17 August 2001
"Phil Goff's has completely missed the point about the purchase of the LAV IIIs. It is not about who signed off the
purchase, it is about the poor quality of advice given to successive Ministers of Defence," National's Defence
spokesperson Max Bradford said today.
"The army withheld important information from the then-Government when it recommended the purchase in 1998/99. I would
expect Mr Goff and Mark Burton to be as concerned, as we are, about the vehicles because they got the same inadequate
advice as we did. Since then the costs have exploded.
"The altered answers to questions released yesterday simply prove how important an inquiry is into the advice that
successive Ministers were given by the army over the capabilities of the vehicles.
"The Auditor General's report on the process of approval is unlikely to determine if the right advice was given on
whether the vehicles are right for the job. I have offered the Auditor-General access to all the files and advice I
received as Minister, and urged the Government to conduct a full inquiry into the purchase, both during my time as
Minister and subsequently.
"It is little wonder Helen Clark disbanded the Air Force Skyhawks and put 700 air force men and women out of a job. She
needed the money to pay for nearly ¾ of a billion dollars of army personnel carriers, which obviously aren't suitable
for peacekeeping tasks in our region. This has the makings of a major scandal.
"The LAVs can't turn in a tight circle in the terrain common in the Asia-Pacific region the army will work in, but it
seems this wasn't pointed out by the army. The costs have grown outlandishly from $212m to $658m, but did Ministers
receive advice or warning about this?
"It is clear poor advice was given about the LAVs capabilities for the job they are required to do. That is why a full
inquiry is needed, and I don't believe the Auditor-General's inquiry commissioned by the Ministry will do the job," Max
Bradford said.
Ends
Attached : Mr Bradford's letter of 3 July 2001 to The Auditor-General:
3 July 2001
Mr David McDonald
The Controller & Auditor-General
Audit New Zealand
Private Box 3928
WELLINGTON
Dear Mr McDonald
Audit Office Investigation on Army LAV 3 Purchase
The Foreign Affairs, Defence & Trade Select Committee, of which I am a member, has been advised that your office is undertaking an investigation on
certain aspects of the Army's LAV 3 APC purchase. The audit was commissioned by Mr Graham Fortune, Secretary of the
Ministry of Defence.
The Select Committee received a short briefing on the investigation two weeks ago.
I am writing to you to invite the Audit Office to undertake a thorough investigation on this matter. The investigation
needs to stretch back into the period of the last government when the Government was advised, through me, to approve the
purchase of up to 102 light armoured vehicles at a cost of $212 million.
The Committee has been advised that this cost has escalated to $658 million, a figure which does not, we understand,
include key support equipment such as recovery vehicles and tankerage. There are also unhealthy rumours that vehicles,
when equipped with a turret, will not fit within the RNZAF C130 Hercules aircraft. The veracity of these rumours needs
to be checked.
I am particularly disturbed, as a former Minister of Defence, that there is such a significant gap between the $212m
recommendation I received from the NZDF and the (perhaps) final cost of $658m. This cannot be explained away simply by
the significant exchange rate devaluation since the Labour/Alliance Government took office.
Accordingly, I wish to urge you to include, as part of your investigation, the adequacy of the evaluation process that
led to the APC recommendation to the last Government.
I am sure the Select Committee, as well as the Secretary of Defence, would want to know all of the details of what was
included in the cost estimate; how much support was provided for; what cost estimates were included to justify the
recommendation suggesting that somewhere between 80 and 102 vehicles could be purchased and the robustness of the Army's
ordering, estimation and procurement processes.
As the former Minister I have no objection to you seeking, and gaining, access to the relevant Cabinet material to
assist with your investigation and, consistent with the new Public Audit Act, to undertake a full investigation of the
processes that led, first to the original recommendation and second, to the significantly different recommendations to
the present Government regarding the cost of the APCs.
I appreciate these are matters which may be additional to the Secretary of Defence's terms of reference. Accordingly, I
have copied this letter to him and you may care to discuss with Mr Fortune whether he is prepared to allow the terms of
reference to be extended as appropriate.
I look forward to your response to this matter.
Yours sincerely
Hon Max Bradford
National Opposition Spokesperson
For Defence
Cc Hon Mark Burton, Minister of Defence
Mr Graham Fortune, Secretary of Defence
Mr Graham Kelly MP, Chair,
Foreign Affairs, Defence & Trade Select Committee