Publication: Business Day Issued: Date: 2011-06-21 Reporter: Judith February Reporter: Richard Calland

Saab’s ‘bribe’ admission makes new case for inquiry



Business Day



Reporter Judith February
Richard Calland
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IT WAS Patricia de Lille who arrived at the opening of Parliament in February 2000 wearing a sweater emblazoned with the words: "The arms deal is out of my hands." At the time, the Strategic Defence Procurement Package was off the radar of most citizens. But like an unlanced boil, the serious, if unproven, allegations have festered ever since.

Last week, in a sudden and dramatic turn of events, Swedish company Saab admitted that in 2003 a contract was signed between Sanip, a Saab subsidiary, to pay R24m to Fana Hlongwane, an adviser to then defence minister Joe Modise. Saab had bid to supply Gripen fighter jets to SA with British Aerospace Systems (BAE) and the payment was an inducement to secure the deal.

This is not a new allegation, but the fact that it comes from the horse’s mouth, apparently with documentary proof, is a potential game-changer.

Saab denied these allegations over the years, yet last week Swedish media uncovered the contract between Hlongwane Consulting and Sanip, a company jointly controlled by Saab and BAE for the express purpose of managing the industrial offsets of the deal.

So R24m was channelled to Sanip and on to Hlongwane. Even though the Mail & Guardian has presented evidence of Hlongwane’s role, the question is why did local investigators not uncover the truth? The answer is partly that the national director of public prosecutions, Menzi Simelane, decided not to investigate Hlongwane and, in 2010, intervened to stop the Asset Forfeiture Unit freezing H longwane’s assets. Once again, therefore, questions are being raised about Simelane’s judgment and about the arms deal itself.

It all started as far back as 1992, when arms dealers came a-courting. In 1999, the deal — whose cost is always in dispute but which runs to tens of billions of rand — saw the government sign five main contracts for submarines, helicopters, lead-in fighter trainers (Hawks) , corvettes and Gripens .

The evaluation of tenders was first considered by four committees looking at technical merits, financial details and offset benefits. The government "sold" the deal to South Africans on the basis that the offsets would outstrip the expenditure. The offsets have been the subject of controversy in their own right, with doubt cast on whether the obligations have been fully met.

More than 10 years later, the arms deal is synonymous with corruption, bribes and conflicts of interest. Our democratic institutions were severely tested as political pressure mounted on the investigative authorities and on Parliament to organise a cover-up and, alas, they largely failed the test.

Parliament’s standing committee on public accounts (Scopa), with Gavin Woods as chairman, had raised several concerns about the procedural regularity of the various transactions. African National Congress (ANC) MP Andrew Feinstein joined Woods in raising serious concerns about the probity of the procurement procedures.

The arms deal investigation set in motion a process that would tear Scopa apart and eventually lead to both Woods’s and Feinstein’s resignations. Scopa has never fully recovered, though under the current chairmanship of Themba Godi it has rebuilt and is hesitantly finding its feet many years on.

Ironically, back then one of Scopa’s main concerns related to the contract for Hawk jets awarded to BAE — why was the contract awarded to BAE when clearly it was not the most cost-effective option? Modise was consistently linked to allegations that he intervened to eliminate cost as a criterion in the evaluation process relating to the Hawk jets. Modise also allegedly stood to gain from the offsets as he was a shareholder in Conlog — one of the companies set to benefit from the deal with BAE. Few believe Hlongwane kept all the cash or that his was the only inducement paid. Were payments channelled to the ANC itself, as Feinstein later alleged in an interview on Swedish radio in 2003?

Harbouring suspicions about what transpired and who benefited is one thing; being able to prove them is quite another. Thanks to the Saab admission, we may now be one step closer to the truth.

In its May 2001 report, pro-democracy institute Idasa raised several questions about the Hawk contract, including: Why was the evaluation basis changed from a costed to a noncosted basis so late in the tender process? Who made that decision and why? Were other tenderers told of the change and, if not, why not? What are/were the cost implications for SA as a result of those changes?

These questions seem as pertinent now as they were in 2001. Continuous attempts have been made to sweep the allegations of corruption under the carpet. The Scorpions were another indirect casualty of the arms deal. For years since the joint investigative team’s report, rumblings of further investigations have been doing the rounds but no one believed there was any serious appetite for the investigation to be reopened.

Late last year, the matter was declared dead and buried, when Scopa was briefed by Anwa Dramat, the head of the Scorpions’ replacement, the Hawks. The essence of Dramat’s presentation was that the Hawks lacked the capacity to pursue the investigation. There were more than 4-million documents relating to alleged corruption in the BAE and German Frigate Consortium deals that needed to be sifted through. One person had been assigned to do so and it would take about three years, he said. Only then might decisions about further charges be made. Scopa was compelled to defer to Dramat’s assessment: too much paperwork and too little money and capacity to take this further. But are the recent Saab admissions a game- changer for Dramat?

As the history of the arms deal has shown, if allegations of corruption are not dealt with swiftly, institutional corruption festers as a culture of impunity develops.

But will Parliament have the stomach to reopen the investigation? Its recent record and the poor leadership from the speaker’s office suggest that this is unlikely. The Hawks, politically compromised since inception and declared to be insufficiently independent by the Constitutional Court, have shown no appetite for further investigation.

Predictably, the executive’s response has been an uncomfortable silence. If the Hawks cannot reopen their investigation, then surely the case for appointing a c ommission of i nquiry is stronger than ever — notwithstanding the fact that the president’s decision not to do so until now is the subject of a Constitutional Court challenge. An independent commission of inquiry may well lay bare uncomfortable truths regarding personal enrichment by those well-connected individuals brokering the deal and the distinct possibility that facilitation payments made their way to the coffers of the ruling party.

President Jacob Zuma may himself have been implicated; as leader of government business in Parliament, he signed the infamous letter in January 2001 that ordered Scopa to back off from its call for an inquiry that would include the Special Investigations Unit headed by Judge Willem Heath.

Zuma now has an opportunity to redeem himself by appointing an independent commission of inquiry, to show that doubts that persist about his probity are unjustified, and that the arms deal — and all the harm that it has done — is not "out of his hands".

• February is head of the Political Information & Monitoring Service at Idasa. Calland is Idasa’s programme director and professor in public law at the University of Cape Town.

With acknowledgements to Judith February, Richard Calland and Business Day.