Eye on the Money
Book Launch Speech
15 August 2007
First and foremost my thanks to Lavinia, the love and light of my life. It is 40 years now since she picked me up on a street corner in Hillbrow in Johannesburg. As you will read in the book, I had just arrived in South Africa in 1967 from the United States, and then had a broad American accent. I thought all South African women were diamond heiresses. She thought all American men were rich. And so within four months I was a married man.
Lavinia has been Archbishop Desmond Tutu's personal assistant for more than 20 years during which she has been the breadwinner - allowing me to be "the gorilla on Trevor's back", and to live on the sweat of my frau.
Second, Stephen Johnson, Annari van der Merwe, Frederik de Jager and Mike Nicol of Umuzi have been fantastic. Mike has been a tremendous editor, with a light yet incisive touch. Thank you Umuzi for seeing it through, and for having courage to tackle this contentious topic. Even the lawyers didn't dilute it too significantly.
Third the media, that for so many years has kept the arms deal scandal on front pages and on the airwaves. Politicians love to lambaste journalists. I say thank God for journalists who hold corrupt politicians to account. The Independent newspapers provided an amazing three-days of op-ed extracts of Eye On The Money. Martin Welz and Noseweek have been incredibly supportive throughout the saga, and in their August issue recommended to readers that they should add the book to their shopping list. Thank you Martin, and thank you to the media.
And fourth, thank you Exclusive Books for hosting this event.
You'll recall how European politicians flocked to South Africa after 1994 to pay tribute to Madiba and our new democracy with one hand, and to peddle weapons with the other. Even Queen Elizabeth was involved when she visited Cape Town in 1995, and the royal yacht Britannia doubled as a floating British arms exhibition.
British Prime Ministers John Major and Tony Blair and German Chancellor Helmut Kohl exerted massive pressures on behalf of the British and German arms companies to buy weapons that the SANDF considered both too expensive and unsuited to South Africa's needs. Why, one asks, did our government succumb to those pressures? Three issues - Aids, Zimbabwe and corruption - define the Mbeki presidency. It is unconscionable that its first major decision was the arms deal, and that it then claimed nonsensically that expenditure on warships and warplanes would create over 65 000 jobs, and fast track South Africa's economic development.
I asked the British government in 1998 to investigate whether BAE was paying bribes to Tony Yengeni and other ANC politicians. The response eventually was that it was not illegal in Britain to bribe foreigners, and so there was no crime to investigate. Indeed, those bribes were then even tax-deductible in Britain, France and Germany as legitimate business expenses.
Later, in mid-1999 ANC intelligence operatives approached me. The arms deal, they told me, was merely the tip of a corruption iceberg associated with the leadership of uMkhonto-we-Sizwe, and the late Joe Modise. The corruption was on a scale beyond my wildest suspicions.
The common denominator was that the government would provide political protection in return for kickbacks to the ANC. The operatives' information has proved uncannily accurate. Archbishop Njongonkulu Ndungane called for an independent judicial investigation. When the government ignored him, I introduced the spooks to Patricia de Lille.
Amongst those named back in 1999 was Saudi Prince Bandar, then Saudi ambassador to the United States, an aspirant to the Saudi throne, a frequent visitor to South Africa, and close friend to both Mandela and Mbeki. Blair last December tried to squelch investigation into bribes amounting to £1 billion [that's billion pounds, not million] paid by BAE to Prince Bandar, and laundered with British government assistance through Riggs Bank in Washington DC. Blair claimed that investigation of BAE bribes would jeopardize British national security.
Blair's intervention has backfired. BAE bribes are at last under investigation by the US Congress and also the Department of Justice in the United States, and by authorities in Sweden, Switzerland, Austria, Czech Republic and Britain, plus the Organisation for Economic Cooperation and Development (OECD). In addition, German authorities are investigating bribes Thyssen Krupp paid to secure the German warship contracts with South Africa.
BAE derives 46 percent of its sales in the United States. Whatever their own nefarious reasons, a blacklisting of the company by the Americans because of the congressional corruption investigations could, hopefully, put BAE into bankruptcy. Archbishop Tutu rightly describes the arms trade as the modern slave trade.
Yet South African authorities -- under pressure by Mbeki and the President's office - still refuse to reopen the arms deal investigation or to cooperate with what Minister Alec Erwin describes as a "fishing expedition". Jacob Zuma and the Shaik brothers were also named by the spooks back in 1999. Patricia and I were smeared by the President himself as racist, and denounced by one of his minions as quote "the forefront of a US imperialist plot to reestablish a colonialist, racist regime in South Africa" unquote.
Eight years later and the Mbeki presidency is now in shambles, with the Sunday Times this weekend questioning how South Africa can survive another two years of his mismanagement. The President has only himself to blame: he was repeatedly warned that the arms deal would lead to disaster. The affordability study noted that the arms deal could lead the government into "mounting fiscal, financial and economic difficulties", and would crowd out socio-economic spending on housing, education and welfare.
The study also noted that instead of creating over 65 000 jobs, the negative economic consequences would be losses of between 115 000 and 200 000 jobs.
Zuma, I believe, is a very small fish in the scandal, scapegoated to divert attention from Mbeki's much greater culpability. It is the kickbacks from arms exports that fund European political parties. The ANC is not funded by its R12 annual membership fees, but refuses to open its books to public scrutiny and absurdly claims that it is a private entity.
