would be happy to stay for the next five weeks to interact with the JIT. She said that there was a problem with access to documentation in that DTI did not want to share info about the Industrial Participation (IP) because it was confidential. DTI then did provide the documents. The member wanted to know what led to this change of attitude.

The deputy Chair ruled that any further questions from Ms Taljaard be put in writing.

Ms Taljaard commented that this was an unacceptable process.

The deputy Chair replied that the process has been to the member and the answers that the member seeks will be provided by the agencies. He said that there was not one person in the house and that nobody has a monopoly.

Ms Taljaard asked if the response will be orally or in writing.

The deputy Chair replied that it would be up to the AG.

In response to the question the AG said that the issue with the documents relating to the IP was one of confidentiality. DTI had to first get consent to make the information available. They have done so and consent was given.

Adv Schmidt said that it has been interpreted by the executive that the Defence Review was a mandate given to the executive to purchase equipment. Nowhere was Parliament involved. The Adv wanted to know if the AG saw the Defence Review as a mandate or just a wishlist.

The AG replied that Parliament gave the go ahead subject to the consideration of affordability. Many checks and balances were in place because it was a huge procurement. There were many different approval levels and Cabinet approved each of these.

The Chair said that Chapter 1 & 2 was now closed.

Chapter 13 - Contracts
Mr Woods (IFP) said that from the opening comments of the chapter it is clear that the chapter is misdirected as it looks at the wrong contracts. He said that the 14^th report of SCOPA referred the JIT to the offset arrangements.

Dr Koornhof commented that the JIT identified numerous gaps and procedural wrongdoing and wanted to know if there was a possibility that any findings in the report can impact on the validity of the main contracts.

Ms Taljaard said that every contract has 4 components. The AG had difficulty in sourcing the NIP terms. She asked if the PP had sight of the NIP terms. She said that the DSO and the National Director of Public Prosecutions have not said anything about the validity of contracts in the report.

Adv De Lange said that he Justice Committee passed this chapter unanimously. The chapter is not misplaced because it is about the drafting of contracts. SCOPA had asked the JIT to see if the contracts were well drafted.

The AG replied that there were lots of comments that the contracts were not drafted well. The question that was raised by the JIT was how far must this issue be looked at. It would take long to go through every clause in the contract. Unless the contract is tested in a court of law there will always be different views. The JIT just glanced at the contracts to see if there was anything sloppy or if there were glaring problems. The process that was followed in drafting was also looked at. This is what the chapter deals with.

The Public Protector was surprised by the comment that the chapter was misdirected. The offset arrangements are dealt with in chapter 12. There is nothing wrong with the contracts, it is properly drafted and there is no clumsy language.

In response to Dr Koornhof he said that there are gaps and shortcomings but this does not impact on the substance of the contract or the validity.

In response to Ms Taljaard he said that he did have sight of the NIPS & DIPS. Alec Irwin testified at length during the public phase of the investigation. The performance guarantees were tested with the best international practice and t was found that it as consistent with the best practices internationally.

Adv Schmidt said the background to the chapter is short but heavily loaded. He said that the integrity of SCOPA was put into question. The chapter is quiet on whether the contracts led to confusion, whether it had incorrect references or if there were annexures missing. He said these were factual considerations unlike the subjective consideration whether the language is not clumsy.

Mr Kannemeyer (ANC) commented that it is important to read because 13.3 states that the all the annexures were with the contracts.

Ms Taljaard asked is that the PP had access to the NIP and DIP terms but the AG did not due to the confidentiality concerns.

The AG clarified that he never indicated that he never saw those contracts. When he wanted to test the realisation of the NIPS there were problems getting the documentation relating to that.

Ms Taljaard asked the JIT to indicate what they had access to and what they did not have access to.

Adv Schmidt said that if the member could add properly he mentioned 4 issues. The annexures were only one. He asked why does the finding of chapter 13 only refer to the language and not the other factual issues mentioned earlier by himself.

