Publication: The Witness Issued: Date: 2007-01-15 Reporter: Adriaan Basson Reporter:

Enduring Cloud



The Witness

Date 2007-01-15


Adriaan Basson


The year has hardly begun and the controversial arms deal is front-page news again. Adriaan Basson reports on this albatross around South Africa's neck.

There's more chance of the Democratic Alliance winning the next election than of President Thabo Mbeki appointing a judicial commission to investigate South Africa's R30 billion arms deal.

This is the view of businessman and arms deal critic Dr Richard Young, responding to the DA's request to Mbeki at the weekend to appoint such a probe.

This comes after Britain's Serious Fraud Office (SFO) confirmed that its investigators are on their way to South Africa to look for dirty trails related to the purchase of 24 Hawk training aircraft under the arms deal.

Yet another year. Yet another chapter in the arms scandal. And still more questions about the government's most expensive shopping spree in the new South Africa.

The DA can probably not be blamed for its request to Mbeki. While Eddie Trent, the DA's spokesman on the arms deal, has probably stopped counting how many times he has already called for such a commission of inquiry, it probably still remains the logical thing to do. Even though Young says there's more chance of the moon being made of Roquefort cheese than of Mbeki acceding to the DA request.

Mbeki's critics would agree: the only judicial inquiry to ever have flowed from the arms deal controversy was the Hefer Commission and in the end the issue ended up being less about greased palms and dirty money and more about ANC infighting.

Why does the head of state keep refusing to appoint a proper inquiry to thoroughly expose the albatross that returns to haunt the government year after year?

Young believes Mbeki will not initiate anything that could eventually backfire on him.

Mbeki, in turn, repeatedly points to the report of the Joint Investigation Team (JIT) on the arms deal. This team, which consisted of the auditor general (AG), the public protector (PP) and the national director of public prosecutions (NDPP), found in November 2001 that there was no evidence of improper or unlawful conduct by the government.

Mbeki even referred to it in Parliament on the day he relieved former deputy president Jacob Zuma of his duties. This after Judge Hilary Squires had ruled in Schabir Shaik's trial (a ruling endorsed by the Appeal Court) that Shaik had benefited from the arms deal through Zuma's intervention.

At the time the JIT report was already viewed as highly suspect.

Young, whose C2I2 firm was unsuccessful in its bid to equip the navy's four new corvettes with combat suites, fought a fierce court battle against the AG to obtain access to earlier versions of the JIT report.

In January 2005 these documents were handed over to him. They told a frightening story: sensitive parts about mistakes and irregularities relating to the procurement process were omitted from the final report.

The final JIT report was softened and changed to leave the government untainted.

One of the issues someone clearly wanted to keep out of the report was the purchase of Hawk training aircraft from Britain's BAE Systems at very high prices.

South Africa could have saved millions of rands by going for the less expensive Italian option which was the Air Force's preference in any case.

Damning, too, was an interview conducted by the AG's investigators with Lieutenant-General Pierre Steyn, former secretary of defence. Steyn had expressed doubts about the legal basis for embarking on the arms acquisition process, said that the purchasing process was littered with irregularities, claimed that there was political manipulation and stated that Defence Force recommendations were blatantly ignored.
"How they acquired the Hawk never really convinced me. I emphasise again, as an accountable official, that it is irregular to consider an option for which no price exists", Steyn said.

He did not make these statements before a commission of inquiry broadcast on national television (like Hefer) but to the government's accounting officer.

And between the AG, PP, NDPP and the cabinet (which saw the provisional report before the final version was issued) Steyn's criticism ended up in the wastebasket.

And somewhere between Shaik's trial, Zuma's prosecution and Tony Yengeni's prison antics, the Hawk deal sort of just sank into oblivion.

Until the past weekend, that is, when London's authoritative Guardian broke the story that the SFO investigators are on their way to South Africa.

The Scorpions, who have handled the Shaik, Zuma and Yengeni cases up to now, will assist the SFO in their investigations here.

The SFO is under massive pressure to perform following the recent controversial decision by that office and Tony Blair to abandon the investigation into an arms deal between BAE and Saudi Arabia. The investigation into the al-Yamamah deal was apparently threatening Britain's diplomatic ties with Saudi Arabia.

The South African visit forms part of a worldwide investigation into BAE's activities, including activities in countries such as Romania, the Czech Republic and Tanzania.

According to the Guardian, the SFO seems to be particularly interested in the relationship BAE had with the late Joe Modise and his advisor, Advocate Fana Hlongwane.

Modise, minister of defence from 1994, died of cancer in 2001.

BAE is alleged to have paid large sums of money to Hlongwane. Hlongwane is currently chairman of the Ngwane Defence Group, of which his friend and former defence chief, General Siphiwe Nyanda, is CEO.

