The following is excerpted from the Nov. 5 press briefing by the South African government spokesman following the Nov. 4 meeting of the government Cabinet, which decided to terminate the contract to buy eight Airbus A400M transport aircraft. Click here for the Cabinet decision.
PRESS BRIEFING TRANSCRIPT
You spoke about the termination of the Airbus contract. Just exactly how much would it have cost?
We can give figures, government has already paid R2,9 billion. The original cost was in the region of R17 billion and the escalation would have taken the cost to about R40 billion.
Did Cabinet have any advice or suggestion on Gill Marcus. (not audible)
Themba Maseko: Nothing specifically, we just know she is the right person for the job and she will do a sterling job to the satisfaction of all South Africans.
--Journalist: Further to the Airbus does the industrial participation part of the airbus contract still stand? Is that in any danger or has that been a problem and does the government owe any monies towards that?
Themba Maseko: I don’t have the exact details about whether government still owes any money. The termination of the contract will obviously have implications that would have to be spelt out over the next few days or weeks. Our hope is that because the contract was not just about the acquisition of the C aircraft but it was also to get the South African industry to supply Airbus’ Global programme. So in cancelling the contract it’s possible that Airbus may say because you are no longer purchasing our products we are not going to participate in the programme. But there is no final decision on that matter. It’s something that still needs to be looked at as the contract is concluded.
--Journalist: In terms of the implications is there going to be a penalty fee and if so how much?
Themba Maseko: At this stage as far as I understand the contract there is no penalty fee. The agreement basically said if Airbus is not able to deliver according to the specific timeframes South Africa would have the option to pull out of the contract and at this stage the original deal was that Airbus would have delivered the first aircraft in 2010 but we can check the date. So they have missed the deadline. So I’m not aware of any penalties at this particular point.
--Journalist: Are we considering buying other airplanes. The reason why we bought this was to have an airlift capability. Now we won’t have that. Have alternative purchases been discussed?
Themba Maseko: The air force is going to have to do an assessment. Clearly one of the reasons why the decision was taken to acquire this aircraft was to strengthen South Africa’s airlift capability and especially our peacekeeping missions in the continent. So the air force will have to do an assessment and if it does require more aircraft a proposal would have to be tabled before Cabinet for a decision to be taken.
--Journalist: Can you explain the R192 million that was mentioned in the budget policy statement a fine that was incurred by Denel as a result of the delays. Is that money also part of the refund?
Themba Maseko: Let me apologise I don’t have details of that. In Cabinet that matter was not raised so I’m not able to answer that one.
--Journalist: In the whole process of pros and cons on deciding whether to cancel or not what were the arguments against cancelling obviously there’s the finance thing. What implications will it have for the air force not to have these aircraft? If you can paint the scenario of the decision making process.
Themba Maseko: It was an extensive review. One of the immediate implications is the fact that the air force will have to go back to the drawing board to look at its own airlift capabilities. It may have an impact on South Africa’s participation in a number of peacekeeping efforts in the continent. So that would be the obvious implication but when the Minister speaks to the Portfolio Committee this morning, she will maybe give more details on that one.
--Journalist: On Airbus, have we already paid something, I am under the impression that South Africa has already had to put payments in on that. Have we any idea how much that was and the other is two weeks ago you told us Cabinet had taken a view on Airbus. Is the decision you are announcing the same view they took then or has there been a change. Has Cabinet changed its view in the past two weeks?
Themba Maseko: Cabinet did take a view the past two weeks. However it said because of the complication of this decision and its implications, the Minister of Defence was given the task to go back and do some more homework on this matter, interact with the various departments that participated in this decision, talk to Armscor and Denel and understand the full implications especially the cost implications of that decision. She was able to give that report yesterday and Cabinet was satisfied that she did look at the possible implications of the decision. So yesterday’s meeting confirmed that view that was adopted at the last meeting which we could not announce. We also had to make sure we communicate with the relevant parties especially Airbus itself because you can’t enter into a contract with somebody and get them to hear about a decision to pull out through the media and that is why we delayed it. The amount already paid is R2,9 billion and it will be refunded. The contract makes provision for that.
--Journalist: Another one on Airbus was there an indication that costs might escalate beyond R47 billion if we decided to go on with the contract?
Themba Maseko: It was not specifically discussed at yesterday’s meeting. It’s possible that the costs could have escalated but no figures were mentioned at yesterday’s meeting.
--Journalist: There is a Denel delegation in Europe at the moment. Did they discuss that?
Themba Maseko: No, that matter was not discussed at the meeting.
--Journalist: What happened to the Hercules C130 aircraft that was renovated in 1990s? Is there a sense that those can still be used and we didn’t need the Airbus in the first place?
Themba Maseko: I have to apologise as I don’t have those details. We will have to get back to the ministry on that issue.
--Journalist: I just want clarity the Minister’s report to Cabinet, did the Minister recommend in the report that the contract should be cancelled.
Themba Maseko: Precisely yes. The Minister met with a lot of Ministers, a lot of departments made inputs, we talked to Denel, and we talked to Armscor so that the process led to a recommendation for the cancellation.
--Journalist: The Minister said she was embarrassed that the figures had come out in Parliament. So will there be any disciplinary action against her.
Themba Maseko: No there was no discussion of any disciplinary at this Cabinet meeting. However the Minister said she is concerned about numbers being released in public before any thorough process is conducted but no disciplinary action.
--Journalist: Are there any diplomatic fallout from this fences to mend in the sense that the Minister indicated that South Africa was embarrassed when the figures came out. And in the sense that North Atlantic Treaty Organisation (NATO) approached South Africa to be involved in this Airbus process.
Themba Maseko: I would imagine there would have to be some interaction at different levels to explain the rationale for this particular decision. I don’t have any specific details about who will be spoken to but I do expect some discussions to take place between the South African government and various governments.
--Journalist: Was there a view in Cabinet that went against the Ministers’ view that we should cancel. Were there any other views that said no we should go ahead with the deal?
Themba Maseko: The matter was discussed extensively. The pros and cons were looked at but the decision which is what this briefing is about was that we should actually go for the cancellation. At this particular point I am not able to say that this view or that view was expressed. Cabinet’s decision was that cancellation was the best way forward. There are quite a number of issues taking place today and the Minister of Health briefing would have clashed with too many things happening in Parliament. So we should actually dedicate a special session for the Minister of Health to make an announcement. The decision of the HIV and AIDS programme of government is quite exciting. There are major decisions that have been taken by government which represent some changes and we are really looking forward to the opportunity to do the briefing. So the Minister was indeed ready to do the briefing today but we thought there was just too many issues on our agenda and we will not do the briefing today.