Adv De Lange said that a proper reading of the finding will clearly show that not only the language is referred to but all the issues referred to the JIT by SCOPA.

The PP agreed with Adv De Lange. On the request by Ms Taljaard he said that truckloads would be required to list the documents that the JIT had access to. He said that the request was to broad and vague.

Dr Koornhof asked if it was possible to definitely make conclusions about the validity of the main and sub contracts especially since there are so many outstanding issues and ongoing investigations. He wanted to know if it was not premature to conclude that the government's position is not flawed.

Ms Taljaard commented that an easy solution would be to ask the JIT what was requested but not given to them but this would probably be pointless because the JIT themselves do not know if they had access to everything.

The AG said that the question on the validity of contracts was already answered. On the sub contracts he said that the Department had nothing to do with sub contracts and fall outside this discussion..

He said that the assurance cannot be given that the JIT saw all the documentation. The documents relating to the implementation of the NIP commitments were the only documents that were difficult to obtain because of confidentiality.

The Chair ruled that discussion on this chapter were now closed. Ms Taljaard indicated that she still had many questions.

Chapter 12 - NIP & DIP
Dr Davies (ANC) referred to the recommendation at the end of chapter 12 that sates the DTI and DoD must get a legal opinion on the controls in respect of the effective implementation of the NIP and DIP programmes. The member wanted the JIT to elaborate on this.

Mr Bruce said that there was an attempt in the chapter to hold out that the weighting process is scientific when it is in fact subjective. DTI officials make errors and these errors influence the way in which projects get weighted. The report expresses no opinion on this. The report looks at world experiences on the penalties that kick in if investments are not made but there is no attempt to see if there is a history of success or failure of the implementation of these projects.

Ms Taljaard asked if the JIT saw the business plan assessments relating to the IP.

Mr Chiba asked why the last two points under 12.2.9.5 (e) are not translated into recommendations at the end of the chapter.

The AG responding to Dr Davies said that as the supplier fulfils part of the obligation the guarantee gets smaller. There might be room for manipulation and therefore it was recommended that a legal opinion be obtained.

The response to Mr Bruce's comments centres around the realisation of the NIPS & DIPS therefore there will be a constant and regular review of the NIPS & DIPS. The realisation will be tested against the milestones but it needs to be looked at holistically because market conditions and changing circumstances could have an effect on realisation.

The AG said that he did look at the business plans and no problems were found. It is better to do look at the realisation on a 6 monthly basis and report to Parliament.

The omission of not translating the points into recommendations is an oversight. The body does contain a recommendation to ensure that suppliers do not invoice for things that were not done because this will result in the performance guarantees being lowered.

The PP said that the performance guarantees were higher than international norms but yet there were still allegations of that the country was being ripped of. There is no way that higher guarantees can be negotiated.

Mr Mabeta asked who is going to be involved in setting up the criteria for monitoring the realisation of the programs and the business plans.

Ms Taljaard asked if the JIT identified any conflict of interest issues that spilt over into the IP.

In response to Mr Mabeta the AG said the contract will be looked at to see what the milestones are. The milestones will be the criteria against which the realisation of the programmes will be judged.

There was no indication of a conflict of interest except that one of the members of the team received a motor vehicle but there was no direct link with the contract or conflict of interest.

Ms Taljaard said that the NIPS carried much more risk than the DIPS. DIPS accounted for 14% of the IP obligation while NIPS accounted for 86%. Since it is permissible for NIP projects to be substituted with other projects the member wanted to know what mechanisms were in place to keep track of this and exercise an oversight role.

Secondly has the JIT looked at the intrinsic and generic risks associated with the NIP against the business plans.

Thirdly has DTI made available the documentation highlighting all the milestones.

Fourthly did the JIT use the public interest argument to get the confidential information from DTI.

Mr Bruce asked if the JIT find out if consultants were used by companies and whether suppliers were obliged to use certain consultants.

