Paul Kirk
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 R43-billion 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, whose name is known to the Mail & Guardian, 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 R3,5-million.
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 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 R43-billion 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. Those deposing to the affidavits asked not to be named.
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.
The case ended up in the hands of the police syndicate fraud unit. The M&G has obtained a copy of a statement one of the fraud squad officers handed to ADS general manager Charles Strachan, in which she warns him that she is investigating a case of fraud and that he is a suspect.
A representative for the unit said the docket has now been forwarded to the office of the national commissioner of police for him to peruse before before it is given to the director of public prosecutions.
Guy Rich, a representative for the special investigating unit, confirmed that his unit had also received the documentation and interviewed the complainant. it prepared a request for a proclamation to investigate the allegations but it was held up by the Department of Justice on the grounds that it was waiting for the Department of Defence to conduct an audit of all ADS contracts. The audit has not yet been completed.
Contacted for comment, Strachan referred all queries to his CEO, Pierre Moignot.
Moignot could not be reached for comment. Schabir Shaik did not respond to faxes and several phone calls. His cellular phone was switched off at the time of going to press.
ENDS