Defence and Military Veterans Minister Lindiwe Sisulu has assured Parliament that the government is “haggling hard” to recover billions from Airbus following the cancellation of an order for eight A400M military transport aircraft.
Sisulu believes South Africa is owed about R2.9 billion by the multinational plane maker after project delays made the contract price soar from R17bn when it was approved in 2004 to about R40bn by the time South AfrIca pulled the plug in 2009. The latter estimate equals about twice the SA Air Force’s entire budget for 2009/2010.
The A400M aircraft would have given the SANDF the strategic airlift capability it currently lacks to transport soldiers and equipment over long distances in support of the country’s growing peacekeeping commitments on the continent.
Appearing before Parliament’s standing committee on public accounts (Scopa) on Tuesday, Sisulu said in terms of the contract, the money should have been paid out soon after the deal was terminated, and that “we are haggling hard to make sure that we can get it back”.
Secretary for Defence Mpumi Mpofu told MPs that Airbus had “pleaded” with the government (for a repayment schedule) as “they do not have R3bn to pay back in a single cheque”.
This prompted DA MP David Maynier to suggest: “I simply don’t accept that Airbus - one of the biggest companies in the world - cannot find R3bn to repatriate to South Africa.”
A number of ANC MPs nodded their agreement to this comment. Scopa chairman and African People’s Convention MP Themba Godi said: “You may be right”, but suggested the Treasury and Defence Department be left to continue the haggling over repayments with Airbus.
Sisulu also confirmed earlier reports that the Treasury had been roped in to assist state arms buyer Denel in negotiating a repayment schedule between the government, represented by Denel, and Airbus Military, the European manufacturing giant’s defence subsidiary.
Airbus SA spokesman Linden Birns said on Tuesday discussions between the parties to wrap up the cancellation of the deal were “ongoing”.
“I have been assured by Airbus Military … that good progress is being made,” he said.
Asked what was holding up repayment, Birns said he was not privy to the details, but that it was “all tied up with wrapping up the cancellation of the order” and noted that ending a deal of this size “is not like switching a light on and off”.
Responding to concerns that the end of the deal would also mean the end of South Africa’s participation in the multinational effort to build the A400M, Birns pointed out that the acquisition aspect and the “industrial partnership” agreements were contained in two separate contracts.
He implied that the cancellation of the one should not affect the status of the other.
However, former Denel Group CEO Talib Sadik last year warned in Parliament that a clause existed in the purchase contract which could be invoked to scupper the industrial participation aspect of the deals.
South African firm Aerosud and a Denel-Saab partnership company (Denel-Saab Aerostructures) have won contracts believed to be worth hundreds of millions of rand to build components for the A400M. The status of these contracts is now uncertain. - Political Bureau