Pretoria | Wednesday
SOUTH African Trade and Industry Minister Alec Erwin denied on Tuesday that the government deliberately misled the public about the cost of a multi-billion dollar strategic defence package.
Speaking at a public hearing into alleged corruption into the $5.5-billion deal, Erwin defended an original cost estimation in 1998 that put the price tag at R30.3-billion ($3.7-billion).
The overall cost has since risen to R43-billion ($5.5-billion) as a result of exchange rate fluctuations — sparking criticism that the government misled the South African public.
Three statutory bodies are investigating allegations of widespread corruption linked to South Africa’s plans to buy aircraft, patrol boats and submarines from five European defence manufacturers.
Erwin told a panel led by South Africa’s public protector, Selby Baqwa, that it would not have been sensible at the time of the deal to make price forecasts, as the real cost would only be known once the project was completed.
A wide range of factors had to be considered such as the impact the acquisition would have on financial markets, interest rates and South Africa’s balance of payments, he said.
Erwin added that outlining all factors that could push up the deal’s price would only have sown confusion.
“As soon as you start dabbling in different types of figures, you will only confuse yourself,” Erwin told the panel.
Assessing the financial risks of the deal had been a very complex exercise, Erwin continued.
“This matter was discussed for many hours, late into the night. It has been an immensely complex thing,” Erwin said.
“We came to he conclusion that this was a risk worth taking in the light of the defence department’s need for equipment,” the minister said.
The office of the public protector, the auditor general and the director of public prosecutions are conducting the investigation into the arms deal.
The probe began in January at the insistence of parliament after auditor general Shauket Fakie released a report saying proper procedures had been sidestepped in the tender process for the deal.
Among the allegations is one that the chief whip of the ruling African National Congress, Tony Yengeni, received a bribe, in the form of a luxury four-wheel drive, from a company with links to the deal.
The hearing was postponed to July 16. – AFP
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