Publication: Business Day Issued: Date: 2004-10-11 Reporter: Tim Cohen

'French Connection' Adds Mystique to SA's Arms-Deal Potboiler



Business Day

Date 2004-10-11


Tim Cohen

Web Link


France has traditionally been a leading player in the African arms trade but its role in the Zuma affair is perhaps not as instrumental as commonly thought.

Ever since the success of the 1970s film The French Connection the phrase has in colloquial vocabulary signified something more than a link with France.

It's something special or unusual. It's the French connection.

And so it has been with SA's arms-procurement process and the Scorpions investigation of Durban businessman Schabir Shaik, even though British and German companies play a much larger role in the deal.

The involvement of French arms company Thomson-CSF (which later became Thales and now called Thint locally) has dominated the headlines even though the French are investigating why their cut of the deal ended up being comparatively so small.

It is as though the participants and observers think about the case and say, "Ah, of course, the French connection."

But what was that connection in the Shaik case? What is it about the French involvement that invokes this knowing phrase?

And what was the true extent of French influence on the course of events ?

One minor chapter in the arms deal story was distinctively French as it took place at the country's embassy in SA some time ago.

Since it is a diplomatic event, it would be, let us say, tactless to mention names.

The French ambassador was apparently in the habit of inviting members of the local community around for a "grand boeuf" on Friday afternoons.

On occasion, these lunches have been known to extend well into the late afternoon.

And when that happens, a certain amount of wine tends to be consumed, and then there is the cognac to be had, and, well, eventually the conversation is bound to drift beyond the strict formalities of official diplomatic discourse.

A guest at one of these occasions was, by chance, involved in a business transaction that concerned the forthcoming arms procurement process in SA.

Somehow the conversation got around to the risks involved in selling arms in African states.

The man recognised these risks, but informed the guests that he had negotiated himself a rather unusual fall-back position.

According to his contract, which he produced for all to see, if he spent a single day in jail because of the contract, the company involved would pay him $1m .

The French ambassador was going puce at this stage.

Even through the mists of all the alcohol, it was obvious that this conversation had gone far enough.

The lunch quickly broke up.

What does this illustrate? The fact is that arms companies know they are fantastically unpopular.

They know that to do business in Africa, and anywhere else in the world for that matter, they will undoubtedly trip over some weird stuff.

Nothing is ever uninteresting in this game. You need a tough skin, good luck, a good nose for political trends and, apparently, a hefty pension commitment should things go awry.

What is more, arms companies know that their buyers know their tricky predicament.

The pressures of domestic and international politics are often transmitted all the way through to the vendor companies .

And it does not help that the arms companies themselves have tended to be owned by the state.

Politics is everywhere in this game.

Because of this maelstrom of crosswinds, arms companies tend to be obsessively secretive.

But we do know something about the involvement of Thales in SA as it features prominently in the summary of substantial facts submitted by the Scorpions in the Shaik trial.

According to this document, Thomson Holdings was incorporated in SA in 1996, with 85% of the shares held by Thomson, 10% held by Shaik's company Nkobi Investments and 5% held by Gestilac.

Gestilac sold out in 1999, but this 5% holding is interesting. Gestilac was Swiss registered but owned by a Frenchman, and a rather remarkable man at that Jean-Yves Ollivier, an old Africa hand who has been operating on the continent for decades.

During his early years in Africa, Ollivier was an agent for an electronics unit of Thomson.

He is now an independent and is currently most closely associated with Democratic Republic of Congo businessman Jean-Pierre Bemba, the leader of the former rebel Mouvement de Libération du Congo .

Ollivier is one of those remarkable figures who seems to pop up in odd places, doing favours here and there and earning bits here and there.

His political sense must be highly developed, and just one example of this is how he managed to make an amazing transition from the old SA to the new with seamless ease.

He helped the old government, for example, free then Recce Capt Wynand du Toit from an Angolan jail.

