20 April 2007
The Public Protector has responded to Mr Trent's request that he investigate
bribery allegations against Mr "Chippy" Shaik.
After due consideration of the request, the media report concerned, and the
Joint Investigation Report into the Strategic Defence Procurement Packages
submitted to Parliament in 2001, the Public Protector Advocate Lawrence
Mushwana concluded that he could not at this stage, proceed with an
investigation as the "allegation" referred to criminal conduct that German
authorities were investigating.
It would only be possible and proper to consider further investigation or
recommendations in respect of the administration, propriety and impact of the
procurement process concerned once the criminal and, if so, prosecution of the
suspects, have been concluded.
"The Public Protector does not have powers to conduct criminal
investigations and to institute prosecutions. It is therefore for the National
Prosecuting Authority (NPA) to decide whether the allegations made by Der
Spiegel warrant any further investigation in South Africa, at this time,"
Advocate Mushwana said.
The response to Mr Trent is a result of a request from the Democratic
Alliance (DA) on 5 February that the allegations relating to Mr Shaik should be
investigated.
The Public Protector, National Prosecuting Authority and Auditor-General,
whose offices jointly investigated the arms procurement process in 2001, met on
15 March 2006 to confirm the variety of requests for investigation that have
been sent separately to the institutions and to assess if there were
overlapping matters that could be addressed jointly.
The outcome of the meeting was that "none of the requests required their
joint consideration. They agreed that each institution would deal with issues
that have been raised based on their own mandates. This means that the three
agencies will not reconstitute a joint investigation team as was structured in
the 2001 investigation. The agencies will respond directly to the individuals
who made enquiries and requests for investigation."
The Public Protector noted that the Joint Report of 2001 found that Mr Shaik
had not recused himself properly from meetings that later awarded contracts to
his brother Mr Schabir Shaik. Mr "Chippy" Shaik later resigned from the public
service after an inquiry found that he acted improperly by disclosing
confidential information contained in a draft report of the
Auditor-General.
The contents of the letter follow:
Mr E Trent, MP
Democratic Alliance
Parliament
Dear Mr Trent
Request for an investigation: Allegation in 'Der Spiegel'
Your letters of 5 February 2007 and 4 April 2007 refer.
1. We have considered your request for an investigation of allegations that
appeared in a German publication, Der Spiegel, relating to a criminal
investigation that is being conducted in Germany into allegations of corruption
allegedly involving the former Head of Acquisitions of the South African
National Defence Force, Mr "Chippy" Shaik.
2. The article that your request was apparently based on was published in
English on the website of Der Spiegel on 5 February 2007. It stated, in the
main, that:
2.1 German state prosecutors are investigating allegations that a German
shipbuilding consortium paid bribes to South African officials to win a major
defence contract. The investigation has been ongoing for almost a year;
2.2 Investigators visited the headquarters of Blohm + Voss in Germany with a
search warrant
2.3 The prosecutors believe that they have found documents backing up
suspicions that the German shipbuilders won the South African contract with the
help of "kickbacks", which apparently include several internal memos that
appear to document how employees of the shipbuilders held unofficial talks with
the head procurement officer of the South African Defence Force. "The high
ranking bureaucrat allegedly demanded a payment of $3 million at those meetings
and in 2000 that sum was indeed transferred to a front company in London."
3. As you are aware, the Strategic Defence Procurement Packages were the
subject of comprehensive investigations jointly conducted by the Office of the
Public Protector, the Office of the Auditor-General and the National
Prosecuting Authority, at the request of the Parliamentary Standing Committee
on Public Accounts.
4. It was agreed by the three investigating agencies that the Office of the
Public Protector would conduct a public hearing into the strategic requirements
of the South African National Defence Force (SANDF), the process and procedure
of acquisition and specific complaints by a tenderer who alleged certain
improprieties in the acquisition process that caused his company to be
deselected from obtaining a specific contract.
5. The Office of the Auditor-General was tasked with a forensic
investigation of several aspects of the procurement and its process and the
Directorate of Special Operations (DSO) of the National Prosecuting Authority
with investigation of the allegations of criminal activities relating to the so
called "arms deal."
