PAUL KIRK, Johannesburg | Friday
THE South African Police Service and the Scorpions are investigating allegations of serious fraud committed by African Defence Systems (ADS), one of the companies at the centre of South Africa’s R43bn arms deal.
The allegations come from a former engineer at ADS, who has opened a criminal case against his employer, alleging it fraudulently invoiced Armscor for millions of rands. ADS recently won, in circumstances that have become controversial, the tender to supply combat suites for South Africa’s new corvettes.
The whistleblower backed up his claims with voluminous documentary evidence. But he was silenced last year by ADS, which succeeded in lodging an urgent interdict against him. In its interdict application, ADS claimed that the engineer’s claims were all false and that all his supporting affidavits were concocted. The interdict was unopposed as the engineer, being unemployed, did not have the funds to defend the action.
This week the M&G obtained some of the documents that ADS has sought to suppress. The 23 pages of documents detail alleged fraud of R3,5m.
In 1993 African Defence Systems was known as Altech Defence Systems and owned by Bill Venter’s Altech group. It subsequently became African Defence Systems after being bought out by Thomson, whose South African directors include Schabir Shaik. Shaik’s controversial empowerment company, Nkobi Holdings, is a shareholder in Thomson’s South African subsidiary.
Many of the allegedly fraudulent invoices were presented before ADS’s change of ownership. The alleged fraud was thus committed before and also during Shaik’s tenure at the company.
The allegations could lead to a clash between Shaik and his brother, Chippy, who heads the Department of Defence’s procurement division. Chippy Shaik confirmed this week that Armscor is also conducting an investigation into the allegations against ADS.
Chippy Shaik has defended himself against allegations of nepotism where the award of contracts for the R43bn arms package is concerned, saying he recused himself when a possible conflict of interest arose.
Chippy Shaik claimed this week that all the allegations related to a period before his brother became involved in ADS. When informed that the allegations also covered the time of his brother’s tenure at ADS, Shaik said he could not comment, as he was not personally aware of the allegations.
The M&G has also obtained the sworn affidavits of several ADS employees confirming information in the main 23-page dossier. After being reported to the Lyttelton police station, a criminal case was opened against ADS – case number 447/08/99. The documents the M&G has obtained all form part of this investigation.