Publication: Mail and Guardian Issued: Date: 2001-10-05 Reporter: Editor:

Bigger Fish to Fry?


Publication  Mail & Guardian
Date 2001-10-05
Web Link


AS Tony Yengeni became the second African National Congress parliamentary casualty of the arms deal, speculation mounted this week that he could be a strategic sacrifice whose arrest will protect more influential players.

Former defence minister Joe Modise and army procurement chief Chippy Shaik top the list of key players who, observers close to the arms deal believe, should receive the serious attention of the prosecution authorities if the probe is to appear comprehensive and thorough.

There have been suggestions that the government is keen to avoid implicating more senior politicians and officials involved in the deal, fearing that this could result in the cancellation of arms contracts.

At the time of going to press, there were signs that a strong lobby in the ANC's national working committee believes Yengeni's resignation as chief whip is not enough. The lobby is pushing to expel Yengeni from Parliament and suspend him from the party. It is understood ANC secretary general Kgalema Motlanthe has written to MPs assuring them that the ANC leadership is taking the Yengeni matter seriously.

Shocked ANC parliamentary caucus members are understood to have supported Yengeni's decision to step down as chief whip. However, party MPs signaled that further disciplinary action was unlikely to take place before Yengeni's trial in January.

Prosecutors in the Scorpions unit have locked Yengeni in a catch-22. If he manages to convince the court that his receipt of the Mercedes Benz was not corrupt, he will still be hit with a fraud charge - for deceiving Daimler-Benz Aerospace into thinking he could swing arms contracts in their favour.

The charge sheet says: "Whereas in truth and in fact, [Yengeni], when he so gave out and pretended, well knew that he had no intention to use his power or exercise his influence in that way ..." Either way, he loses - for being corrupt, or for not succeeding in being corrupt.

The lengths to which the national prosecution authority has gone to nail Yengeni has fuelled speculation that his arrest is a diversionary tactic.

One ANC member said that with the imminent release of the report on the arms deal to Parliament, it was possible Yengeni had been prosecuted to "improve the response to a flaccid report. It appears that [the ANC leadership] have finally taken the decision to scapegoat Tony."

One indication of the government's reluctance to take on the real heavyweights is that both the justice ministry and the national prosecution authority have stressed that Yengeni's arrest has nothing to do with the arms deal. Even Yengeni believes otherwise, telling it was obviously related.

The government may be stressing the lack of a link because it fears any proof of corruption could result in the cancellation of arms contracts. Many observers believe the government's grim determination to exclude the Heath Investigating Unit from the arms probe had the same roots. Of all the investigating agencies, Heath's was the only one with the legal power to rescind contracts.

Richard Young, the head of C2I2, a Cape-based defence company involved in the arms procurement process, says: "I would like to know why they are concentrating on Yengeni when they have much bigger fish to fry" - an obvious reference to the likes of Shaik and Modise.

Young says it is "significant that the government and the Scorpions are denying the link between the Yengeni arrest and the arms deal".

Young says there is a clause in the contracts labelled "remedies in case of bribes". The clause suggests that if a link can be shown between anyone found guilty of corruption and the decision to award a contract, then that contract can be cancelled. Young says the government is "terrified" of the link.

Andrew Feinstein, the other MP to have lost his position because of the arms deal, says Yengeni's arrest is "extraordinarily good news. I sincerely hope this is the first of a series of arrests of others far more directly involved in the deal who have also allegedly benefited from it."

He adds that it "places in sharp relief the ANC's efforts to undermine [Parliament's] public accounts investigation. I hope that now the committee is given the space to work in a fearless and non-partisan manner."

But Feinstein, who resigned last month in protest against the ANC executive's efforts to quash the parliamentary investigation into the deal, adds: "Yengeni was always on the periphery." He says the crucial question is whether the investigators take on the "big decision-makers" in the arms deal.

On the contracts issue, Feinstein says: "My understanding is that contrary to what many ministers have been saying, if it can be shown that there has been corruption, the deals can be cancelled with no penalty to the South African state".

Sipho Ngwema, representative for the national prosecution authority, says no further arrests are imminent. Ngwema said after Yengeni's arrest: "At this stage I can say we are expecting further developments in the case, but as far as I know we are not expecting any further arrests to be made soon."

However, sources close to the investigation believe another high-profile arrest is imminent.

In addition to the prosecution of Yengeni, authorities issued an arrest warrant for Michael Woerfel, the local head of the European weapons company who allegedly arranged Yengeni's cut-price luxury car.

There have been suggestions, but no firm proof, that Modise has interests in companies that have benefited from the deal. Evidence was also led during Public Protector Selby Baqwa's public inquiry into the deal that Modise signed off the submarines deal before the government had assessed its affordability.

Beeld reported that the auditor-general's office questioned Modise this week. Investigators from the Scorpions have seized numerous documents relating to Modise and his tenure as minister of defence, when he presided over the genesis and execution of the deal.

Shaik has come under the spotlight for his alleged role in the awarding of contracts to people close to him. In particular, he is alleged to have steered a multimillion-rand contract to provide combat suites for the navy's corvettes to Thomson CSF - a company linked to his brother Schabir.

In testimony to Parliament Shaik claimed he recused himself from meetings where his brother's company was discussed. However, the Mail & Guardian has published documents indicating that Shaik chaired a meeting where the combat suites - and his brother's opposition - were discussed.

In addition to possible cases of nepotism, the investigators have also been perusing the arms deal's tender procedures - a line of inquiry that could show how contract specifications were rigged to favour certain companies.

It is also alleged that foreign arms companies may have been forced to tie up with local empowerment firms offering nothing but political connections.

One such concern, Futuristic Business Solutions (FBS), was formed by the head of the army under Modise, General Lambert Moloi.

In one letter to a prospective foreign partner, FBS wrote: "FBS takes it upon itself to use its established network to lobby and market [the foreign arms company], its products and services, to key decision-makers within the government of South Africa or any of its departments or ancillary bodies ... during the adjudication of the tenders for the [arms acquisition] programme ... "

There have also been allegations, but no proof, that businesses with close links to the ANC benefited from the arms deal.

Yengeni's decision to resign was not unexpected in ANC circles, although the dramatic timing of his announcement caught MPs completely by surprise.

Yengeni said he was "innocent of all the charges laid against me and I will prove this in court". He rejected allegations that he was being used as a scapegoat with "the contempt it deserves" and as "utter rubbish". He added that he had no doubts about the way the arms deal was negotiated.

"I have had no sleepless nights about it because it was a most professional process."

With acknowledgment to the Mail & Guardian.