Moves to acquire a R2 billion bling jet for President Jacob Zuma appear to have taken a nosedive as the government seeks to extract itself from a signed offer to buy the top-end 777-LR from US manufacturer Boeing.
A source close to the acquisition this weekend confirmed to the Sunday Independent that the deal with manufacturer Boeing had been cancelled, but could not say when.
Defence Secretary Sam Gulube is in the US talking to Boeing about the planned purchase of a jet that would elevate Zuma close to the top of the heap in aviation ostentation. Gulube is also seeing Pentagon officials on other international business, it has been learnt.
Incontrovertible evidence in the possession of the Sunday Independent shows that, under the heading “Department of Defence Acceptance of Boeing Proposal”, on May 29 Gulube officially accepted Boeing’s proposal number 6 – 1105 – KJN12-547R2 for the 777 aircraft as well as the prices quoted therein.
By this time, though the special funding required had not been approved by the National Treasury, the deal had already been in train for some time.
At least one earlier set of deadlines – for April – had already been missed and, according to the Boeing proposal Gulube’s acceptance had been required by May 25. A date of June 15 was specified for final agreement to purchase.
The Boeing proposal specifies a price of $155 million (R1.26 billion). The aircraft was capable of carrying 300 passengers in its ultrawide cabin, it had a nominal range of 8 190 nautical miles, and could sustain a take-off weight of 322 000kg. In addition, the plane had a GSM cell modem for in-flight entertainment, landscape camera systems, ultracomfortable seating arrangements, mood lighting and Matisse reproductions on the cabin walls. However, reconfiguring the jet to presidential needs would have added $80m to the bill, taking the full price to $235m.
The document, signed off by Boeing regional director for sales Kathy J Nelson, specifies that the offer would be sealed – pending final acceptance negotiations – on receipt of Gulube’s written confirmation of acceptance and the payment of a (refundable) $10m deposit into Boeing’s Chase Manhattan bank account. The Sunday Independent has been unable to verify the deposit payment, but in his letter of acceptance Gulube specifies the “price quotation” has been okayed and “we have noted the advance payments that are required for the aircraft and the amounts and times indicated…”
Attempts to discover when the deal ran aground have been stonewalled by both the Department of Defence and Boeing.
Presidential spokesman Mac Maharaj was quoted as saying after an exposé of the deal in Independent’s newspapers:
“Before you make assumptions… first verify with the department… There was no such deal on the table.”
Boeing communication director Adam Morgan, said: “As our long-standing policy, Boeing does not comment on conversations, potential sales or potential customers.”
Department of Defence director of communications Siphiwe Dlamini said only the minister would be releasing a statement, though he could not say when.
Sources close to the process, however, confirmed that the deal was still alive in the middle of June, when Zuma announced a cabinet reshuffle in which Lindiwe Sisulu was moved from the defence portfolio to the public service portfolio and former correctional services minister Nosiviwe Mapisa-Nqakula was installed in her stead.
This was despite an apparent reluctance on the part of Finance Minister Pravin Gordhan to approve deviations from procurement regulations that would have given the deal the green light– without it going out to tender.
Urgently requesting approval from Gordhan to deviate from normal procurement processes on May 22 – only seven days before Gulube formally accepted the Boeing proposal – Sisulu cited Treasury Regulation TR 16A6.4, which allows for the waiving of supply chain management procedures in authorised instances where following them was “impractical”.
She also noted in the same communication that the aircraft were being bought on the basis of cabinet approval having been given for the purchase of four VIP aircraft recorded in December 2010.
In terms of this directive, Sisulu and her team – including special adviser and political commentator Sipho Seepe, were involved in facilitating the deal at a political level. Negotiating the actual purchase was to be the work of a so-called VVIP air transport ministerial task team (involving Treasury and the departments of defence and public enterprises). It was put together to explore the most expeditious ways in which aircraft could be acquired.
To get the ball rolling – and noting the time lapsed – Sisulu urgently requested that Gordhan approve:
* That normal tender processes be waived.
* That permission was given to approach aircraft manufacturers directly.
* That money from refunds on the aborted acquisition of Airbus A400Ms be used to finance the project.
But Gordhan was not playing ball. Responding in one letter to two communications – that of May 22 and the other dated March 25 – he in effect declined to authorise deviations, referring the minister back to normal Treasury regulations.