Adv Schmidt asked why the performance guarantees approved by Cabinet that is discussed under 12.2.5 is different for the NIP and DIP respectively.

The AG said that is true that there is more risk involved with the NIP. A model has not yet been worked out on how exactly to monitor the realisation. Everyone is waiting to get the report behind them The AG undertook to make a submission when a plan is worked out. the intrinsic risks were not looked at because the realisation of the programmes should not be pre judged. In respect of the report on the milestones the AG indicated that he never personally received it but it could be that members of his team did. He would have to check. He said that he did raise the public interest argument with the Minister but if consent was not obtained it would have exposed government to lawsuits so a balance had to be struck.

The AG could not give an answer on the use of consultants off hand.

In response to Adv Schmidt he said that the NIP commitment guarantee is based on 5% of the NIP obligation. DIP is different and the guarantee is 5% of the unfulfilled portion of the commitment. The unfulfilled portion is used because as the commitment is progressively realised the guarantee gets smaller and therefore 5% on the commitment that is unfulfilled.

Ms Taljaard asked if the JIT looked at the IP evaluations. Secondly she wanted to know if there JIT was not concerned about the fact that during the investigation they did not have access to documents but only when the investigation was almost complete was the documents made available.

The AG replied that in the review of the IP all the evaluations in every procurement was looked at.

On the access to information he said that there was no concern because the issue was only raised at a late stage. The report was going to be an interim report but as it happened the team was able to deal with everything adequately. Only at this late stage was the documents surrounding the realisation of the IP requested. The consent that was given was a conditional consent in that only the AG had access not the general public and the specifics thereof cannot be shared.

The Chair ruled that discussion on this chapter was closed. Again Ms Taljaard indicated that she still had many questions.

Afternoon session:
Mr Mahlangu allowed the matter of Mr Ngcuka's proposed absence during the following day's meeting to be addressed.

Adv. Schmidt (DP) remarked that the Democratic Party had serious reservations about Mr Ngcuka's absence from the next meeting. It was a constitutional duty imposed on all the three agencies to be at the meeting. His party wanted Mr Ngcuka to be available so he could fulfil his constitutional duty and also enable Parliament to fulfil its oversight role. The Democratic Party opposed the request from Mr Ngcuka to be absent from the next meeting.

Asked to comment, Mr Bulelani Ngcuka (National Director of Public Prosecutions) replied that his commitments for the following day had been made long ago - they were directly related to his work and involved persons from other parts of the world. He apologized for the inconvenience caused by his absence and asked if it would be possible to deal with pertinent issues while he was still at the meeting. Other matters raised during his absence that require his response he assured them that he would provide replies.

Mr Mahlangu remarked that the DP's concern was noted. The Committee should look at specific issues and questions to be directed to Mr Ngcuka and others would be put down in writing for Mr Ngcuka's attention.

Ms Taaljaard (DP) commented that the DP's concerns were firm reservations and that this was by virtue of the constitutional obligations.

Mr Mahlangu again asked if there were specific questions for Mr Ngcuka.

Adv. Schmidt remarked that he was aware that the names of persons who were still under investigation were not allowed to be disclosed in terms of criminal procedural legislation. Could Mr Ngcuka disclose the names of people in respect of which a decision to prosecute has already been taken, and thereby a reason for not disclosing their names does not apply.

Mr Ngcuka agreed that it was not normal practice to disclose the names of persons under investigation by the Unit because it would be prejudicial to them. This is due to the assumption that the allegations against them may be unwarranted at the conclusion of the investigation. Nor does the Unit disclose the extent of the investigation against persons who are being investigated until the investigation has been finalised. There are only three people where a decision has been taken to prosecute: Messrs. Shaik, Mr Woerfel and Mr Yengeni.

Ms Taaljaard asked Mr Ngcuka to indicate the extent of the cooperation between his Unit and investigating agencies from other countries such as the United Kingdom and Germany.

