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UNITED DEMOCRATIC MOVEMENT

MEDIA RELEASE

 

COSTS AND RISKS OF ARMS DEAL

STATEMENT ISSUED BY DR GERHARD KOORNHOF, MP
UDM SPOKESPERSON ON FINANCE

The UDM expresses concern regarding the revelations in the Mail and Guardian that Cabinet was informed about the high costs and risks of the arms deal.

It is disturbing that the Cabinet Committee responsible for the arms procurement deal were warned by the Department of Finance in August 1999 about the risks involved in the deal. Four types of risks were identified namely: Exchange rate risks, Interest risks, Counter-trade risks as well as Macro-economic (growth) risks.

These revelations raise a number of serious questions:

  1. Why did the Cabinet Committee take the decision to proceed with the deal knowing the risks involved?
  2. Why were the risks not explained to Parliament when the deal was announced?
  3. Why was the public not informed that the cost to the state would not be fixed at R29.9 billion?

The Cabinet Committee, specifically Mr Mbeki, then Chairperson of the committee, as well Ministers Manuel and Erwin, needs to answer these questions. Ignoring the warnings of the downside potential of any project places the full responsibility on the decision-makers, they must face the full consequences of such decision.

Enquiries:
Dr Gerhard Koornhof, MP
UDM Spokesperson for Finance

Pretoria
 26 April 2001

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