Democratic Alliance (Cape Town)

9 February 2014

South Africa: Project Flute - R100 Million+ Claim Against the State for Bungled Spy Satellite Project

press release

The first official statement mentioning "Project Flute", Defence Intelligence's secret billion-rand spy satellite development project, has been made by the Auditor-General, Kimi Makwetu, who confirmed that the bungled project had resulted in a possible claim against the state of more than R100 million.

Responding to my request for access to records, in terms of the Promotion of Access to Information Act (No. 2 of 2000), the Auditor-General confirmed that "Project Flute" had resulted in a potential claim against the state of R115 914 849.

The Auditor-General furnished me with a copy of a 2006/2007 annual report on Special Defence Account (SDA) financial statements, which includes an amount of R115 914 849 as a contingent liability.

The reason for the contingent liability, according to the report, was: "for a potential claim against the state by a foreign company as a result of the withdrawal of the approval for the sensitive project by the Minister".

The report goes on to state that this "could result in the claim against the SDA being considered irregular expenditure" and that the matter is "being pursued at inter-state level by the Minister".

The Auditor-General confirmed that the R115 914 849 potential claim against the state "relates to the cancellation of Project Flute".

This is the first official statement making direct reference to "Project Flute".

The fact that there was a possible R100 million claim against the state, and that the matter was pursued by the Minister at inter-state level, suggests that there may have been major financial misconduct as a result of "Project Flute".

We have to determine whether there was financial misconduct, and if there was financial misconduct, whether any disciplinary proceedings were instituted as required by the Public Finance Management Act (No. 29 of1999).

I will therefore:

- Submit a further request, in terms of the Promotion of Access to Information Act (No. 2 of 2000), for access to records relating to possible financial misconduct proceedings relating to "Project Flute"; and

- Submit parliamentary questions probing possible financial misconduct proceedings relating to "Project Flute".

The evidence suggests that "Project Flute" was not cancelled; it was reinstated under a new codename as "Consolidated Project Flute".

The question, therefore, remains: is the Kondor-E (E1) radar imaging satellite, which will reportedly be launched from Baikonur Cosmodrome on 27 February 2014, Defence Intelligence's secret spy satellite developed under "Consolidated Project Flute"?

In the end, I am not going to sit back and let Defence Intelligence sweep a bungled billion-rand spy satellite development project under the carpet in Parliament.

David Maynier, Shadow Minister of Defence and Military Veterans

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