No country has yet satisfactorily resolved how to fund political parties, but arms companies - BAE and Thomson CSF in particular - are expert in creating offshore bank accounts and front companies to disguise the payment of bribes to politicians. Idasa has rightly described the arms deal scandal as "the litmus test of South Africa's commitment to democracy and good governance".
Corruption is not some victimless crime. Its economic consequences are borne by the poor because of the misallocation of public resources. Its political consequences destroy the legitimacy of government, and public trust in constitutional democracy. Riots all over the country to protest non-delivery confirm that the government has lost touch with the people, and that there is huge public anger.
The arms deal is not a done deal. It can still be cancelled. Less than half of the BAE/Hawks and none of the BAE/Saab Gripen fighter aircraft have been delivered. The arms deal has not yet been paid for. Instead, our government has recklessly borrowed from European banks, oblivious to warnings from its own consultants that the arms deal was a highly risky proposition.
In cancelling the arms deal, President Mbeki could still redeem his legacy even so late in the day, albeit by an embarrassing admission that South Africa's still fragile democracy holds politicians accountable to the commitments of our Constitution. What is certain is the arms deal will not go away, no matter how hard Mbeki tries to brush it under the carpet.
The financial penalties of cancellation would fall not to South African taxpayers but, instead, to the British government's Export Credit Guarantee Department (ECGD). Let the British government explain to British taxpayers why successive prime ministers collude with notoriously corrupt arms companies, to pressure countries such as South Africa to buy armaments for which we have no need and cannot afford.
The British government minister responsible for the ECGD finally admitted that bribes were paid to secure the BAE warplane contracts but, she pleaded, they were "within acceptable limits." It is now public knowledge that BAE had intended to pay bribes of £180 million (R2.6 billion), and that those "acceptable limits" were scaled back to "only" £112 million (or R1.6 billion). What we don't yet know is how those bribes were split between the ANC and the British Labour Party.
The Germans and French were equally "generous" with the warship contracts. A former German ambassador to South Africa who was my houseguest in March 1996 inadvertently let the cat out of the bag. The French government controlled Thomson CSF (now renamed Thales) is notorious for its involvement as an instrument through which successive French governments have subverted democracy in Africa and elsewhere. Thomson CSF documents already in the public domain confirm Mbeki's irregular involvement in the allocation of the warship contracts. And most revealingly, the documents also confirm that the ANC's Treasurer, Mendi Msimang was present at some of those meetings. That the Minister of Health's husband holds the ANC's purse strings explains why she is political Teflon. What bribes went to the ANC from the warship contracts?
Yet the Speaker of Parliament refuses to allow any further investigation. Parliament has become a rubber stamp for the executive, with parliamentarians being reduced to kow-towing party lapdogs instead of robust public watchdogs.
The 20-year foreign loan agreements signed by Minister Trevor Manuel extend until 2019, and are a textbook example of third world debt entrapment by European banks and governments. These loan agreements are in my possession, and have been verified in court as authentic. In violation of the Public Finance Management Act, they have never been referred to or approved by Parliament.
The loans are in foreign currencies, not rand, so it is impossible to calculate what the arms deal might eventually cost, given the extreme volatility of foreign exchange markets.
Like Mbeki, Manuel is a master of political spin. That literally every government department is now dysfunctional makes a mockery of his purported financial brilliance. It is internationally well established that massive public investments in health and education -- not money squandered on armaments - are essential prerequisites to the eradication of poverty. Yet the departments of health and education in particular have collapsed.
As a former international banker, a major part of my motivation for writing Eye On The Money was to put those arms deal loan agreements and their default clauses into the public domain. They must be rigorously examined. In short, Manuel has "sold" South Africa and its future to Barclays Bank, the British government and the International Monetary Fund.
The price being paid is by the 40% of South Africans who are unemployed, by the six million South Africans who so callously will die of Aids-related deaths by 2010, and by the eight million who live in the shacks that blight our cities. Not surprisingly, given the corruption that permeates the government and ANC, crime is out-of-control. We have a chief of police who consorts with gangsters.
My other motivation in writing the book was to record the contribution during the 1980s of the international banking sanctions campaign in overturning apartheid. That history has previously not been written. The apartheid government thought that military security made it immune to sanctions. Ironically, military expenditures on armaments bankrupted the country and brought about the collapse of the apartheid system.
It was church leaders including Archbishop Tutu and Dr Allan Boesak, using international pressure and sanctions, that brought about the release of Nelson Mandela in February 1990 and South Africa's "miraculous" and relatively peaceful transition to constitutional democracy.
It was my privilege to be part of that campaign after PW Botha in August 1985 waved his finger, and told the international community to go to hell. People around the world prayed and contributed to the end of apartheid. South Africa was then on the brink of civil war. Banking sanctions were a non-violent strategy to avert such a tragedy. They worked, but the arms deal represents nothing less than the betrayal of that struggle.
I conclude with an old Afghan proverb that our government - plus the British and American governments - must ponder:
The wise invest in people: fools invest in wars.
Thank you for coming, and thank you for listening. Now buy the book.
Terry Crawford-Browne August 15, 2007
With acknowledgement to the Terry Crawford-Browne.