Judge Heath's jet lease report grounded
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Legal consultant Judge Willem Heath investigated the controversial R820-million presidential jet-leasing contract that former secretary of defence Mpumi Mpofu refused to sign last year and recommended that it be scrapped because he considered it invalid, a Mail & Guardian investigation has established.
But the contract was not cancelled and is now at the centre of a bitter dispute in the North Gauteng High Court in Pretoria.
Heath's 37-page report appears to validate Mpofu's concerns, stated before she quit her job in October last year after allegedly facing "intolerable pressure" to sign what she considered an irregular contract to lease two luxury jets for the presidency from the AdoAir Aviation Group, which was chaired by Nigerian businessperson Adegboyega Olulade.
Sources close to Mpofu said she was not consulted on the AdoAir leasing contract and was acting on advice from her own legal team when she doggedly refused to sign the contract. The M&G was informed that Mpofu was living in fear of her safety while tensions in the defence department escalated. As the accounting officer for the defence department, the contract with AdoAir could not proceed without her signature.
Instead, AdoAir took the matter to court, claiming that because then-minister of defence and military veterans Lindiwe Sisulu and her department had not proceeded with the awarded tender, it appeared a decision had been taken not to go ahead with the contract and the company was therefore applying for a review of the matter. The defence minister and Armscor opposed the review application while its legal team continued to negotiate with AdoAir for more favourable contract terms.
A court affidavit by the defence department's chief financial officer, Mziwonke Dlabantu, described how he had investigated whether his department had decided or not to proceed with the award to AdoAir, which was selected after six companies were invited to tender.
"I am specifically aware that the then secretary for defence [Mpofu] made certain recommendations for the cancellation of the contract, but such recommendations were not accepted and no such decision was made," he wrote. The court case is still proceeding.
The M&G was informed that Sisulu commissioned Heath to give a legal opinion on the contract after Mpofu quit her post. What mystifies the few who are aware of the existence of his report is why it was kept internal and not handed to the court so that the department of defence could try to get out of the flawed contract.
Sisulu's spokesperson, Ndivhuwo Mabaya, said that Sisulu, as defence minister, would not have decided whether the Heath report was to be handed to the court. "She might get advice from Heath and then pass it on to the secretary of defence [Sam Galube], who would decide on procurement matters," he said.
Heath completed his investigation into the AdoAir contract shortly before President Jacob Zuma appointed him in early December last year to head the Special Investigating Unit, from which he resigned dramatically two weeks later. In his report, Heath alleged numerous irregularities in the AdoAir contract, including:
A R20-million upfront deposit that was to be paid by the defence department at the start of the five-year contract.
A number of irregularities in the procurement process, including that AdoAir was not compliant with black economic empowerment policies, no external evaluation had been done to prove the company was in financial good standing and it was a closed tender process that should have been advertised.
Apart from listing what he alleged were some fraudulent misrepresentations in the contract, Heath was disturbed that no evaluation was done of the two Embraer Lineage 1000 VIP jets offered for lease. His report illustrated that a cash purchase of the two jets would have cost the state about R572-million, whereas the five-year lease on the aircraft had a price tag of R820-million.
In terms of the tender requirements, AdoAir should have provided proof of the aircrafts' availability, but the company did not even have the aeroplanes at the stage of tendering.
Gerrie Ebersohn, AdoAir's attorney, told the M&G he had not seen Heath's report because the department of defence had not handed it to the court.
Ebersohn said he did not know why provisions had been made in the lease contract for a R20-million upfront payment by the department. However, the M&G understands that during negotiations with attorneys Xulu Liversage, which was acting for the state, this payment was one of a number of clauses unfavourable to the government that had been removed from the contract. Asked what the next step would be in the court case, Ebersohn said AdoAir was considering its options.
Xulu Liversage confirmed that its services had recently been terminated. The department, in turn, said it wanted to take a different legal approach to the case. The law firm said that shortly after it had filed its report on the case with newly appointed Defence Minister Nosiviwe Mapisa-Nqakula and Galube, its services were terminated.
In a recent Cabinet reshuffle, Zuma unexpectedly moved Sisulu to a new post as minister of public service and administration.
The department of defence declined to comment or answer questions on the AdoAir contract. "The matters you raised in your query are being dealt with by the public protector," said spokesperson Siphiwe Dlamini. "It would be advisable to allow that to take its course."
