Job hopes blown away

Eastern Cape big loser after arms deal offsets flop

A CATALOGUE of broken promises over foreign investment and the creation of tens of thousands of new jobs has left the Eastern Cape as one of the biggest losers in the saga of the government’s huge arms deal.

This is according to critics of the so-called Strategic Defence Procurement Package, concluded in 1999 at a cost to the country in the region of R70-billion – and which promised that subsequent foreign investment would generate more than R100-billion.

The arms deal came under fire last week following President Jacob Zuma’s statement that no evidence of corruption or fraud had been found by the Seriti Commission of Inquiry into the deal.

Zuma also said the report had indicated that 11 000 jobs had been created through the arms deal’s anticipated offset programme.

But that is more than 5 000 jobs fewer than German company MAN Ferrostaal alone had promised to create by investing in a factory at the Coega Industrial Development Zone in exchange for a R6-billion submarine contract.

More companies – suppliers of submarines, fighter aircraft, helicopters and frigates – also promised to invest in the country in return for securing contracts.

At the time, the government announced that the arms deal would generate roughly R110-billion in investments and create 65 000 jobs, an outcome which former president Thabo Mbeki said justified the deal’s exorbitant price tag.

These offsets were meant to create sustainable employment and reshape the economy.

This did not happen on anywhere near the scale promised – and now anti-arms deal campaigner Terry Crawford-Browne has described the Seriti Commission as a “total whitewash”.

He said he was considering taking the matter to the Constitutional Court.

Further, Crawford-Browne believes the Eastern Cape lost out in particular, as the province could have benefited more from government spending on healthcare, education and housing if the arms deal had never taken place.

“Predictably, the steel mill at Coega never materialised – nor did any of the 16 251 jobs,” Crawford-Browne said.

“When that did not materialise they [Ferrostaal] said they would build a condom factory in East London but that went under after three months.

“They then promised to invest in a tea plantation in Lusikisiki to save jobs but that also went under,” Crawford-Browne said.

He said Ferrostaal’s investment promise and commitment to create more than 16 000 jobs in Port Elizabeth had won it the submarine contract. “It made massively inflated offset promises,” he said.

“For a R6-billion submarine order it said it would invest R30-billion back into South Africa.

“The offsets were always a scam and effectively the people of this country were lied to.

“Now we also have all these planes with no pilots, mechanics or fuel.”

Hennie van Vuuren, author of The Devil in the Details: How the Arms Deal Changed Everything, said it was clear that provinces like the Eastern Cape had been robbed of the opportunities promised by the arms companies who delivered very little.

Van Vuuren said he also believed that, when political heads changed like they did during the arms deal time span, these companies “relied on people forgetting what was initially promised”.

“The people of Port Elizabeth and the Eastern Cape have been lied to and have had to pay massively for this fraud.

“It would be an injustice not to take this further,” Van Vuuren said.

Andrew Feinstein, who wrote The Shadow World: Inside the Global Arms Trade, said he believed “unequivocally that the commission has whitewashed the deal” and believed charges brought against Tony Yengeni and Schabir Shaik had proved that corruption in the deal had been uncovered.

Economist Dawie Roodt said politicians at the time were naive to believe that the jobs and investments promised by European arms dealers would materialise.

“When someone promises to sell you something and the transaction is complete, they immediately lose interest and all other promises made are forgotten,” Roodt said.

“If these promises had actually been fulfilled, it would have led to a huge economic injection but none of that counts because it was always just a selling pitch.”

DA finance spokesman David Maynier described the final report as a massive disappointment as it had cost R113-million to compile and those implicated in arms deal corruption had effectively been let off the hook by the commission.

“It is clear the commission made no real effort to investigate the allegations contained in crucial documents . . . following a compliance investigation into Ferrostaal,” Maynier said.