Special Hearings — Chemical And Biological Warfare Hearings — 1998-06-08

CHAIRPERSON: You're not on the record Mr Vally.

MR VALLY: I beg your pardon.  Maybe you can just read that section into the record.

DR KNOBEL: You have it in front of you though.

MR VALLY: I've got from J1 to J5.

DR KNOBEL: You have in J, you have meeting held on the 29th of March '94.

MR VALLY: Yes?

DR KNOBEL: If you page through that document you get to a next meeting called: "A Special Coordinating Management Meeting".

MR VALLY: Yes, I see it now, thank you.

DR KNOBEL: Now at that meeting, it says
"Brigadier Basson sketched the background of the claim of R350 000"
When this was discussed at the Coordinating Management Committee meeting, both myself and the Chief of the Defence Force wanted more background about exactly what work was done and what did it constitute and whether it was a fair amount of money to be paid.  For that purpose Brigadier Basson was asked to obtain from Doctor Koekemoer, an explanation of the process that he had used and to what value it was for Delta G Scientific to get this information from Jerry Brandt.  
 Now the document that you are referring me to dated the 24th of November was sent to me by Doctor Basson in reply to that request from the Coordinating Management Committee with added to it the explanation of Doctor Koekemoer what he calls:
"A cost evaluation of the two routes for the preparation of that product"
So this document that you are referring to then served at this special meeting and it was a special meeting because by this time we had delayed the payment of that amount of money by almost a year and it had to finalised, and therefore the meeting of the Special Committee took place on the 2nd of December, about a week after we received this document and then the decision was taken what could be paid.

MR VALLY: What is PMK?

DR KNOBEL: I beg your pardon?

MR VALLY: There's to payment for a formula, there's also reference to the delivery of PMK.  We're talking a sum of ...[intervention]

DR KNOBEL: But would you please tell me where this document is?

MR VALLY: Certainly.  If you look at the letter addressed to you dated the 22nd of March 1994, and then there's reference there to a previous letter dated the 19th of February which is addressed to Sefmed Information Systems.  Do you see the letter I'm talking about?

DR KNOBEL: Let me just find that.

MR VALLY: Look at the annexure to J1.

DR KNOBEL: I think I've got it.  Is it the letter of Viljoen, French and ...[indistinct]?

MR VALLY: Same attorneys.

DR KNOBEL: Ja.  I've no idea what that is, that is some code that they probably used for the same product, I'm not sure.

MR VALLY: Well
"It is our instructions that in terms of an agreement reached between our client and yourselves, the formula for the manufacture of PMK was sold to yourselves for an amount of $100 000"

DR KNOBEL: But ourselves is the Sefmed Information Systems.

MR VALLY: I understand that.  Do you know the company Sefmed at all?

DR KNOBEL: Yes, I've heard of it.

MR VALLY: Is it a front company of the Defence Force?

DR KNOBEL: Yes, originally it was as far I remember.  And you know that we've discussed this ...[indistinct] front of it.

MR VALLY: I beg your pardon?

DR KNOBEL: We've discussed the situation of what was front companies and what was not front companies.

MR VALLY: And do you know who the directors of this company are?

DR KNOBEL: No idea.

MR VALLY: There is also in that same letter to Sefmed, on page 2, there's also a claim of
"A sum of R119 157 due to our clients in respect of the fourth delivery of PMK to you"
Do you see that?

DR KNOBEL: I see that, yes.

MR VALLY: In his letter, J1, the letter to you, he referred to his letter of demand to Sefmed Information Systems, which we heard from you at one stage was a front company for the Defence Force.  In the very next sentence he says he's addressing the letter to you in your capacity as coordinator of the Baxil Project.

DR KNOBEL: Yes.

MR VALLY: The minutes of the meeting of the 2nd of December 1994, a special meeting you referred me to just now, you in the meeting of the Coordinating Management Committee with General Meiring present, yourself, Lieutenant General van Breedts, General Major Brocker, Brigadier Koertzen, Brigadier Basson and Colonel Steyn, agree to pay R350 000.

DR KNOBEL: Yes.

MR VALLY: What were you agreeing to pay R350 000 for?

DR KNOBEL: You mean R250 000?

MR VALLY: I beg your pardon, the claim that - alright,  He says
"The demand was R350 000 but we agreed to pay R250 000"

DR KNOBEL: Yes.

MR VALLY: Can you tell us what that was for?

DR KNOBEL: That was for the product that had been imported to South Africa through Organochem by Jerry Brandt as well as for the formula that he provided and which Koekemoer comments about.

MR VALLY: When you say: "Koekemoer comments about", is it the ...[intervention]

DR KNOBEL: The route that was followed, the scientific ...[intervention]

MR VALLY: The baxil formula?

DR KNOBEL: Yes.

MR VALLY: What Doctor Koekemoer advised us was ecstasy, is that what you're referring to?

DR KNOBEL: That's what I'm referring to, yes.

MR VALLY: So can we assume that the PMK being referred to is also ecstasy?

DR KNOBEL: No, Mr Vally, I don't know whether we can assume that at all, I'm not sure.

MR VALLY: Well I'm trying to work it out you know.  R250 000 of taxpayers money went to pay for a product of which we only know the code name and we also got a delivery of the product which was a fourth delivery, according to the letter to Sefmed which was a military front company.

DR KNOBEL: Yes.

MR VALLY: And if you're referring to Doctor Koekemoer, the formula he was given and the product he made was ecstasy, he told us that.

DR KNOBEL: That's correct.

MR VALLY: So is that the formula we're talking about?

DR KNOBEL: I suppose so Mr Vally.

MR VALLY: So are we to assume that not only were we manufacturing ecstasy ourselves but we were also importing ecstasy?

DR KNOBEL: No, I'm not saying that at all, I'm saying ...[intervention]

MR VALLY: Well, that's what I'm trying to find out.

DR KNOBEL: Well Mr Vally, I've tried to say to you before that both with the methaqualone and with other products we were trying to get pure basic ground substances so that we could use it to produce an incapacitating agent.  This is the information that was given to me and to the Coordinating Management Committee, that this man had not only imported substances to us, and he did so illegally and he did so from Britain, but also he provided us with a particular formula.
 When the Coordinating Management Committee wasn't satisfied with that explanation they said: "We want a written document where the scientists at Delta G informs us of whether this in fact saved this country money, yes indeed, is it a good price to pay".  And that is the document that you referred me to, which was discussed at the Coordinating Management Committee.  On the basis of that it was decided to pay this man.  
 And you will notice that Basson indicated that R250 000 would be correct.  I questions that, I said: "What did he quote you before and what did you agree to pay"?  And is at the end of that special meeting, you will see my remarks there with reference to paragraph 2:
"It is recommended that the amount be decided on afresh"
 And in the end the Coordinating Management Committee Meeting agreed that this man's delivery of a product as well as of a formula was valuable and deserved to be paid the amount that he had asked us to pay.  That is what was ultimately agreed to and which was paid.  
 And as you yourself indicated, at this meeting was present, not only the Chief of Staff Finance, the Acting Chief of Staff Finance but also Brigadier Koertzen who I explained to you before in my testimony last time was the expert on financial aspects of Project Coast.  We had him there so as to advise us as to the reasonableness of paying that amount.