6. The investigation by the Office of the Public Protector was concluded
under the direction and authority of my predecessor, Advocate S A M Baqwa,
SC.
7. At the time of the submission to Parliament of the Joint Investigation
Report into the Strategic Defence Procurement Packages (November 2001), several
allegations of corruption were still under investigation by the DSO. As you are
aware, these investigations resulted in the arrest and prosecution of several
persons.
8. Paragraph 1.3.2.3 of the Joint Report stated that:
"Whilst there may have been individuals and institutions who used or
attempted to use their positions improperly, within government departments,
parastatal bodies and in private capacity, to obtain undue benefits in relation
to these packages, up until now no evidence has emerged to suggest that these
activities affected the selection of the successful contractors / bidders,
which may render the contracts questionable."
9. It should be noted that as far as Mr Shaik is concerned, the Joint Report
found in paragraph 14.1.17 that:
"There was a conflict of interest with regard to the position held and the
role played by the Chief of Acquisitions of Department of Defence (DoD), Mr S
Shaik, by virtue of his brother's interests in the Thomson Group and African
Defence Systems (ADS), which he held through Nkobi Holdings. Mr Shaik, in his
capacity as Chief of Acquisitions, declared this conflict of interest in
December 1998 to the Project Control Board (PCB), but continued to participate
in the process that led ultimately to the awarding of contracts to the said
companies. He did not recuse himself properly."
10. Mr Shaik resigned from the Department of Defence in March 2002, after a
disciplinary enquiry found that he acted improperly by disclosing confidential
information contained in a draft report of the Auditor-General.
11. In paragraph 14.2 of the Joint Report, 15 recommendations were made in
respect of improving the administration, process and propriety of the
procurement process of the Department of Defence.
12. The Joint Report was adopted by the National Assembly, to whom the
Office of the Public Protector is accountable.
13. Subsequent to your request for an investigation of the criminal actions
of Mr Shaik referred to in the said article, I met with the National Director
of Public Prosecutions and the Auditor-General. The purpose and result of our
meeting appear from the media statement issued on 16 March 2007, which stated
that:
"The meeting was held to confirm the variety of requests for investigation
that have been sent separately to the institutions and to assess if there were
overlapping matters that could be addressed jointly.
However, the three principals came to the conclusion that none of the
requests required their joint consideration. They agreed that each institution
would deal with issues that have been raised based on their own mandates. This
means that the three agencies will not reconstitute a joint investigation team
as was structured in the 2001 investigation.
The institutions, in line with their respective mandates, have reaffirmed
and expressed their willingness to co-operate with any investigative agency
that might request their assistance."
14. In your letter of 5 February 2007 you stated that:
"If the allegation is correct, and Mr Shaik did benefit from a bribe, not
only does it bring the sale of the corvettes by ThyssenKrupp to the South
African government, into question but there are numerous, broader implications
for South Africa's arms procurement policy, in this regard."
15. The 'allegation' that you referred to relate to criminal conduct that is
being investigated by the prosecuting authorities in Germany who are at liberty
to contact the National Prosecuting Authority in South Africa for assistance.
As indicated above, it was agreed that each of the investigating bodies
concerned in the 2001 investigation would deal with the recent allegations in
terms of its constitutional mandate. The Public Protector does not have powers
to conduct criminal investigations and to institute prosecutions. It is
therefore for the NPA to decide whether the allegations made by Der Spiegel
warrant any further investigation in South Africa, at this time.
16. You will appreciate that; it will only be possible and proper to
consider further investigations or recommendations in respect of the
administration, propriety and impact of the procurement process concerned, once
the criminal investigation and, if so, prosecution of the suspects have been
completed.
Thank you for bringing this matter to my attention.
Yours faithfully
Advocate M L Mushwana
Public Protector of the Republic of South Africa
Enquiries:
Charles Phahlane
Tel: (012) 366 7006
Cell: 082 856 8188
Issued by: Office of the Public Protector
20 April 2007
Source: SAPA
