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DA: DTI concedes over arms deal offsets

Mar 16 2012 17:16 Sapa

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Cape Town - The trade and industry department (DTI) has conceded that Ferrostaal has invested a total of only €63m (about R628.67m) in arms deal offsets, the Democratic Alliance said on Friday.

DA spokesperson David Maynier said Trade and Industry Minister Rob Davies and officials from his department revealed "shocking new information" about arms deal offsets to parliament's portfolio committee on trade and industry on Friday.

Davies and the DTI officials appeared before the committee to deal with questions raised as a result of a leaked internal audit document produced by Debevoise & Plimpton.

It investigated "questionable and improper payment" made by Ferrostaal, which formed part of a consortium that supplied submarines to South Africa.

The leaked internal audit document stated that, whereas Ferrostaal had an obligation to invest €3bn (about R29.9bn) under the arms deal offset programme, they had in fact invested only €63m.

"The department conceded that the leaked internal audit document was correct and that Ferrostaal had in fact only invested a total of €63m," Maynier said.

"During the briefing, the department also revealed shocking new facts about the arms deal offset programme, including that a total of 50 751 jobs, comprising 16 917 'direct jobs' and 33 834 'indirect jobs', had been created as a result of the arms deal offset programme, rather than the 65 000 jobs promised."

The total actual investment by each of the arms deal companies under the offset programme was:

- BAE/Saab, $203m (about R1.54bn) instead of the $7.2bn (about R54.9bn) obligation;

- German Submarine Consortium, €63m instead of €2.85bn (about R28.44bn);

- German Frigate Consortium, €44.4m (about R443m) instead of €2bn (about R19.9bn)

- Thales, $139.7m (about R1.06bn) instead of $652.4m (about R4.97bn); and

- Augusta (Light Utility Helicopters), $49.3m (about R376.2m) instead of $767.9m (about R5.86bn).

Maynier asked: "How is it that BAE/Saab, which supplied the Gripen and Hawk aircraft, could get an offset credit of $7.2bn, when they only actually invested $203m?

"And how is it that Ferrostaal, which supplied the submarines, could get an offset credit on €2.85bn, when they only invested €63m?"

There were clearly some serious questions to be answered about how the arms deal offset credits were awarded, and how the so-called multipliers were applied, given the wide variance between the total obligation and the actual investment by each arms deal company.

This could only be done if the DTI laid its cards on the table and provided a full report on the arms deal offsets.

"This the minister has agreed to do. The DA therefore welcomes Minister Davies' commitment to make a full report on the arms deal offset programme available to the portfolio committee on trade and industry.

"This will bring an end to a struggle, spanning more than a decade, to squeeze detailed information of the arms deal offset programme from the department of trade and industry," Maynier said.

arms deal  |  da  |  dti
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