Publication: Sunday Independent Issued: Date: 2001-01-06 Reporter: Sam Sole Editor:

Modise Cited in Sourced R2bn Aircraft Deal

Publication  Sunday Independent
Date 2001-01-06
Reporter Sam Sole
Web Link

Two American businessmen are poised to launch a R2-billion damages suit against Armscor, the state arms agent, over a failed bid to buy redundant South African Air Force aircraft.

They claim the deal may have been stymied because Joe Modise, the former minister of defence, and Ron Haywood, the current chairman of Armscor, wanted to put together their own deal to purchase the planes. Both Modise and Haywood have vehemently denied the claims. 

Modise said the allegations were part of a smear campaign against him and other senior African National Congress figures. 

Modise denied he had given any instruction not to sell the aircraft 

More than three years ago Roy Segers and Richard Parker began negotiations with Armscor to buy nine French-built C160 "Transall" cargo planes, which had been mothballed by the airforce.

In September 1998, just days before they were due to make payment of $28-million (about R212 million), they were called to a special meeting and told the aircraft had been taken off the market.

Segers and Parker say they were told by Boet van Staden, a senior Armscor official, that this action stemmed from the minister of defence. 

Modise denied this week he had given any instruction not to sell the aircraft and said he was not aware of the circumstances surrounding their sale. Van Staden referred all queries to the Armscor communications office.

Segers and Parker continued to negotiate with Armscor to try to reinstate the deal. Some months later, after Modise had retired as minister of defence, the two Americans were meeting financiers Incentive Corporate Finance to secure funding on another deal. They were surprised to be told that Modise and Haywood had just approached the same institution seeking to raise capital to buy, refit and refurbish the C160s. 

Lowenthal said he and Modise knew each other "Howard Lowenthal, the son of Norman Lowenthal, the chairman of Incentive, came into the meeting and said words to the effect that Modise and Haywood had just made an approach to Incentive to assist them in raising a loan of $100-million for the purchase and refurbishment of C160 aircraft," says Segers. 

He said Lowenthal indicated Modise and Haywood had held discussions on the matter with his father, Norman. 

Segers says Lowenthal junior suggested that they work together with Modiseand Haywood, but the Americans declined, saying they still had what they considered a valid contract with Armscor for their own offer to purchase the aircraft. 

Contacted in Boston this week, Howard Lowenthal declined to confirm or deny the conversation, citing his responsibility to keep company matters confidential.

Haywood this week emphatically denied being involved in any attempt to purchase the aircraft.

Modise said he had never heard of Incentive and did not know Norman Lowenthal.

However, when contacted Lowenthal said he and Modise knew each other: "I know him, he's been to my office. We discussed an agricultural development programme." 

Lowenthal said he was not aware of any approach by Modise or Haywood to Incentive to fund a purchase of C160s.  

Since then Parker and Segers say they have been told by a senior national intelligence agent, whose name they have disclosed, that Modise and Haywood attempted unsuccessfully to raise the finance with several other institutions. 

This has been denied by Modise and Haywood. Attempts to reach the agent were unsuccessful at the time of going to press. 

Parker and Segers also learned that in April 1999 Armscor had attempted to sell the aircraft and spares to a French company, Moncey Investissments, for $23-million - $5 million less than their own offer. 

The Sunday Independent is in possession of copies of documents that substantiate this information. That deal apparently fell through. 

In about May Armscor issued a new tender for the sale of the aircraft, with the nod going this time to a United Kingdom company, believed to be Heavylift. 

However, there appear to be questions around this deal too - also believed to be worth less than the original offer by Parker and Segers - and it is not known if any of the aircraft have yet been moved. 

In the meantime Parker and Segers have instructed their attorney to sue Armscor for $312-million in damages.

Jack Hajibey, their attorney, said that he would serve summons when the courts reopened later this month.

With acknowledgement to Sam Sole and the Sunday Independent.