SA should rescue US$ 45 million AgustaWestland deal: DA

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The Democratic Alliance (DA) says government, state arms acquisition agency Armscor and the Denel arsenal must act to save a bungled “US$ 45 million business opportunity offered by European arms company AgustaWestland for the construction of A109M light utility helicopters in South Africa.”

The party’s defence shadow minister David Maynier says it “is imperative that we get to the bottom of what happened and what can be done to salvage” the offer.

Maynier says the proposal was included government cancelling penalty charges of approximately R90 million, which were incurred as a result of the late delivery of thirty A109M helicopters as part of the strategic defence package, in exchange for a guarantee of US$45 million worth of business over five years constructing A109M helicopters in South Africa.
“Where is the downside?,” he asks, adding that the deal would “surely have positioned companies such as Denel Saab Aerosructures (Pty) Ltd (DSA), which in the past has manufactured components and assembled A109M helicopters, to become part of the global supply chain for Augusta Westland.
“The deal would surely be good for the economy, good for the aerospace industry and save hundreds of high tech jobs in South Africa.” DSA recently announced it might have to retrench about 120 workers as a result of a thin order book.
“We cannot have a situation where coordination failures, indecision and foot dragging in government put industry and jobs at risk as appears to be the case in the bungled US$45 million deal offered by Augusta Westland [sic],” he said.

The Business Day newspaper this morning reported the bungle was “another reason for the dismissal of Armscor CEO Sipho Thomo, and could also have been the cause of the sudden resignation of [DSA] CE Lana Kinley.

The paper says it understands the Department of Defence favoured the deal, but that “others in the government or state defence industry establishment” rejected it.
“Ironically, had the contract been approved, the guaranteed work for five years could have been a lifeline for the cashstrapped [DSA],” the paper said.

DSA chairman Llewellyn Jones confirmed to Business Day two weeks ago that Kinley’s resignation was a result of a disagreement over a major contract. It is possible that the rejection of the Agusta Westland offer precipitated her departure.

In a letter to Thomo in early December, Armscor chairman Popo Molefe told him that the charge sheet for his disciplinary hearing was amended with the addition of another charge.

In the letter, Molefe told Thomo: “You, without authority and knowledge of the board, negotiated and gave an expectation to Agusta Westland that Armscor would revise a claim it had against Agusta Westland for US12.5m[illion].”

Maynier adds that this is a high-level bungle. “How is it possible that a US$45 million opportunity falls between the cracks at the Department of Public Enterprises and DoD? There are two critical questions here: who dropped the ball, and what is being done to pick it up?

He says Denel CE Talib Sadik should shed light on the matter when he appears before Parliament’s Standing Committee on Public Accounts tomorrow.

Armscor was scheduled to appear before the National Assembly’s Portfolio Committee on Defence and Military Veterans this morning to brief MPs on Thomo’s sacking, but chairman Popo Molefe asked for a postponement as Thomo now apparently intends contesting his dismissal.



Pic: An AgustaWestland A109M LUH on the assembly line at Denel Aviation in January 2008.