Aerospace Village ready for take-off
However, Lance Schultz, who was appointed chief executive of the CAV in August 2015 as the financial irregularities were surfacing, said that designation of the CAV specifically for aerospace and defence companies had fundamentally changed, following a strategy review undertaken last year that took account of the impact on business of the industrial revolution and how this would manifest over the next 50 years.
“With the advances in things like composites, titanium and other lightweight components and artificial intelligence, we have extended the mandate to afford high-tech advanced manufacturing companies to also co-locate into the CAV.
“It's a point of departure (for the original concept), but it's still allowing a group of like-with-like technologies, so it's not dissimilar from a number of parks of its type in the world,” he said.
Schultz stressed the programme for the CAV was going ahead and he had the support of all the key stakeholders, including Aerosud, Denel, Jonker Sailplanes and Paramount, but it was taking a bit longer than expected.
A sod-turning for the launch of the CAV was held in 2008, at which then trade and industry minister Mandisi Mpahlwa said the government had made a commitment to develop the aerospace industry to be as healthy as the automotive industry by 2014.
The vision presented by Mpahlwa was that South Africa would have a sustainable, growing, empowered and internationally recognised industry by 2014. Schultz attributed the failure to achieve this vision to “governance and lack thereof”.
He admits to being “upset” that he was not made aware before his appointment as CAV’s chief executive of a forensic report compiled for the trade and industry department, the 100percent shareholder of the CAV.
The forensic report was mandated following allegations of fraud, corruption and reckless tender appointments related to the CAV and found maladministration and unauthorised expenditure “running into millions”.
The trade and industry department confirmed in September 2015 that it had initiated action, including the laying of criminal charges, against individuals and companies involved in alleged financial irregularities and fraud at the CAV.
The department added that disciplinary action was initiated against staff, including the immediate dismissal of a director responsible for the programme, and it was pursuing criminal charges against the official with the intention of recovering funds as recommended by the forensic audit into the CAV.
Sidwell Medupe, a departmental spokesperson, failed to respond to a number of e-mailed questions sent to the department about the outcome of the criminal cases and the recovery of funds.
Schultz said he ensured once he joined the CAV that there was no opportunity for corruption, maladministration or tender irregularities in CAV and it had received two clean audits since he joined.
Trade and Industry minister Rob Davies was insistent in 2015 that the CAV was operational when it only shared a single “pilot” building on the perimeter of the 15.6hectare site with Ahrlac, a joint venture between the Paramount Group and Aerosud, for the development of a light reconnaissance and counter-insurgency aircraft in South Africa.
However, Schultz confirmed that the installation of bulk services such as electricity, stormwater drains and roads on the site commenced in May this year and would culminate in township establishment certificates that are expected to be awarded in June next year.
Schultz said there was an amount of R84million that was previously allocated to the CAV for bulk earthworks and infrastructure before he joined, which was the infrastructure capital budget they were using to develop the township.
He added that the total investment required for the development of the CAV was about R1.1bn over a five-year period, commencing from next year.
Schultz admitted that there were some issues that had to be resolved to gain access to the R1.1bn and other government incentives that were available. This because of National Treasury rules related to “double dipping” in regard to receiving government grants and incentives and also funding for the build programme.
Schultz said what was referred to as phase 1A of the CAV was scheduled to commence by the middle of next year and provide for 30percent of the development over a two-year construction programme.
He said prospective tenants were ready to sign for space in this phase, but this was dependent on the funding for CAV’s development being 100percent confirmed by the government.
“This development will and can succeed only if the relevant amount of seed funding is provided. There are two tenants specifically that have already signed letters of intent and are willing to sign, but need the commitment on funding, because they are not able or willing to put funding into the top structures.
“If we miss this time window of March next year, then we have a failed business case, so it’s absolutely imperative that a mechanism be found for funding,” he said.