While Jayendra Naidoo was tasked with finding the best deals for the country, he was closely associated with an arms subcontractor
Paul Kirk
Jayendra Naidoo, the government’s chief negotiator in the R66-billion arms deal, is set to make a small fortune out of the very contracts he brokered on behalf of the taxpayer.
Naidoo, a former unionist and former head of Nedlac, the bargaining chamber that brings together government, business and labour, was hand-picked by President Thabo Mbeki in late 1998 to negotiate the best possible deals and finalise contracts with the arms suppliers.
But while Naidoo was tasked with championing the cause of government and the taxpayer in these negotiations, he also had a close association with and acquired a stake in electronics giant Tellumat, which scored subcontracts worth hundreds of millions in the arms deal.
Naidoo has been quoted defending himself from “conflict of interest” charges by saying he did not know, during his stint as negotiator, that Tellumat stood to benefit from the arms deal. Documents seen by the Mail & Guardian suggest, however, that he was appraised of Tellumat’s interest.
Naidoo’s appointment to head government’s so-called international offers negotiating team was announced in November 1998. He took up the post the next month and served until January 2000, when the deal was finalised. For this he was paid more than R1-million.
But in December 1998, the same month Naidoo started as chief negotiator, he was also appointed chairperson of Plessey South Africa, predecessor to Tellumat. (Most of Plessey’s divisions were hived off into Tellumat in early 1999.)
Naidoo remained chairperson of the rump Plessey until the end of October 1999, Tellumat confirmed this week. The rump Plessey and Tellumat were and remain closely affiliated.
In January 1999 already, it was no secret that Tellumat expected to profit handsomely from the arms deal. The company’s CEO, Llew Jones, told Computing SA at the time: “Some of our brightest pros-pects lie in the defence market following the government’s announcement of its R30-billion [later estimated at R66-billion] procurement programme.
“Tellumat products have been selected for the aircraft programmes and we are in a favourable position to do local manufacture and integration of some systems for the naval vessels.”
During his year-plus as arms negotiator, Naidoo’s relationship with Tellumat grew in more tangible ways. In July 1999 J&J (Pty) Ltd, the holding company founded by Naidoo and former communications minister Jay Naidoo, bought a 2,5% interest in empowerment company Primgro.
The following month Primgro of which Jayendra Naidoo became a director bought a 25% interest in Tellumat. This means the government’s chief arms negotiator had become a shareholder in and beneficiary of one of the defence suppliers with which he was directly or indirectly negotiating.
Naidoo’s excuse as reported in Independent Group newspapers last October seems to be that he “denied knowing that Tellumat had any contracts arising out of the arms deal”.
In fact, the contracts are significant, and documentary evidence points to Naidoo’s likely knowledge. The British multinational BAe Systems was selected to supply Hawk fighter-trainers, one of the primary contracts in the arms deal. A BAe document dated October 15 1999, and available to Naidoo’s negotiating team, lists Tellumat as one subcontractor it would help supply the Hawks’ “IFF transponders”. The transponders are sophisticated electronic components that allow fighting machines to interrogate each others’ “friend or foe” status.
This was clearly not Tellumat’s only stake in the arms deal it has significant subcontracts on the navy’s corvette and submarines purchases too. An Armscor document from December 1999 and again information that would have been available to Naidoo as chief negotiator lists Tellumat as having R334-million worth of “local industry participation” contracts in the arms deal.
Unlike in the case of Chippy Shaik, the Department of Defence’s procurement chief, Naidoo’s apparent conflict of interest was not examined in the joint investigative report on the arms deal that was submitted to Parliament last December. And that makes at least one member of Parliament’s Standing Committee on Public Accounts see red especially as she was refused access by the Department of Trade and Industry, responsible for the industrial participation components of the deal, to the documents M&G has now seen.
Says Democratic Alliance MP Raenette Taljaard: “Unless the Scorpions’s investigation into shareholdings and business interests promised in the report brings about a thorough probe of Jayendra Naidoo the credibility gap of the report will widen.”
Taljaard says she asked the trade and industry department last year for documents showing who BAe Systems’s local partners were, but that she was refused. It is understood, too, that the joint investigation into the arms deal, led by the auditor general, public protector and public prosecutor, was denied access to such documents until relatively late in the investigation.
Taljaard charges: “The fact that the Minister [of Trade and Industry, Alec Erwin] chose to hide behind commercial confidentiality both when the [investigators] tried to probe this aspect as well as when he received queries from the opposition shows that government has more to hide.”
Edwin Smith, spokesman for Erwin, said the minister was en route to New York and unlikely to be able to respond.
Naidoo failed to respond to faxed questions by the time of going to press.