How he helped the new government is not clear (it had to do with the Congolese transition). Whatever it was, it was sufficient to be awarded the Star of Africa by former president Nelson Mandela.

Gestilac bowed out, timeously it now transpires, for a nominal amount on July 26 1999, and the following day a whole series of transactions took place establishing a holding company in France, a new local company and a new relationship with Nkobi.

In effect, Thomson invested about R15m in the local company. Clearly, things were looking up.

What transpired before this was a frantic bout of positioning and repositioning which is essentially the subject of the trial that starts today.

The actors and accusations are well known: Thomson was behind in the race and desperately looking for a way to get a slice of the contract, and it teamed up with Shaik to do so.

The fact that Shaik's brother, Chippy, was head of the team apportioning slices of the $3bn deal is a detail that only the wilfully blind could have missed.

What is less well known is that it was clear even in this pre-1999 period to some African National Congress (ANC) insiders that the then KwaZulu-Natal economic affairs MEC Jacob Zuma had a good chance of becoming deputy president. Pairing up with his financial adviser must have seemed like clever politics.

Nkobi and Thomson's subsidiary, African Defence Systems (ADS), were eventually successful in winning a small slice of the arms deal as part of the German frigate consortium.

The Scorpions' allegation is that with the Heath commission investigation looming, Shaik solicited a bribe from Thomson on behalf of Zuma for political cover which was eventually handed over.

But these events aside, what about the French connection? It is interesting that during this period the French government was in fact steadily divesting from Thomson-CSF.

The company was originally 100% government-owned, and was 60%-70% government-owned at the time the arms deal with SA was signed in 1999. It is now only about 30% government-owned, and is listed on the French stock exchange as Thales.

There is one other aspect of the "French connection" that is pertinent: the relationship between the Scorpions and the French judicial authorities.

As is likely to become clear in the trial, the Scorpions were alerted to a possible bribe attempt through a tip-off.

The Scorpions took the tip-off seriously because it included the now notorious encrypted fax.

The next obvious step was to find where it was sent and how it was acted on, if at all.

This took the Scorpions to the Paris headquarters of Thales and other places where the company was operating, including Mauritius. In order to search these locations, the Scorpions would obviously require the assistance and co-operation of the local constabulary.

Yet with regard to the French authorities, they were naturally hesitant. This was, after all, a company partly owned by the French state.

And the French had something of a reputation for turning a blind eye to bribery in Africa, particularly if it was to the advantage of the French authorities.

The impression that the "French exception" applied to business dealings was perhaps hardened by the Elf scandal, which spawned the country's biggest corruption trial and touched the highest echelons of the country's political elite, including the then justice minister.

But, perhaps ironically as it turns out, the French were also hesitant.

It's not always obvious to South Africans, but relations between the French police and African governments have a poor history mainly because for much of Africa's postcolonial history it has been run by despots. And in a despotic state there is no distinction between the police and the government. The police are simply an extension of the despot's exercise of state power.

So the French police, like those of other former colonial powers, have tended to be cautious about applications from the police forces of African governments, since the se (sic) have tended to be about applying political pressure rather than solving crime.

But the Scorpions must have done something right, because the relationship with the French police seems to have started out exceptionally well. The Scorpions got all the documentation together and submitted it to a French magistrate, Edith Boisette.

And the application for a search warrant was granted within a day astounding the Scorpions, who considered such speed impossible.

Although Scorpions officials could not themselves take part in the search, they were allowed to sit next door while the search took place. French police ferreted through mounds of documents, translating them, and going back for more, and so on.

The next obvious step for the Scorpions was to interview the suspects. An obvious central character here was Alain Thetard, a one-time board member of ADS and the person who wrote the notorious fax.

Thetard was and remains a top-line negotiator for the company. He was involved in deals between Thomson and Saudi Arabia and a deal between the company and the Taiwanese government that is now the subject of a top-level investigation.

