The house the arms deal bought
Mail and Guardian
|Reporter||Sam Sole, Stefaans Brummer|
Deeds office records show that Nyanda's
R3,75-million offer to purchase the home in the exclusive Johannesburg
suburb of Bryanston was accepted in early January 2005, five months
before Nyanda retired as defence force chief on May 31 2005. The
property was transferred to him on May 5.
Deeds records show he had a "private bond" for R4,36-million registered against the property at the same time as the transfer. The bond was unusual, in that:
claimed the bond was repaid in full, "punctually, with interest",
calculated at the market-related rate of prime minus 1%.
The bond was cancelled after four years. At then-reigning interest rates and over this shorter period, the required instalments would have been well over R100 000 a month.
Hlongwane has been the subject of extensive arms-deal-related investigations and legal procedures across multiple jurisdictions, tracking payments to and from him and his companies. Evidence from these, seen by the Mail & Guardian, suggests that Nyanda started repaying Ngwane Aerospace at about R70 000 a month during the second quarter of 2007.
These payments appear to be consistent with the fact that Nyanda had started earning a salary a few months earlier as chief executive of Ngwane Defence, a company separate from Ngwane Aerospace but part-owned and chaired by Hlongwane.
If these payments were all there were, the repayment holiday of more than 20 months in itself would have constituted a significant benefit. What is more, at the rate of R70 000 a month, he would hardly have dented the bond by the time it was cancelled.
Stockenström claimed, however, that Nyanda had already started repaying in June 2005, the month after the bond was registered, with the first amount a lump sum derived from his military pay-out. He claimed there were further lump-sum payments and that he had the financial statements to prove that the loan was fully settled. He would not show them to the M&G.
A noticeable feature is that Hlongwane, signing personally, agreed to
cancel the bond on May 11 2009, the day that Zuma's first Cabinet was
sworn in and Nyanda returned to public life as minister of
Stockenström denied the bond cancellation was to spare Nyanda the predicament of having to declare a benefit from Hlongwane in his parliamentary and ministerial declarations, as a bond is "an obligation, not a benefit".
The timing, he claimed, was coincidental: Nyanda had paid the final instalment in about April and he, as Hlongwane's lawyer, was given an instruction on May 11 to cancel the bond. He later changed his version to say the instruction would have been before May 11.
Said Stockenström: "Should there have been something untoward, why would one register a bond so it is there for all the world to see?"
One explanation could lie in the argument used by investigators to attack the meticulous agreements entered into between BAE and "consultants" such as Hlongwane: they were a "sham", produced to lend a veneer of legitimacy to payments that might otherwise have attracted even greater scrutiny.
When Nyanda was promoted to head the South African National Defence
Force on June 1 1998, it was just in time to participate in one of the
most fraught decisions of the arms deal.
In May that year requests for offers had been issued to BAE Systems and two competitors for the Air Force's trainer jet requirements, with June 15 the deadline for bids. Interdepartmental teams evaluated the bids, scoring the MB339 offered by Italy's Aermacchi the highest. The results worked their way up the system to the Armament Acquisition Steering Board and the Armaments Acquisition Council (AAC) during July that year. During that time BAE's much more expensive Hawk was brought back into the running on the baffling grounds that cost was not a factor. The AAC, on which both Joe Modise, as defence minister, and Nyanda served, was the highest authority in the acquisition, bar the Cabinet itself, which confirmed BAE as the preferred bidder in November 1998.
BAE and its Swedish partner Saab's joint offer of Hawk trainers and Gripen fighters was signed in December 1999 after negotiations at a cost of R15-billion-plus.
Nyanda's own role in the deliberations is not apparent but his acceptance of a home loan from Fana Hlongwane, later unmasked as one of BAE's most richly rewarded "consultants", raises questions about bad judgement, conflict of interest and more.
Hlongwane was shown in court affidavits by investigators from Britain's Serious Fraud Office to have received more than R200-million from BAE and perhaps Saab. The payments included amounts totalling at least R50-million which flowed from Sanip, a local company controlled by BAE and Saab, to two Hlongwane-owned companies, Hlongwane Consulting and Ngwane Aerospace.
The Sanip payments were still flowing to Ngwane Aerospace at the time Hlongwane used it to grant the R4,36-million home loan to Nyanda.
Stockenström, Hlongwane's lawyer, denied the payments received by his client from BAE were illicit, saying they were received "in terms of written agreements where he acted for them as a consultant".
With acknowledgements to Sam Sole, Stefaans Brummer and Mail and Guardian.