Publication: Business Day Issued: Date: 2008-12-01 Reporter: Tim Cohen

Almighty Power of The Cover-Up

 

Publication 

Business Day

Date 2008-12-01

Reporter

Tim Cohen

Web Link

www.businessday.co.za


The Scorpions, with
admirable pluck *1, have ignored their imminent demise and are continuing to conduct search and seizure operations as part of their investigation of the arms deal. Good for them, but it’s hard not to notice how little everyone seems to care.

Previous Scorpions raids were the
stuff of legend that shook South African politics to the core. But the Scorpions raids over the past week of British arms company BAE Systems, former ministerial adviser Fana Hlongwane and John Bredenkamp barely made it to the front pages.

South Africans have apparently got tired of this issue, and have long ago made up their minds about it. These raids seem like so many before them. But, from covering the extraordinary story of the arms deal for the best part of a decade, I suspect investigators are
only now getting anywhere near to the heart of the matter.

If and when they do, I suspect several things will become apparent.

First, it will become obvious that African National Congress president
Jacob Zuma’s role in the whole affair was really trivial *2. The fact that Zuma’s name is now deeply associated with arms deal corruption is a huge irony, and I suspect it is no accident. I think the investigations of Zuma were a convenient red herring for all the people much more intimately involved. This is one of the reasons for Zuma’s and his supporters’ anger. But it’s also something he cannot express. He can’t fume publicly about the fact that other people were more corrupt than he was (assuming they were and he was).

Second, as the investigation progresses, it will probably become clear that the most egregious acts of corruption involved not the French or German parts of the deal, but the British part. This is also an irony. The French defence companies have received the most and the worst press, but actually they and the
French authorities were comparatively honourable about it all *3. This is partly, you suspect, why they were beaten into the role of subcontractors.

From the start, the aircraft contracts were the most suspicious part of the deal. And the British part of the aircraft contracts were most questionable for the simple reason that the selection criteria was so obviously jigged and the British contribution of training aircraft was the least necessary, considering SA had plenty of Cheetahs for that purpose at the time. SA’s navy was obviously in need of attention, and a capacity to patrol South African waters is a clear defence requirement. But the British seemed excluded from the deal, since the Germans were supplying the naval vessels, and the Swedes the jets.

The British Hawk trainers were twice the cost of the Italian Aermacchi MB339 and were only favoured when the defence minister at the time, Joe Modise, who was being advised by Hlongwane, opted for a “non-costed” option, which allegedly focused on the military value and counter-trade deal offered by British Aerospace. This was already apparent at the time of the auditor-general’s report on the arms deal in 2001.

The third and last of my predictions is that if this investigation goes anywhere (and I suspect it won’t) it will demonstrate former president Thabo Mbeki’s intimate involvement in the whole sordid affair. Mbeki has been the
eminence grise *4 in the arms deal from the start, yet his culpability has never been brought to light.

It tends to be forgotten that it was Mbeki who was responsible for
proposing, motivating, organising and selecting the ultimate winners of the contracts as deputy president and then as president. But our chess-playing former president apparently helped make sure that others were around to take the fall when things started to go wrong.

Why is the British role in allegations of corruption only coming out now, eight years after the event? I suspect it’s partly because the level of corruption was so high, and therefore so much was at stake. The numbers mentioned in the Sunday press tell their own tale; no longer are we looking at a mere R500 000 per year. Suddenly we are looking at £1m a year, and a settlement figure for Hlongwane of $8m.

The big question is why this investigation is making any progress at all, since British prime minister Tony Blair famously quashed the investigation of the BAE Systems huge bribes involved in the $85bn Al Yamamah arms deal with Saudi Arabia, the company’s largest deal. The short answer is that BAE’s contracts with the US military are now threatened, and in order to settle that dispute, everything else is child’s play.

The US military awards contracts worth tens and hundreds of millions of dollars each month to BAE *5. But if they are convicted of fraud in the US, these contracts would be barred. And the reason they may is because of this very same Al Yamamah deal, since it became apparent that the prime beneficiary of BAE’s alleged $2bn bribe, Prince Bandar bin Sultan bin Abdul Aziz Al Saud, kept some of the money in the US at Riggs Bank, opening the way for US involvement.

The US justice department then slapped a subpoena into the hands of then BAE CEO Michael Turner at Houston airport. According to one legal analysis,
the smack of the subpoena hitting Turner’s hands was heard around the world.

So BAE is now trying to clean house, and has apparently stopped stonewalling the UK’s Serious Fraud Office, which, in turn, has started to investigate the South African deal, asking the Scorpions for assistance. And this new-found enthusiasm to at least try to control the most egregious forms of corruption is what ultimately led to the raids in SA during the week.

Will any of this ultimately come to court? *6 Frankly, I doubt it. Arms dealers know that politicians have the power and the desire to cover up their own indiscretions, and in the process cover up theirs too.

As a state without a written constitution and a rather tired, worldly view of this stuff, the British have more ability than most. US authorities brought 103 foreign bribery cases this year, Germany 43, France 19 ­ all doubling or quadrupling the number they brought last year.

This year, the British brought zero, zero more than they brought last year.

With acknowledgements to Tim Cohen and Business Day.



*1       It's a pity that Hlongwane got tipped off before the raid and managed to get rid of the stuff the DSO and SFO really want.

And it took just 8 years to gather up the requisite pluck - uck.


*2      Actually not.

        The amount of R500 000 per year (until ADS starts paying dividends) might be numerically trivial in comparison, for example to Fana Hlongwane's R280 million. Chippy Shaik's R30 million and Allan McDonald's R75 million.

But this was not a bribe to secure a contract worth a couple of billion Rand, it was the equivalent of 20 pieces of silver to use his political and executive power to curtail an official investigation and provide permanent political top-cover to one of the most corrupt companies on the planet.

The money is one thing, but the conduct is more akin to treason.

As is the conduct of Thabo Mbeki for having secret meetings with this self-same French company so that it could be assured of winning a massive contract at an enormously inflated price with any competition.

The wages of these sins will be 15 years in the slammer.

For Thomson-CSF and BAE Systems disbarrment to do business anywhere in the world for 10 to 20 years.


*3      Chirac phoned Mbeki in a rage when France got no primary contracts.

So Mbeki elevated the corvette combat suite to the position of primary contract and gave them the lion's share of this.

It is simple plain bullshit that Thomson-CSF is a subcontractor in the Arms Deal.

Thomson-CSF Navale Combat Systems (NCS) and ADS are both signatories to the corvette Umbrella Agreement and its sub-agreements, equal to Blohm+Voss, HDW and Thyssen TRT.


*4      Is it  the Eminence Grise vs the Jintelman Litigant?


*5      Likewise, the US military awards contracts worth millions of dollars each month to Thales International and its US partners.

The US market is the big one and the one that both BAE Systems and Thales having been trying to penetrate for years. Indeed, it could be said that success in the US market is imperative for the long terms survival of these two international wannabees.

That is why Thomson-CSF is trying so hard to get out of charges here, because a conviction for corruption in this country will see it be disbarred in the USA.

This is why Thomson-CSF paid Jacob Zuma a bribe in the first place to protect it from being investigated for bribery or other unlawful conduct it has already done.


*6      Not so fast.

In this instance there is a very good possibility of getting some charges and some convictions.