The right to interview a senior person like Thetard was trickier for the French justice system to grant, especially so early in the investigation.

This would involve a French citizen being questioned by a foreign police force even though charges had not been laid. This would not be easy to justify in any country.

One question was whether the information supplied for the search warrant application was sufficient to cover a request for questioning, or whether a fresh application was necessary.

As it happens, the response of the French police and judiciary amazed the Scorpions, and they prepared to stretch the bounds of their legal authority in order to cooperate, allowing the application of certain provisions in South African law in France.

But then a strange thing happened. While the paperwork was under way, it became clear to the French authorities that there was a second track in the South African arms deal investigation: a political track.

And it appeared that even though there was a formal application by the Scorpions to interview the Thetard, some top officials in the justice department also wanted to talk to him for purposes which were not exclusively to do with crime-solving, but had a more political character.

What and who was involved in such a meeting from the Scorpions' side is unclear, but what is clear is that such a meeting did take place.

A recent application by the French companies to have their names removed from the case was dismissed by a Pietermaritzburg judge.

But it did bring to light that, following some pre-meeting negotiations conducted by prominent advocate Kessie Naidoo, it was agreed that the French companies, and even their local subsidiaries, would be dropped from the charge sheet in the case against Shaik.

Apart from the role of the French arms company, the political track had another aim: dealing with the political fall-out from the case.

This political track was established very early, when it first became clear that Zuma might have been involved, a full year before his name was publicly linked to the events.

Apparently, a delegation was sent to President Thabo Mbeki to inform him about what had transpired.

Informing the president was understandable, but apparently the suggestion was also made that Zuma should stand down on artificial grounds to protect the ANC and the government.

But Mbeki demurred. The reasons he did so will remain a fascinating but unanswerable question, unless he decides to do so at some point in the future.

Possibly he decided against pressuring Zuma out because he considered it unlikely that the charges would ultimately be brought.

Possibly he was suspicious about the political motivations of those bringing the charges.

Asked for detail about this course of events, the Scorpions, who are constantly accused of "leaking documents" and media manipulation, issued a one paragraph rebuttal.

"We are still awaiting and relying on the co-operation of the French authorities. I don't think it would be a good idea to comment adversely on their co-operation or lack thereof. This will not help our cause," said the national prosecutions authority's spokesman, Sipho Ngwema.

They also declined requests for interviews on the topic, despite the fact that no French companies or citizens are now involved in the case.

But back in 2002, while the investigation was under way, the relationship with the French authorities was rapidly unravelling.

After hearing about the "political track", the French justice ministry's old suspicions about Africa seem to have resurfaced.

Was the Zuma case about political opportunism or was it about solving crimes?

Whatever the case, the co-operation dried up.

The French magistrate Boisette apparently was criticised within the justice ministry for considering extending the bounds of French law to accommodate the investigation.

What was the point of the Scorpions seeking to interview Thetard when they had done so already?

The existence of a political track does explain one other thing. It is commonly alleged that former head of the national director of public prosecutions Bulelani Ngcuka and former justice minister Penuell Maduna were motivated by political ambition in probing Zuma's involvement.

Maduna was accused of being a "traitor", an accusation that apparently reduced him to tears, at a cabinet meeting no less.

He and Ngcuka were upset not only because of this flagrant accusation and the now discredited accusation that Ngcuka had once been an apartheid spy.

They were also angry that they were being forced to face these accusations despite the fact that they had weakened and possibly even jeopardised their own investigation precisely by their efforts to protect Zuma from the full force of the investigation.

Of all the mistakes and missteps in this investigation, there is a very good chance that the thing Ngcuka and Maduna most regret is trying to stage-manage the political aspects of the case.

By trying to do so, they lost on both sides, weakening the investigation and losing in the race for political favour and succession.

So what, then, about the French connection?

Alas, it transpires, there is none. The case is not about them. It is about us.

With acknowledgements to Tim Cohen and Business Day.