Germans drop arms deal investigation
|Publication||Mail & Guardian|
|Author||Sam Sole and Stefaans Brummer|
German investigators have been forced to close their corruption probe into the sale of four corvettes to the South African navy by the ThyssenKrupp consortium.
A statement issued by Thyssen this week suggested the probe had been dropped because investigators found no evidence of criminal behavior. The company claimed that proceedings were stayed "without sanction and in particular without cash settlement".
However, information gathered by the Mail & Guardian suggests an investigation stymied by lack of cooperation from South Africa, legal challenges by a key Thyssen middleman and looming statutory time limitations.
The M&G understands that Thyssen has paid a substantial settlement to the German tax authorities. This contained no admission of criminal guilt. However, the summary indictment supplied by German prosecutors in their request for legal assistance explicitly linked allegations of a tax offence by Thyssen to the payment of bribes.
The German request, sent to the South African department of justice in mid-last year, said that Thyssen had falsely claimed that these so-called "commission payments" were effected before December 31 1998.
Before this date German companies could still claim tax deductions for foreign bribe payments as "necessaty expenses". This "misrepresentation" gave Thyssen a substantial tax break. The Dusseldorf investigation established that, beginning in 2000, Thyssen paid more than $22-million to Tony Georgiadis - a key intermediary in the South African warship deal - via a Swiss bank account.
Cheques from this same Credit Suisse account, in the name Mallar Incorporated, were issued in 1999 for separate R500 000 donations to the ANC, to the Nelson Mandela Children's Fund, and to Graca Machel's Mozambican development fund.
Copies of these cheques were found during a raid by German investigators on the home of senior Thyssen executive Christoph Hoenings. However, an application by the German authorities for access to the Mallar accounts is understood to have been stymied by a legal challenge by Georgiadis.
Georgiadis has always denied any wrong doing. Credit Suisse issued a statement on behalf of Mallar confirming that the company had made "no payments ... to any bank in South Africa, nor to any South African office holders or Cabinet minister or any other South African beneficiary". This reassurance, however, only covered the period April 2000 to May 2002.
Dusseldorf prosecuting authority spokesperson Arno Neukirchen told the M&G this week that even if they had gained access to the Mallar records, they faced the possibility that the funds had been transferred through a number of other jurisdictions, such as Lichtenstein or the Bahamas, before reaching the final destination. Further investigations might take years and still not reveal that anyone besides Georgiadis had received money.
The other payment that the Germans were attempting to trace was a $3-million amount paid to a United Kingdom company Merian Ltd, which is represented by South African accountant Ian Pierce.
Investigators believed the payment was in response to a request by then head of defence procurement Chippy Shaik. Shaik has always denied the allegation.
The German prosecutors asked South Africa for legal assistance in accessing bank records relating to Pierce, Shaik and Merian Ltd, as well as Thyssens' long-time South African representative Sven Moeller.
The request was not passed on to either the police or the Scorpions. Instead the justice department wrote back to the Dusseldorf prosecutors suggesting they had not made out a sufficient case and requesting further information.
Neukirchen said this information had been supplied "to the extent we were able" early this year. The Dusseldorf prosecuting authority statement said that time had been a major factor in its decision to close the investigation into two former Thyssen executives who had been most directly involved in the South African deal - Hoenings and Jurgen Koopman.
"Even if further investigations might deliver sufficient grounds for suspicion, no conviction could be expected within a reasonable time, given that further investigation depends significantly on the results of the request for judicial assistance sent already to the South African authorities on July 10 2007, whose timely execution cannot be relied on."
The statement also noted that Koopman and Hoenings had been convicted on other charges, "not substantively connected" to the South African deal, which had been uncovered during the investigation. Their sentences in this matter were wholly suspended.
The decision to end the investigation of other named suspects, including Georgiadis, was based on the failure to secure evidence linking them to bribery.
It appears that this one was never digitally published.
I only received it today.
It was a companion story to "Mabandla 'blocks' arms probe" of the same date.
It is incredible that it is said that the investigation was abandoned because it "was based on the failure to secure evidence linking them to bribery".
At least in the USD3 million bribe to Chippy Shaik and "a group represented by him" they had seized the original bribery agreement signed by Chippy Shaik and Christoph Hoenings.
It had been been kept in a special bank deposit box in London which used a two-key system.
This had been advised to Christoph Hoenings by Tony Georgadis who lived in the UK.
The German police in Dusseldorf not only had this document, but the German bribery memorandum from Hoenings to Thyssen management recording his trip to South Africa and his second meeting with Chippy Shaik confirming the arrangement.
They also had a raft of other relevant documentation including a written instruction to Thyssen from Chippy Shaik instructing it that Ian Elvis Pierce was his agent or representative in this matter.
The German police also traced most of the payments from the Merian Ltd bank account in the Channels Islands to beneficiaries in South Africa and the transfer of the balance to an account in Switzerland when things started getting to too hot after the payments were being monitored.
Some of those South African payments are extremely interesting.
One of the biggest ones went to a company where the main director was a woman who had already died of liver cancer.
Another was to a company where the director was an old woman.
Yet a couple of others were made to a company where L'Oreal Greer was the director.
She is Ian Pierce's daughter.
Yet another was made to a company in the Stellenbosch or Somerset West area.
This latter one is particularly interesting.
There's gold in them thar hills.
Maybe it is Fool's Gold.
Maybe I'm the Fool.