Opposition Democratic Alliance MP David Maynier has described the national industrial participation programme (NIPP) linked to the arms deal as a “monstrous political fraud” after the latest set of figures related to the programme was tabled in Parliament.
Offsets were required investments in industrial plants in South Africa and were a condition of winning arms deal contracts in 1999, Business Report avers today. Under that set of deals, arms makers promised to invest billions of dollars in South Africa by 2011. Condom factory Condomi was one such project. Business Report says the factory was built by German Submarine Consortium as a condition for winning a $594 million (R4.5 billion at yesterday’s rate) contract for three submarines.
Last year the Minister of Defence and Military Veterans, Lindiwe Sisulu, told Parliament that the final cost of the deal was now estimated at about R47.2 billion. But Terry Crawford-Browne, an activist critical of the arms deal, has put the figure closer to R70 billion when adjusted for interest and contractual obligations.
In 1999, when former president Thabo Mbeki signed the arms deal contracts, he assured the nation that the entire package would cost R30.3 billion – and no more than R42.2 billion, according to an estimate that factored in a “worst case” scenario of deteriorating exchange rates, inflation and cost escalation.
At the Portfolio Committee on Trade and Industry yesterday, in addition to the liquidation of Condomi, Maynier questioned German Submarine Consortium member Ferrostaal’s financing of the movie Long Walk to Freedom. He cited a statement by Trade and Industry Minister Rob Davies, which said the company had partly funded the movie in the form of a loan and grant of €6 million (R60 million), whereas in another document issued by his department the figure was put at €300 million. At the committee meeting, officials from the department reported that 13 years after the arms deal was signed into existence, much of the compliance with offset obligations had not been met.
Maynier said companies bidding in the arms deal promised 65 000 jobs during negotiations in 1999, as well as €110 billion in investment. Yesterday, the department reported that 21 393 jobs were created, while export credits amounting to US$11.5 billion and investment credits of US$21.4 billion were achieved, Business Report says.
Officials said a detailed report on this was tabled with the committee last year along with the department’s annual report. “The national industrial participation programmes are a monstrous political fraud,” Maynier fumed. The German Submarine Consortium had an obligation to invest €3bn. “We were told in the report this has been invested in full. But it seems this is simply not true.
“It should be noted that they didn’t actually invest €3bn. Of the €3bn, about €62m was invested – roughly 2% of €3bn.”