Publication: Mail and Guardian
Reporter: Stefaans Brümmer
Reporter: Sam Sole
Reporter: Adriaan Basson
Reporter: Gcina Ntsaluba
Arms deal probe (2000-2010)
Mail and Guardian
Stefaans Brümmer, Sam Sole,
Adriaan Basson, Gcina Ntsaluba
The arms deal investigation is dead. After a decade of investigators'
blood, sweat and tears, and ever larger revelations about hundreds of
millions of rands splurged by arms merchants to lubricate the sale of jets,
ships and submarines, Hawks boss Anwa Dramat has effectively buried the
The Hawks confirmed this week that Dramat closed the last two active legs of
the investigation on September 21 after feedback from the National
Prosecuting Authority (NPA).
The decision -- which flies in the face of substantial evidence -- came two
weeks after Dramat failed to persuade MPs to "take an executive decision" to
halt the probe.
While elements of the criminal justice system are still pursuing leads
previously ordered, it appears that -- with the main investigative capacity
at the Hawks shut down -- these efforts stand little chance of success.
The Hawks, a police branch formally called the directorate for priority
crime investigation, succeeded the NPA's disbanded Scorpions unit in
specialist investigations including into the arms deal.
The death of the probe means that well-connected South Africans suspected of
receiving or channelling bribes -- chief among them Chippy Shaik and Fana
Hlongwane -- are off the hook, as are the foreign arms merchants now known
to have spent more than R1-billion in "commissions" as they sold R30-billion
worth of military hardware to the South African government.
It also means that democratic South Africa has failed its most important
test in dealing with corruption allegations. The question is whether a "Polokwane
consensus" -- an accommodation between warring ruling-party factions that
accused one another of using arms deal investigations to target one another
-- supplied the motive.
Shaik, head of defence procurement when the arms deal was finalised in
the late 1990s, stood accused of negotiating a $3-million (now R20-million)
bribe with one of the companies in the German Frigate Consortium which sold
South Africa four patrol corvettes. He is a brother of Schabir Shaik, one of
only two individuals convicted for arms deal corruption, and Mo Shaik, head
of the South African Secret Service. Both were key backers of President
Jacob Zuma in his political ascendancy.
Hlongwane, adviser to then-defence minister Joe Modise while the arms deal
was set up, allegedly received roughly R250-million in payments, much of it
via an opaque offshore network, from BAE Systems. The arms giant sold South
Africa jet trainers and fighters. Hlongwane was on the guest list for the
wedding of police chief Bheki Cele -- Dramat's boss -- a fortnight ago, with
members of the political elite, including Zuma.
Formal investigations into the arms deal started almost exactly a decade ago
when Parliament's standing committee on public accounts (Scopa) requested a
multi-agency probe in October 2000.
Although massive resources were expended by the auditor general, public
protector, Scorpions and others over the years, one leg after the other
succumbed, inter alia to cover-up conspiracy and capacity constraints. An
advanced probe into Modise himself was dropped when he died in 2001 and a
prima facie case against Zuma was abandoned last year after evidence emerged
of political interference in the timing of his prosecution.
It was to Scopa that Dramat returned early last month to brief MPs at their
request on progress with the two remaining active legs of the investigation
-- both of which had been given new life in recent years as investigations
abroad dislodged firm evidence of untoward payments.
Dramat explained to MPs that the Hawks took up the German Frigate
Consortium (GFC) leg of the investigation after arms deal whistle-blower
Richard Young lodged a formal complaint with police last November. He
claimed that the investigation "depends on information from the German
authorities" -- information that would need to be obtained via a formal
letter of request issued by a judge.
The process to get this letter issued started in June, when the NPA in
Gauteng tasked the NPA's specialised commercial crimes unit, Dramat said --
but he complained to MPs about the three years it would take to conclude the
investigation "if the German authorities cooperate".
What Dramat did not brief the MPs on was the strength of the evidence.
During their own probes, German authorities seized among other things a copy
of a memo written in August 1998 -- shortly before the Cabinet was to
approve the selection of preferred suppliers -- by a top executive in the
GFC, Christoph Hoenings.