The SFO will probably also be interested in the original version of the JIT report, in which it was found that Modise personally influenced the decision to go for the Hawk rather than for the cheaper Italian training aircraft.

Another aspect of the SFO investigation is the role of Dr Richard Charter and his Osprey Aviation. Charter, who drowned in 2004, was BAE's agent in South Africa with regard to the arms deal.

BAE has admitted that commissions were paid to Charter and Osprey but said those were for legitimate services rendered.

Charter and Hlongwane had a common interest in Tsebe Properties, of which Hlongwane is still a director.

The British investigation is not the only international investigation into alleged bribery relating to South Africa's arms deal.

In July last year the German prosecution authority in Dusseldorf confirmed that it was investigating corruption relating to the purchase of four new corvettes for the navy.

The German Frigate Consortium (GFC), headed by the industrial conglomerate ThyssenKrupp, won this contract of R6,87 billion in 1998. The tender for the corvettes' combat suites, in connection with which Shaik was found guilty, was worth about R1,3 billion.

The German investigation caused a stir at the time of Mbeki's visit to the recent World Cup Soccer tournament in Germany for the official acceptance of South Africa as hosts of the 2010 tournament.

The government claimed at the time that the publicity about the German investigation had been planned to cast Mbeki's visit in a bad light.

The weekly magazine Der Spiegel revealed that the offices of ThyssenKrupp, Blohm+Voss, HDW and MAN-Ferrosteel, which all form part of the GFC, had been searched and that bribes of R137 million were being investigated.

The investigators know that with the sale of the corvettes [to South Africa], so-called "essential expenses", a euphemism for bribes by German companies abroad" were written off against tax requirements, until this practice became illegal in Germany [in 1999]. However, they are not yet sure who approved the payments, reported Der Spiegel.

The German authorities apparently received a document from South Africa as far back as in 2001 which contained allegations that a high-ranking South African politician had received millions of rands via Switzerland for his part in the awarding of the GFC contract.

Der Spiegel's investigation emphasises the navy's first tender process for corvettes (Project Sitron) in 1994 and the fact that Britain and Spain were the only countries on the shortlist at the time.

That decision did not stand for more than four weeks. On his visit to Germany in 1995 [as deputy president], Mbeki surprised Klaus Kinkel, Germany's minister of foreign affairs, and the GFC, by announcing that "the race is still open".

The German prosecution authority is not willing to comment on progress in its investigation, but it is known that Independent Democrats leader Patricia de Lille, who went public in Parliament at the time with the "De Lille dossier" detailing allegations of corruption, leaves for Dusseldorf soon to meet with the body.

It will be nine years this year since the cabinet approved the Defence Force's arms deal in 1998.

In these nine years the arms deal has landed two people (Shaik and Yengeni) behind bars and cost Chippy Shaik, Schabir's brother and former head of the defence force's arms procurement, his job *1. Zuma's sacking was also obviously related to Shaik's demise.

Up to now, little has come of the promised 65 000 jobs and R104 billion worth of investments that were to flow into the country as a result of countertrade agreements. Latest figures indicate that arms companies have created only 13 000 jobs here thus far. On the other hand, South African taxpayers have already coughed up R29 billion for the armaments.

However, developments in the past few months have made it clear that the arms-deal saga is far from over.

This year should bring clarity in a few matters : Trent and the DA remain hopeful. As with the information scandal, it will take a long time to get to the bottom of the arms deal, but the whole truth will eventually be exposed.

*1       Officially, according to the DoD, Chippy Shaik resigned on his own accord in April 2002, six months after the JIT submitted its final report to Parliament, in order to pursue other opportunities.

Indeed, the DoD, Armscor and SANDF gave Chippy a grand sending-off party.

Despite his conduct having been found suspect during mid-2000, Chippy was allowed to remain in his position for two years and at the same time to influence investigations into the Arms Deal.

Chippy Shaik had been disciplined by the DoD some time before he resigned, but according to the DoD, this was in respect of handling of certain classified documents. It is understood that, once indicated of irregular conduct by the JIT's final draft report, he furnished his attorney with certain classified documents to support his defence.

But my conclusion is that after Lekota took over from Modise, Shaik's conduct had become an embarrassment and liability to the MoD due to his acting in contravention of his declared conflict of interest as well as his blatant acts of cronyism, nepotism and self-dealing - but they could not get rid of him on these counts because that would have at the same time constituted a severe indictment on the DoD.

The entire Chippy Shaik saga is entirely unsatisfactory and has not been dealt with adequately by the AG or NPA.

*2      One way or another Mbeki will be made to remember his meetings he had with the French arms firm Thales on 17 December 1998 - hopefully under adversarial cross--examination by a senior counsel in the High Court (things might get a little like the recent cross-examination of his biographer Ronald Suresh Roberts).