Feuding defence chiefs in the gun

By JOHN ARMSTRONG POLITICAL EDITOR

Mutual mistrust is plaguing personal relations at the most senior levels of the military, says the Auditor-General's damning report on the Army's $677 million purchase of new armoured personnel carriers.

The squabbling and intense inter-service rivalry are revealed in David Macdonald's report, which slams relations between the Army, its Defence Force superiors and Ministry of Defence officials as "confused" and "dysfunctional".

The financial watchdog's report - made public yesterday - talks of strong personalities expressing views in "a very forthright and robust fashion".

In particular, the Army's Chief of General Staff, Major-General Maurice Dodson, complained that he was being shut out of the lengthy process involved in the purchase of the LAV3 light armoured vehicles.

The report will lend weight to persistent rumours of a power struggle between the Chief of Defence Force, Air Marshal Carey Adamson, and General Dodson, who is known to have the ear of the Government.

Defence Minister Mark Burton accepted that the report was damning in highlighting the "game-playing and petty politicking" in the military.

Asked how relations could hope to improve with the same staff staying in the same posts, he dismissed suggestions that heads should roll and said "relationship issues" were being addressed, for example, by establishing a joint forces command centre at Trentham.

He was also adopting a "more rigorous" procedure for cabinet oversight of major acquisitions.

The Army is buying Canadian-built LAV3s to replace its Vietnam War-era M113 armoured personnel carriers.

A deal was signed with manufacturers General Motors in January - four years after the project was conceived.

The cost has ballooned from $212 million to $677 million.

Defence Secretary Graeme Fortune sought the Auditor-General's intervention after repeated claims that the tender process was flawed and the vehicles were not suitable for the Army's likely deployments in the Asia-Pacific region.

The Auditor-General's report reveals that the Army persuaded cabinet ministers to buy all 105 light armoured vehicles at once.

Ministry of Defence officials, including Mr Fortune, wanted a "staged" purchase to smooth costs.

The Army believed that once it got its first batch of 55 vehicles, it would not get any more.

Despite his criticism, Mr Macdonald noted that independent consultants had found the LAV3 most closely matched the Army's requirements.

But he criticises the handling of the purchase as "not well managed", saying the project was poorly defined and suffered from poor communications within Defence headquarters in Wellington.

He also hints that the project cost an extra $60 million because of a failure to arrange foreign exchange cover for the weak dollar.

A major part of his report concentrates on the failure of Defence officials and the Army to agree on the recommendations to the cabinet, particularly on the number of vehicles.

The officials and Defence Force commanders believed the Army had a predetermined view of the vehicles it wanted, while the Army believed Defence Force chiefs did not understand its needs.

"The Army is also sceptical of what it sees as a Defence Force preference to equip the two other Services ... We formed the view that mistrust between the parties was partly responsible for the poor handling of this purchase."

Mr Macdonald called for projects of that size to be handled by a steering committee chaired by the Secretary of Defence. Meanwhile, accountabilities and structural relationships within the defence Establishment needed urgent review.

Air Marshal Adamson and the Army issued brief statements saying they would ensure the recommendations were implemented.

Henschel Wehrtechnik, the German company that complained about the tender process, last night warned that it might seek compensation from the Government.

National's defence spokesman, Max Bradford, called for an independent inquiry or select committee investigation, saying the Auditor-General had not explained why more complex equipment purchases by the Navy and Air Force had gone smoothly yet the Army's had not.

"One can only conclude that the problem is a real failure of leadership in the Army."