Publication: Business Day Issued: Date: 2011-06-24 Reporter: Wyndham Hartley

Shock claim of R100m in UK arms deal payoffs



Business Day



Reporter Wyndham Hartley
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DA provides ‘documentary proof’ of BAE payments to ‘consultant’

CAPE TOWN ­ The Democratic Alliance (DA) yesterday opened a new front in the battle to have the arms deal investigation reopened, revealing documents purportedly showing UK arms giant BAE Systems paid R100m to defence "consultant" Fana Hlongwane.

In the most significant development in unravelling the arms deal in recent months, DA MP David Maynier released details of contracts between a front company, South African National Industrial Participation, and Hlongwane Consulting, Fana Hlongwane and Ngwane Aerospace ­ of which Mr Hlongwane was the sole director.

Mr Maynier said the papers amounted to prima facie evidence of bribery and/or corruption and raised serious questions.

This comes a week after the chairman of Saab in Sweden, Hakan Buskhe, said an internal company probe found R24m had been paid to a South African consultant ­ reportedly Mr Hlongwane, an adviser to former defence minister Joe Modise. Saab and BAE were partners in supplying Gripen jet fighters to SA.

Mr Maynier dealt with each document at a briefing yesterday, starting with a consultancy agreement between South African National Industrial Participation and Hlongwane Consulting signed on September 10 2003.

According to the agreement, the consultant was required "to take all reasonable and necessary steps to ensure that the company (BAE) is granted or is able to claim national industrial participation (NIP) credits from the South African government as a result of its involvement in any NIP project; and to carry out any other associated tasks relating to the marketing and implementation of NIP projects as may be reasonably required by the company."

Companies awarded contracts to supply arms had to agree to significant investment in SA, called the National Industrial Participation Programme.

Mr Maynier said "the total value of the contract, over the five-year period commencing on August 1 2003, would have been R98m. The fees and bonus payments in the agreement were structured as follows: a payment of R8,175m on or about August 1 2003; a fee of R1,875m every quarter commencing on or about September 2 2003; a bonus of R22,5m upon the successful completion of ‘milestone 1’ and a bonus of R30m upon the successful completion of ‘milestone 3’."

The milestones were stages in BAE’s national industrial participation obligations.

Among the questions Mr Maynier said the documents raised are:

- Did Hlongwane Consulting actually have the skills, knowledge and expertise in project identification, development, marketing and implementation for the National Industrial Participation Programme?

- Was there evidence that services were actually provided by Hlongwane Consulting in return for the enormous fees and bonuses that were payable in terms of the various agreements?

- Was there evidence of any "forward payments" by Hlongwane Consulting to individuals or institutions involved in the process of decision-making?

- Was there evidence that Hlongwane Consulting complied with all the tax laws and regulations?

BAE Systems in London responded yesterday: "These and other matters were fully reviewed by the Serious Fraud Office (SFO) and formed part of the overall resolution that the company reached with the SFO in February 2010."

Mr Maynier has sent copies of the documents to Hawks boss Gen Anwa Dramat and Parliament’s public accounts committee.

With acknowledgements to Business Day and Wyndham Hartley.

These and other matters were fully reviewed by the Serious Fraud Office - yeah and the moon is made of the tastiest Roquefort.