ANC wants arms deal report

Johannesburg, 10 Jan 2008

The ruling African National Congress's (ANC's) new leadership has tasked a subcommittee to draft a "factual" report on a still controversial R40 billion arms deal negotiated by president Thabo Mbeki in 1999.

The ANC's National Executive Committee says the report will be compiled by an eight-member subcommittee, including businessman and MTN chairman Cyril Ramaphosa, retired SANDF chief general Siphiwe Nyanda, ANC deputy president Kgalema Motlanthe and ANC treasurer Matthews Phosa. The report will enable it "to apply its mind on the issues and provide leadership".

Some media reports already speculate the report could be a first step to implicating Mbeki in arms deal corruption. His former deputy and current ANC president Jacob Zuma is facing a High Court indictment for soliciting a bribe from Thales, the French defence company, to help cover up the alleged corruption.

Much of the hullabaloo about the deal involved the choice of French defence company Thales International (Thint), which - together with its South African subsidiary African Defence Systems (ADS) - was selected to supply its R350 million Tavitac NT combat management system over a much cheaper local rival for the SA Navy's R9.6 billion frigate programme.

The local system was designed and developed by an indigenous group of companies between 1993 and 1999, with ADS - then still part of Altron - being the lead company. The informal consortium included Cape-based defence-IT company CCII Systems that in 2000 helped blow the whistle on procedural irregularities in the "strategic defence package".

ADS was subsequently sold to Thales, with the French company's local holding company, Thint Holding (Southern Africa), taking 80% of the equity and black economic empowerment partner Futuristic Business Solutions taking the remaining 20%. Thint was divided 75:25 between the French and another local partner, Nkobi Holdings, headed by Zuma's then "financial advisor" Schabir Shaik.

The Mbeki, Zuma link

In 1999, Mbeki was deputy president of the country and head of a ministerial committee negotiating a "strategic defence package" with a number of European defence companies, among them Thales.

By that time, says CCII CEO Richard Young, the navy had invested "hundreds of millions" of rands in a local "combat suite" for its frigates, initially under the frigate programme "Project Sitron" and later under the "Project Suvecs" initiative.

The "suite" is a set of IT, communications and weapons systems that allows the captain and his officers to engage in naval combat.

Documents unearthed during previous investigations into the deal and Young's own litigation show Mbeki met Thint and the Navy afterwards dumped the Suvecs combat management system (CMS) that it had paid for. It opted for Thales's Tavitac CMS, a system that neither met the user requirement nor was compatible with the specified architecture.

"A member of Cabinet and chairman of the ministerial committees privately and secretly meeting a foreign company interested in supplying its own products and guaranteeing them upfront the supply contract at the expense of existing local products is not only highly unlawful, in terms of constitutional imperatives and existing DOD and Armscor acquisitions procedures, but more simply in terms of plain ethics," says Young.

"This is something that has to be properly investigated before there is any chance of the public interest in the arms deal subsiding."

Young adds that evidence in the Shaik fraud and corruption trial showed the Thint shareholder then used Zuma - at the time finance MEC in KwaZulu-Natal, but influential in the party - to overcome institutional resistance to the change.

"The bottom line is that the racketeering relationship between Thint and Zuma brought about a situation where the South African taxpayers ended up paying a vastly higher amount for the corvette combat suite and got substantially less even for that higher amount than they would have done either through a different supplier, or even if there had been fair and transparent competition as is stipulated in the constitution," says Young.

Young says the Tavitac selection then had the "knock-on effect" of leading to the selection of further Thales and French systems.

Local advantage

The CCII CEO says modern warships brim with processors and sensors, literally making them floating computers, with the combat "suite" at the centre. The advantage of Suvecs lay in its home-grown intellectual property and domestically-controlled upgrade path. Now both belong to a foreign company and can be held hostage by the French government.

Young adds that the Suvecs "suite" used a systems architecture decades in advance of that used by Tavitac. "The local combat suite was based on a state-of-the-art high-speed deterministic data bus, the Information Management System (IMS). This allowed all combat suite systems and sub-systems to communicate with each other on an equal basis and forming a horizontal architecture.

"The Tavitac-based combat suite is vertically integrated, ie its CMS is the heart of the system and everything must work through it. It is as though the CMS is everything and the rest of the combat suite systems are just peripherals," says Young. "This is archaic and highly undesirable in modern combat suite design."

The IMS included fibre-optic data communications technology that was intrinsically multiply redundant. It also employed a message-oriented middleware (MOM) software layer called APIS (for APplication Interface Services). This made the entire combat suite self-learning and self-healing so that new sub-systems could easily be added or failed ones temporarily removed.

Tavitac, by contrast, is "much less responsive than horizontally integrated systems because data must traverse multiple interfaces; much more difficult to add further systems or sub-systems; and much more difficult to enhance, upgrade or replace," Young says. "The supplier of a vertically integrated CMS effectively controls the entire combat suite over its lifetime and this is exactly what Thales wanted, judging by their secret internal correspondence."

CCII's intrinsic IMS technology is now being used aboard most US Navy surface warships, including the aircraft carrier USS Ronald Reagan and the landing ship USS San Antonio, the latest class of US Navy warship. The US Navy and Royal Navy have also recently adopted new combat system architectures based on MOM-technology.