Arms deal was 'beneficial and affordable in 1999'

THE procurement of arms for the South African National Defence Force in 1999 in deals worth – at today's rates – R60-billion, was affordable for the government, the Arms Procurement Commission heard yesterday.

Jayendra Naidoo, who was appointed by then deputy president Thabo Mbeki in December 1998 as chief negotiator in the arms deal, told the commission chaired by Judge Willie Seriti negotiations had been conducted with great intensity and professionalism.

This had led to consensus within government and the deals struck were beneficial and affordable.

Naidoo represented the South African government in strategic defence procurement packagerelated negotiations with various international suppliers and financiers.

Naidoo's team was required to negotiate an achievable funding arrangement and an affordable package with the preferred suppliers.

Naidoo began his duties in November 1998. He concluded his term in December 1999 after contracts were signed with the various defence suppliers.

The government acquired equipment – including 30 light utility helicopters, four frigates and three submarines – at a 1999 cost of R29.9-billion.

Naidoo said his team's work comprised six sets of contract negotiations, each with a separate defence company.

Each contract would consist of three separate sub-agreements: on the supply of equipment, the non-defence industrial participation (NIP) and the defence industrial participation (DIP) commitments by the suppliers.

The last two included assurances about industrial investment and job creation in South Africa by winning bidders.

"The SA team had to seek to reduce the cost of the package, and to ensure the DIP and NIP commitments were both substantial and solid," Naidoo said.

The Department of Trade and Industry's NIP system for non-defence projects was a relatively untested system and there were problems which needed remedying, he said.

"The tender requirements for DIP and NIP were each equivalent to 50% of the contract price measured in accordance with the rules of the respective industrial participation programmes of the Department of Defence and Department of Trade and Industry," Naidoo said.

The commission continues today, with former deputy defence minister Ronnie Kasrils continuing his testimony that began on Friday.

Former defence minister Mosioua Lekota is also expected to testify. - Ernest Mabuza