INLSA
The Boeing 777-200 LR VIP business jet that could cost the taxpayer nearly R2 billion, if purchased by government for presidential use.
The Secretary of Defence, Sam Makhudu Gulube, is in the US on a two-week trip to finalise the purchase of a mega-bling VIP jet for President Jacob Zuma that would cost the taxpayer $235 million (nearly R2 billion) if the deal goes ahead.
The 300-seater Boeing 777-200LR earmarked as “ZA1” would cost a whopping $80m to reconfigure to Zuma’s specifications, on top of a $150m purchase price, it has been learnt.
Also included in the deal would be a $28m Global Express 600 for the deputy president’s use, bringing the bill for the VIP transport to $183m (more than R2.2bn).
Although negotiated on the basis of cabinet approval, according to information at The Mercury’s disposal, the deal has failed to follow normal requirements that such procurements be put out to competitive tender.
“It’s simply wrong to spend nearly R2bn on President Jacob Zuma’s new Boeing 777-200 LR business jet when so many people in our country are poor,” DA Defence spokesman David Maynier said.
“I hope delegates to the ANC’s 2012 national policy conference ask President Jacob Zuma to explain how a R2bn presidential business jet will help our country tackle the triple challenge of unemployment, poverty and inequality.”
Negotiated directly with Boeing, according to evidence in The Mercury’s possession, the Zuma jet was secured at a price, before reconfiguration, of $155m – knocked down from $305m. Originally destined for another buyer, the 777 apparently became available when that deal fell through.
But after the South African shoppers – with ministerial policy adviser and political commentator Sipho Seepe serving as go-between – missed a deadline for a “definitive agreement” to be signed by May 30, the temperature went up. New deadlines were set for the middle of this month, with Boeing negotiators J Miguel Santos and Carlos Horan threatening to pull the plug if the South Africans did not make concrete commitments.
Seepe confirmed he had acted as a “middle man” between the ministry and Boeing in pursuit of cabinet directives in respect of the VIP aircraft.
It remains unclear whether the Treasury was approached to invoke special powers to override the competitive tender specification on the basis of urgency. Also unclear is what budgets would be called upon to stump up on a shortfall of $183m identified by former defence minister Lindiwe Sisulu.
This was after Sisulu indicated last month that the Department of Defence could find the $80m required to reconfigure and refurbish the earmarked Zuma plane.
One solution proposed by Sisulu at the time was that refunds received from European manufacturer Airbus after the summary cancellation of its orders for the Airbus A400 M be returned from the fiscus to the Department of Defence to fund the VIP transport.
The Treasury, however, has remained tight-lipped on whether authorisation was given for the rerouting of governments funds as suggested by the Ministry of Defence.
Another deviation from normal practice mooted in the Defence Ministry’s apparent haste to push the contracts through was to acquire the planes through SA Airways – as opposed to the SA Air Force, the authority relevantly mandated for VIP air travel.
Such a procedure would be possible, it has been learnt, under Treasury regulations, which allow for other organs of state to be used for procurement purposes. However, such procedures do not obviate the overriding requirement for going to a competitive tender process.
Asked for comment, Finance Ministry spokesman Jabulani Sikhakhane said: “The National Treasury was consulted, as is normal with matters of this nature.”
The Treasury was not in a position to disclose its specific recommendations, Sikhakhane said.
The government’s planned spending spree comes at a time when earlier blunders and misadventures around VIP air transport could cost the country billions in months and years to come.
Nigerian-owned Adonai Aviation, awarded a five-year lease contract for R826m in 2010, which was subsequently summarily cancelled, continues to be in litigation, with the Department of Defence demanding a review of the cancellation of its contract.
If successful, the review would open the door to multibillion-rand damages claims.
The presidential jet, Inkwazi, was returned to service at the beginning of this year, after being out of service for most of last year for routine upgrades and maintenance.
The Boeing 777 is the world’s largest twin-engined aircraft, and has the longest range of any aircraft in commercial use.
