10 February 2014 by Kim Helfrich - defenceweb
South Africa could face a claim exceeding R100 million for not meeting contractual obligations regarding the acquisition of a Russian radar surveillance satellite.
The acquisition was apparently spearheaded by now retired Lieutenant General “Mojo” Motau when he headed Defence Intelligence and would have cost at least R1.2 billion.
Opposition Democratic Alliance (DA) party shadow defence and military veterans minister David Maynier, who has been investigating the issue, said he had been given information on it by Auditor General Kimi Makwetu.
“He confirmed the bungled project had resulted in a possible claim against the State of R115 914 849.
“The Auditor General furnished me with a copy of the 2006/07 annual report on Special Defence Account (SDA) financial statements which includes the amount as a contingent liability.
“The reason for this, according to the report was ‘for a potential claim against the state by a foreign company as a result of the withdrawal of approval for the sensitive project by the Minister’,” Maynier said.
Maynier reverted to asking for information on what has become known as South Africa’s spy satellite saga in terms of the Promotion of Access to Information Act after Defence and Military Veterans Minister Nosiviwe Mapisa-Nqakula accused him of not having state security at heart. She said he was using the now cancelled satellite acquisition to score political points ahead of the May 7 election.
Government reportedly entered into a contract with Russian company, NPO Mashinostroyenia, for the development of a Kondor-E reconnaissance satellite in 2006. At that time it was called Project Flute and was later renamed Project Consolidated Flute.
In January Maynier said the project to develop the Kondor-E satellite was frozen for a period, sometime before 2008 by the Department of Defence, causing NPO Mashinostroyenia to threaten legal action.
“Project Flute is believed to have been frozen, in part, because a flaw was discovered in the contract, something Defence Intelligence failed to recognise,” he said adding the flaw was that Defence Intelligence would be “entirely dependent” on the Russian company.
“Images would have to be requested from them at additional cost and with a significant time delay. Defence Intelligence would have no control over the satellite or be allowed to operate it from South Africa.”
Maynier said the statement by the Auditor General was the “first official” one with direct reference to project Flute.
“The fact that there is a possible R100 million plus claim against the state and that the matter was pursued by the Minister at inter-state level, suggests there may have been major financial misconduct as a result of Project Flute.
“We have to determine whether there was financial misconduct and if there was whether any disciplinary proceedings were instituted as required by the Public Finance Management Act.”
Maynier said he would continue to seek answers. This despite Defence and Military Veterans Minister Nosiviwe Mapisa-Nqakula’s assertion he did not have national security interests at heart.
“Exposing a bungled satellite development project which, after eight years has cost over R1 billion and has not launched a satellite, hardly compromises national security,” he said adding he would submit further questions on the issue and request records relating to possible financial misconduct regarding the project.