In the memo, of which the M&G has a copy, Hoenings recorded that
Chippy Shaik "asked once again for explicit confirmation [of] the verbal
agreement made with him for payment to be made in case of success, to him
and a group represented by him, in the amount of $3-million".
The M&G understands that the German authorities have further
corroborative documentation, including an instruction in which Shaik
allegedly nominates accountant Ian Pierce to receive the payment. German
magazine Der Spiegel reported two years ago that Merian Ltd, an offshore
company represented by Pierce, received $3-million in April 2000, the same
month that South Africa paid the GFC the first instalment on the corvettes.
The M&G subsequently identified at least some onward flow -- five
payments totalling roughly R500 000 from Merian Ltd to a South African bank
account held by Pierce.
Asked this week why Dramat had closed the German leg of the investigation,
Hawks spokesperson Musa Zondi said: "The main reason was that the
investigation has not yielded any evidence that the prosecuting team finds
Zondi did not answer a follow-up question about how such a conclusion was
possible without attempts to secure the evidence from Germany having been
Shaik, who in the past has denied corruption, declined to comment this week.
The GFC leg of the investigation also appears to have included a $22-million
payment to Greek middleman Tony Georgiadis, who was close to politicians
including former president Thabo Mbeki.
In his briefing to Scopa Dramat told how investigations into bribery by
BAE Systems were reopened in 2008 after information was received from
Britain's Serious Fraud Office. The evidence was damning: it included how
the British arms multinational had splurged more than £115-million (now
R1,25-billion) on "commission" payments, most of it through a secretive
Hlongwane received payments totalling roughly R250-million, much of it
covertly. Some were frozen by foreign authorities who suspected
Investigators have attempted to ascertain whether Hlongwane made onward
payments to decision-makers -- a task admittedly complicated by difficulties
in obtaining bank records dating back as far as a decade.
But even if onward flows could not be proved, the question remained whether
payments to Hlongwane did not constitute a crime in itself, as he had the
power to influence the deal as Modise's adviser.
In his briefing Dramat complained that no results had been received yet from
requests for information from the United Kingdom, Jersey, Liechtenstein and
Switzerland and that it would take "three to five years" to complete the
Dramat said the docket was submitted to the NPA in June and that a decision
was awaited. This week Hawks spokesperson Zondi said the BAE leg of the
investigation had been closed because the NPA had advised that "it is not
possible to draft charges against any person".
This decision appears to reflect NPA head Menzi Simelane's attitude in the
past that there was nothing wrong with Hlongwane's receipt of money from BAE
because there was a contract in place between them.
Again Zondi did not answer a follow-up question asking how the investigation
could be halted without the information requested from abroad in hand yet.
Hlongwane has consistently refused to answer M&G questions.
Scopa chair Themba Godi told the M&G on Thursday that he was
surprised. "My reaction at this point is that this is quite a dramatic
announcement by the Hawks, if it's true. The impression we got from our last
engagement with the Hawks and the NPA was that this process was ongoing,
that there were interactions with foreign authorities and they were waiting
to be given additional information."
During the Scopa meeting MPs confronted Dramat over his suggestion that
Parliament take an "executive decision" to halt the probe in view of the
time and resources required. Dramat then withdrew the suggestion.
As far as the M&G could establish, the specialised commercial crimes
unit, which was tasked in June with pursuing the request to the German
authorities and has to handle the requests already made to the UK, Jersey,
Liechtenstein and Switzerland, has received no instruction to stand down --
in spite of Dramat's decision.
Advocate Glynnis Breytenbach, who has been assigned as prosecutor in both
the BAE case and the GFC case, is overseas and could not be reached for
comment on the Hawks' announcement.
The NPA's position also remains unclear. While the reasons given by the
Hawks for terminating both legs of investigation implicate the prosecutors
at least in part, the NPA failed to answer any questions.
A legal practitioner with know-ledge of some of the circumstances said the
NPA could either decline to prosecute or ask the police to secure additional
information to fill gaps in the dockets. There is no confirmation that
either avenue has been followed.
With acknowledgements to
Stefaans Brümmer, Sam Sole, Adriaan Basson, Gcina Ntsaluba and Mail and Guardian.
What can one say?