Scope of preliminary investigation
It was recently announced that auditor general Terence Nombembe and public protector Thuli Madonsela would investigate the government's cancellation of its R2-billion VIP jet acquisition deal for the presidency. The M&G was reliably informed this week that money to pay for the acquisition of the 777-200 LR and the Global Express 6000 jet would probably have come from a balance in the special defence account of R3.6-billion, of which R1.3-billion is apparently available for use.
Democratic Alliance MP and defence spokesperson David Maynier said it now seemed that the 2011 deal to lease the Embraer Linaege 1000s and the 2012 deal to purchase the Boeing 777-200 LR flowed from the decision to purchase four new VIP aircraft taken by Cabinet in 2010.
"I will, therefore, be writing to the public protector and requesting that she consider extending the scope of her preliminary investigation to include an investigation into the leasing of the Embraer 1 000s in 2011," Maynier said.
"There is clearly something fishy about both deals."
Although Mpofu declined to comment, sources close to her said the public protector and the auditor general's investigations had to be expanded to include the AdoAir leasing contract and the explosive situation regarding Mpofu's resignation if the truth was to be uncovered.
Different version of events
Although the defence department claimed Mpofu had resigned because Deputy President Kgalema Motlanthe missed an official state visit to Finland in October owing to mechanical problems with an aircraft, reliable sources dismissed this as absurd.
"How can an accounting officer be held responsible for the mechanics of an aircraft?" asked a source. "Anyhow, they lied and concocted Mpofu's resignation as having been handed in around that time, when she had already resigned earlier in the month."
Sisulu's spokesperson gives a different version of events. Mabaya said Mpofu had not raised any complaints regarding the lease contract in her resignation letter and that accounting officers were responsible for procurement, not ministers.
"The minister expected the secretary for defence to take responsibility for this bungle and failure to plan for the president and deputy president, thus exposing them to a high level of security risk and embarrassment, nationally and internationally," said Mabaya.
Because this had been a Cabinet-approved project, the security of the president and deputy president had to be the priority of the department. "Based on this, the minister expected to make sure that the lease was concluded within procurement processes, managed by herself and the secretary for defence as soon as possible, which she failed to do."
Mpofu had to take "100% responsibility", Mabaya told the M&G .
"Cabinet approved the lease arrangement in 2010 and by the time Mpumi Mpofu left it was not finalised. [The] minister expressed her disappointment at the inability of the secretary of defence to finalise this urgent matter."
Supply chief has been questioned before
Mthobisi Zondi, the head of the supply chain function in the defence department, was a friendly voice on the other end of the phone.
"Why are you asking questions about me?" he asked amiably when he contacted the Mail & Guardian before it had managed to track him down.
Zondi said he was not a signatory to either the contract involving AdoAir leasing two Embraer Lineage 1000 business jets, or the proposed purchase of a 777-200 LR aircraft from Boeing and a Global Express 6000 jet from Bombardier for the presidency.
Although Zondi said the involvement of his unit had been negligible, the next day he confirmed that he had been on the committee that evaluated the technical components in the tender processes for the lease contracts.
Two other sources close to the processes later claimed he was the chairperson of the adjudicating committee at the time the AdoAir contract was awarded.
In response to questions about Zondi's role in the presidential jet tenders and whether he had been cleared of impropriety in a previous allegation against him, former defence minister Lindiwe Sisulu's spokesman, Ndivhuwo Mabaya, said that Zondi had not been reporting to the minister but to the former secretary of defence, Mpumi Mpofu.
"If the accounting officer [Mpofu] was not happy with him, she would have dealt with all her concerns," Mabaya said.
Zondi laughed off suggestions that there had been a cloud over his head regarding a R108-million tender to clear unexploded ammunition from two former military training grounds, which it was alleged he had overseen.
The tender was granted to a company, Origin Exchange, which, it was later claimed, had no experience in the field and no money and shared a business address with one of Zondi's private companies.
"I was cleared by the [South African National Defence Force] inspector general," he told the M&G .
"The former minister will have the report. I have been in this job for five years, before that in parastatal Eskom, why am I suddenly news?"
However, past media reports show that the whip for the committee on public accounts, Mandla Mbili, had urged Sisulu to report back to the committee in 2010 on the Origin Exchange tender allegations against Zondi.