Publication: Mail and Guardian Issued: Date: 2007-10-05 Reporter: Adriaan Basson Reporter: Sam Sole Reporter: Stefaans Brummer

Arms : Germans Squeeze Mbeki

 

Publication 

Mail and Guardian
Date

2007-10-05

Reporter

Adriaan Basson
Sam Sole
Stefaans Brümmer

Web Link

www.mg.co.za

 

A German request for help in investigating bribery in the arms deal -- a political hot potato that will again test the independence of the criminal justice system -- has reached South Africa.

A justice ministry spokesperson said he could not confirm receipt of the request for mutual legal assistance, a formal document regulated by diplomatic protocol.

But two justice sector sources and one close to diplomats indicated it had arrived.

The request has been on the cards since June last year, when investigators in Germany raided premises associated with the consortium that contracted in 1999 to sell South Africa four warships worth billions.

The investigators reportedly found evidence that ThyssenKrupp, the industrial group that leads the German Frigate Consortium, had paid $25-million (about R175-million) in kickbacks.

The German request appears to have finally wound its way through diplomatic channels last week, and the timing is bound to create discomfort on two fronts:

One of President Thabo Mbeki’s subsidiary reasons for suspending prosecutions head Vusi Pikoli might be the latter’s independent stance on further investigations into the arms deal. Mbeki himself has questions to answer about the German payments. The request for mutual legal assistance makes the issue harder to duck.

German Chancellor Angela Merkel was due to arrive in South Africa late on Thursday for a two-day state visit. The German request resurrects one of the more embarrassing episodes in the relationship between the two countries and could be awkward for both heads of state.
 
 
Shortly after the German raids on the frigate consortium in June last year, news magazine Der Spiegel reported that prosecutors in Düsseldorf had been following leads including a tip-off about a senior politician having received money via Switzerland. The Mail & Guardian reported that the tip-off had come from a shadowy Johannesburg businessman with German links, and that he had made allegations about Mbeki.

The Düsseldorf prosecutors raided a second time last November. In February, Der Spiegel reported that a ThyssenKrupp subsidiary paid $3-million in “useful expenditures” to an offshore company allegedly nominated by Chippy Shaik, procurement head at the defence department when the arms deal was concluded, and a further $22-million to a company registered in Liberia.

“Useful expenditures” is German corporate jargon for foreign bribes, which were tax deductible until the practice was outlawed in 1999. Shaik has protested his innocence. Thyssen­Krupp has said only that it is cooperating with authorities and wants “complete clarification”.

The $22-million paid to the Liberian-registered company, identified as Mallar Incorporated, is potentially more explosive than the alleged Shaik payment. Mallar is registered with the Liberian registry for offshore companies, which is extremely opaque.

The M&G has reported that German investigators believe, however, that Mallar is controlled by Tony Georgiadis, the London-based shipping magnate notorious for busting oil sanctions during apartheid.

Georgiadis, who has not contradicted the allegation, was formerly close to FW de Klerk and other apartheid leaders.

He later developed relationships with Mbeki, Deputy President Phumzile Mlambo-Ngcuka, her husband and Pikoli’s predecessor Bulelani Ngcuka, and former Justice Minister Penuell Maduna. He acted as an agent for German companies in the arms deal.

Responding to questions this week about Mbeki and Georgiadis, including whether Georgiadis has provided material or other support for Mbeki’s own political career, the presidency tellingly referred the M&G to the ANC.

Presidential spokesperson Mukoni Ratshitanga said: “I am advised that Mr Anthony Georgiadis has been in contact with the ANC since the early 1990s. Your question should therefore be directed to the ANC.”

Sources in *1 and outside the National Prosecuting Authority (NPA) speculate that Mbeki’s distaste for further arms deal investigations -- besides those into Jacob Zuma -- contributed to his decision to remove Pikoli. *2 In their version, Mbeki feels he cannot trust Pikoli and the Scorpions, a division of the NPA, to be discreet in such investigations.

Mbeki revealed his attitude *3 to further investigations in an SABC interview in January, saying the arms deal contracting process “was not affected by any corruption … That conclusion will stand whatever investigation the British are doing.”

This was a reference to a similar request for mutual legal assistance by Britain’s Serious Fraud Office (SFO), which has been investigating R1-billion in “commissions” by British arms company BAE Systems, which sold jets and jet trainers to South Africa.

The SFO request was not given to the Scorpions to pursue. After a reported tug-of-war between them and the police, and months of delay by the justice department, the department allocated it to the police. This decision raised eyebrows, as the Scorpions conducted the original investigations into the arms deal, gaining institutional knowledge and expertise.

The M&G has, however, had indications that the Scorpions have investigated aspects of the SFO request. A well-placed justice sector source said: “Remember that the big arms deal investigation [conducted by the Scorpions] is still open.”

It remains to be seen whether the justice department, headed by Justice and Constitutional Development Minister Brigitte Mabandla -- now Pikoli’s accuser-in-chief alongside Mbeki -- will allocate the German request to the police rather than the Scorpions. Mabandla’s spokesperson, Zolile Nqayi, said this week that justice director general Menzi Simelane had not yet received the German request personally, but that it may have been received by his department.

The NPA failed to answer detailed questions this week. Police spokesperson Sally de Beer said the police had facilitated meetings “on a police-to-police assistance basis” when British SFO investigators visited South Africa in June. “We did not assist with the interviews, merely appointed a member to accompany them to various meetings,” De Beer said.

With acknowledgements to Adriaan Basson, Sam Sole, Stefaans Brümmer and Mail and Guardian.


*1       The M&G doesn't publish my theories.


*2      You see, it's not only me, but it's my theory and I'm sticking to it.


*3      An attitude characterised by arrogance, contempt and guilt.