Defence department blows a fortune on Cuba

Experts have slammed as unacceptable a questionable move by the department of defence to approve a deal worth several million rands which benefitted a Cuban supplier – extending existing technical and professional services – unsupported by signed supplementary agreements.

This followed a scathing report tabled on Wednesday in parliament by the auditor-general revealing that the department:

• Paid R151 654 265 between October 2019 and March 2022, unsupported by signed supplementary agreements; and
• Paid 3.8 times (379%) more per hour than industry norms, for repair and maintenance services for tank and transport vehicles – costing the state an additional R240 million.

The auditor-general audit outcomes report on the department, covering the financial year 2021-22, found irregularities, contravention of regulations, fraud, theft and a breach of fiduciary duty within the department.

On Project Thusano – managed in collaboration with Cuba – the auditor-general focused on the appropriateness of continued services provided by a Cuban supplier, saying: “The department used supplementary agreements to the initial contracts to directly procure additional or extend existing technical, and professional services – resulting in the contracts being open-ended in nature.

“As a result, the department approved payments amounting to R151 654 265.06 between October 2019 and March 2022 that were not supported by signed supplementary agreements.

In response to the auditor-general inquiries and limitation of scope findings, most of these agreements were subsequently requested from Cuba and submitted to auditors.”

On provision of professional services for tank and transport techniques, the auditor-general found that the department:

• Failed to provide all requested information and prohibited access to facilities, resulting in the auditors being unable to comprehensively evaluate services rendered by the Cubans; and
• Could not assess the efficiency and effectiveness of the repairs and maintenance and vocational training rendered.

The report said: “The process was not fair, equitable and transparent, because the market was not given an opportunity to participate in the additional procurement.

There were uneconomical repair and maintenance services for tank and transport vehicles, with the department paying 3.8 times (379%) more per hour than industry norms.

This cost an additional R240 million.

Organisation Undoing Tax Abuse (Outa) chief executive Wayne Duvenage said Outa found the fact that the department approved payments to a Cuban supplier to procure additional or extend existing technical and professional services “unacceptable”.

He said the department’s 379% payment more per hour to the Cubans for repair and maintenance services was “tantamount to corruption and gross maladministration. The same goes for transport and tank mechanical engineers and technicians in Cuba, which is between 86% and 162% more expensive than in SA.

“The relationship with service providers and training from Cuba has been raised as very suspicious in the past and these matters require a thorough independent investigation. These incidents indicate a loss of control and poor management within the department.”

Military expert Helmoed-Römer Heitman said: “We are paying Cubans to repair vehicles for which Denel Vehicle Systems is the original equipment manufacturer, having taken over BAE Land Systems.

So, we are letting a state-owned company sink and lay off staff and allowing a key capability to die to pay the Cubans to do what local staff could have done – and probably better.

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