Mr Ngcuka acknowledged that there is cooperation between his Unit and other countries. The Unit conducted simultaneous searches in Mauritius and France. Searches in foreign countries were conducted by policing agencies in those countries in terms of mutual legal cooperation. His Unit does not have any cooperation with Germany at this stage. He did not however rule out the possibility of cooperation between the two. His Unit has not received any mandate from Germany, neither has the Unit submitted any requests for investigation there.

Ms Taaljaard asked how far the investigation against the former Minister of Defence, Mr Joe Modise, had progressed and what the resolution has been, if any, in the eyes of the NDPP.

Mr Ngcuka replied that the Unit cannot disclose the names of persons under its investigation. Neither is the Unit allowed to disclose the extent of the investigation against a person until that investigation has been brought to finality. The Unit would be prepared to disclose to Parliament the details of its investigation findings immediately after the investigation has been brought to a head. He dismissed the allegation that Mr Modise had bought shares from companies with the money from some of the prime bidders as untrue. The Unit is still finalising other matters of the investigation and it was sufficient to leave the matter there.

Ms Taaljaard asked if Mr Ngcuka could give an explanation or some comments on the issue of subcontracting.

Mr Ngcuka responded that this is one of the matters that his Unit is currently dealing with. The Unit is looking at whether persons were receiving shares from those companies wrongfully or unlawfully.

Adv. Schmidt said that he was very interested in the issue relating to security clearances. This issue is very close to the issues relating to the special defence account. There was a lot of secrecy evolving around the special defence account and how it is to be dealt with, and how the Auditor General has to refer back to Parliament or to the Cabinet in respect of certain issues thereof. It was perturbing that a person has carte blanche without having been issued a security certificate to deal with SBA accounts. He was convinced that there must be the likelihood of a crime committed by people dealing with special defence accounts without having security clearance.

Mr Ngcuka remarked that the Auditor General would deal with this issue.

Mr Fakie (Auditor General) replied that this matter has been raised as an issue in the Report and has come through as part of the review for the very reasons raised by Adv. Schmidt. There was definitely a transgression of an internal requirement within the DoD and the fact that the DoD did not take the matter up. There could be a statutory transgression as well and this was something that this committee needed to look at: whether there was a statutory transgression and thereafter come up with recommendations.

Mr Landers (ANC) referred to Point 1.3.1 of the Report which deals with allegations that were found to have no substance and thus required no further investigation. He asked if the investigation team was in a position to furnish Parliament with details of the source of the allegations. It would be interesting to know from where the allegations came, especially due to the seriousness of the allegations ,such as that against Mr Swan, that were found to have no substance.

Mr Ngcuka replied that some of the allegations came from Members of Parliament and some from members of the public. He stressed that he would not go into the details of who actually gave the allegations because if he were allowed to do that, this would affect people who desire to report incidences of wrongdoing.

A Member (ANC) referred to the table of outstanding investigations in Point 1.3.1.2 and asked if Mr Ngcuka would indicate if all the instances of irregularities in the first allegation were still being investigated.

Mr Ngcuka replied that the emphasis is to find criminal conduct - whether there are any people who received bribes or committed fraud and if there are people who received gifts which they should not have received. The Unit looks at whether it can gather sufficient evidence to prosecute these cases.

Dr Koornhof (UDM) asked for a broad indication of time frames within which the outstanding allegations still under investigation would be completed.

Mr Ngcuka responded that there is no case that has given him more headaches than this one. He remarked that he would personally like to have it finalized as soon as possible as it has been a nuisance. Similarly, the Unit does not want to sacrifice proper investigation because of the need to quickly finalize the matter. It was thus difficult to give an indication of time frames. He would, however, be able to give an assessment early in the new year.

Dr Koornhof said that it was alleged that a certain company provided expensive cars to a number of politicians, high ranking officials and members in the South African National Defence Force. He asked if this was under investigation because it is not mentioned in the Report. What is the status of the investigation and is the Unit investigating the officials who received expensive motor vehicles.

