To err is Erwin

In an interview with the SABC, Minister of Trade and Industry Alec Erwin responded to our story last week about the inflated value ascribed to many of the offset projects linked to the arms deal. He said: “The Mail & Guardian article was factually inaccurate in a whole range of ways … The figures about a drop in exports are just wrong. We don’t respond to such grossly inaccurate and speculative nonsense.”

The trade and industry department has failed to point out what these inaccuracies are supposed to be. Instead, the minister perpetrated a few of his own. He said the offset obligations were put at R104-billion at the time of the signing of the contracts, which translated into roughly $9-billion — due over a period of 14 to 15 years.

Yet his own departmental report of March this year says the offset obligations are worth about $13,3-billion over a period of seven years — or 11 years in the case of BAe-Saab.

Erwin also failed to deal with the three principal criticisms of the way that offset credits are calculated.

First: export credits are granted on the basis of the total value of the export product, rather than on the value added (or cost saved) by the investment. In the case of BAe-Saab’s gold beneficiation projects, this results in the most obscene distortion, with the trade and industry department claiming offset credits of $2,3-billion from an investment of a mere $70-million.


Second: investment is calculated not on what the obligor puts in, but also on what it can claim to have “facilitated” from other sources — such as our own Industrial Development Corporation.

Third: investments which on the available evidence have nothing to do with the arms deal are being claimed by the trade and industry department as providing offset credits as obligors piggy-back on other projects — in defiance of the department’s own principles of “causality” and “additionality” which are supposed to be a condition for valid offsets.

It may interest the minister to know that even at this late stage — after his department has boasted of these figures for nearly two years — BAe would say only this about its gold projects: “We have not announced any gold projects and cannot discuss detail publicly.”

The arms deal has repeatedly exposed the government to communicating dishonestly in a bid to deflect legitimate criticism. This reached its zenith when the president said in a public broadcast he had acted on specific legal advice in excluding the Heath unit from the joint arms probe, when in fact that advice recommended the opposite. The issue here is one of political honesty. Our democracy deserves better.

Silence means consent

Before we are tempted to congratulate Robert Mugabe for pulling many of his troops out of the Democratic Republic of Congo over the recent period, we should bear in mind just how badly he may soon need them on home soil if his rotten regime is to survive.

In two to three months, supermarket shelves in Zimbabwe are expected to be empty, and only the wealthy are likely to have enough food to eat. Inflation, now running at about 115%, is likely to reach 160% by the end of the year. And it is not only the price of consumables that has been skyrocketing. Asset prices, too — some shares and the like — have doubled or trebled in price over just a few days in recent weeks.

What is happening to Zimbabwe’s banks is perhaps still more worrying. When the banks loaned money to white farmers in previous years, these loans were secured on the value of either the land itself or on the crops the farmers were to produce on it. But these farmers’ land has now been seized, without compensation, by the Mugabe government. Thus, apart from the banks now not being able to recover the value of these loans, the economy has been deprived of the most basic requirement for conducting business on any scale: a predictable, justiciable set of property relations.

It gets worse. The banks have been allowed recently — no, encouraged by Mugabe’s government — to lend their reserves. These reserves have declined sharply from about Z$38-billion to Z$8-billion. It cannot last.

We would like to know how the South African government plans to address this critical situation. Will we see and hear nothing until Presidents Thabo Mbeki and Olusegun Obassanjo again go through the motions ahead of the next Commonwealth deadline? Or until just before the European Union is due to turn up with a cheque for the New Partnership for Africa’s Development in one hand and, in the other, a list of questions about what Africa has done to correct the Zimbabwe crisis?

What does the deafening silence indicate? Quiet diplomacy? Or no diplomacy at all?

Snatching defeat

A drunken lout attacks a referee at a rugby international, and a growing number of twisted South Africans rise to condemn the injured match official while praising his assailant. Then cricket captain Shaun Pollock, representing the nation on foreign fields, dedicates our team’s victory to a self-confessed crook and corrupter of team-mates, his erstwhile captain Hansie Cronje. There’s more than one way to lose, and we seem to be finding them all.

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