Mr Ngcuka replied that this matter was still under the Unit's investigation.

Ms Taljaard asked a question based on the lack of security clearance for the Chief of Acquisitions. She said that this implied certain transgressions or, at least the scope for transgression of Section 118 of the Defence Act on which Mr Shaik has been suspended. This does trigger criminal action and the necessary agencies to investigate breaches of the Defence Act. This is a serious breach of the Defence Act. She asked if this was part of the investigation at all?

Mr Ngcuka replied that this was a matter that the Unit was currently looking at and is the subject of investigation.

Ms Taljaard asked if the investigation had looked at allegations connecting the arms acquisition process with the cellular network licencing of Cell C. The Report is silent on this matter yet the cross shareholdings could imply that there could be scope for further investigations.

Mr Ngcuka emphatically stated that it was not the Unit's practice to state who it was investigating because this was not the right way to conduct an investigation. It was not correct to ask if Cell C was involved in this matter.

Ms Taljaard read Point 14.1.1 and asked:
- Noting the issues that have been raised before about the former Minister of Defence, Mr Modise, she asked if the paragraph was not a premature judgement in the absence of that issue running its full course because Mr Modise had been a Cabinet member.
- Secondly, it does relate to the officials concerned. In this regard the corruption clause in the relevant contracts does come into play - and this is something that does need to be considered.

Mr Ngcuka replied that on the question of the former Minister of Defence, it was better that the Unit be allowed to complete its investigation before making any comments about the involvement of any government officials, including the former Minister of Defence. He continued that the Unit has not looked into the corruption clause in the contracts. Any decision that the Unit would take to act would be motivated by the Corruption Act and not necessarily under the provisions of the contract itself.

Ms Taljaard asked if Mr Ngcuka could comment on the case docket of Mr Ian Pierce and the associated difficulties when that case went to court. The prosecutor in that case did not have the docket and the magistrate threw the matter out of the court. Mr Pierce was a crucial player and would have been a crucial source of information.

Mr Ngcuka replied that Mr Pierce is currently being prosecuted. The reasons behind his prosecution is that he has not complied with the provisions of the subpoena that was served on him. He has since been re subpoenaed and there is a continuation of prosecution against him. The Unit will sort out those problems that caused the docket not to be in court.

Ms Taljaard asked if Mr Ngcuka could comment on the linkages between the arms deal and the third cellular licence.

Mr Ngcuka declined to comment on this as it involved the third cellular license awarded to Cell C for those reasons he had stated earlier - that the Unit is not allowed to divulge details of persons or organizations that are under the Unit's investigation.

Chapters 8 and 9
Ms B. Hogan (ANC) referred to the last sentence of the recommendation in Point 14.2.4 which puzzled her. She asked what was the exact amounts or the costs of the functionalities that were removed because it was unlikely that this could be around R4 billion.

Mr S Fakie replied that the comments that were made by Ms Hogan about the linkages and non inclusion of certain functionalities which eventually led to cost reduction was absolutely correct. An exercise has been done on that and the value of the functionalities that were excluded is R1.169 billion.

Mr M Louw referred to Point 9.2.3.5 where the cost did not include the financing costs of the package and Point 9.2.3.6B where the cost did not take into account all of the elements for each and every package. He also pointed to Point 9.3.4 and asked on what basis does the team justify the finding in Point 9.3.5 that "The Minister's committee was put in a proper position by the Affordability Team to apply their minds in essence as to the financial impacts of the procurement".

Mr Fakie replied that it was in August 1999 that a final affordability assessment was submitted. This statement equipped the committee to take an informed decision. The report deals with the lack of information that was given in November 1998, which at that point in time, had some significant costs that were lacking. This was identified by the Affordability Team. This situation was rectified in August 1999 when Cabinet was presented with details of the full cost from which they were able to take an informed decision.

The meeting was adjourned.