The Problem
Good Deal, Bad Deal?

A Brief History of a Short Period of Time : The Arms Deal - a Litany of a Rampant Corruption of Power

Here's the deal . . .

The Cabinet announced in September 1999 its decision to procure about R30 billion worth of military equipment from several foreign manufacturers. The package deal which includes submarines, fighter aircraft, helicopters and other equipment, is to be sweetened by counter trade agreements providing employment opportunities in South Africa.

The country's largest-ever arms deal has its roots in the White Paper on National Defence, which was approved by Parliament in 1996. The White Paper provided for a Defence Review, which outlined a new force design for the SA National Defence Force.

In November 1998, Cabinet announced its preferred suppliers for the procurement of defence equipment for the SANDF. The arms deal has provoked acrimonious debate in the media and in the corridors of power. The arguments initially centered on whether the country needed such equipment or not. There were grave doubts about the decision to allocate enormous amounts of money to purchase equipment the country is not likely to need, while social welfare projects are sorely underfunded.

In recent months the dispute has focused on the lack of transparency, the method of procurement, and allegations of corruption. Members of the opposition in parliament have accused certain individuals in government of enriching themselves at taxpayers expense; of purchasing unneccessary equipment and of trying to quash investigations into the deals.

Why should South Africa buy new Arms?

The South African National Defence Force has suffered substantial budget reductions in recent years. These cutbacks mean that less money has been spent on replacing older equipment with modern weaponry. The outdated and inadequate military equipment has affected the readiness of the SANDF to deal with the challenges of the future.

The arms deals have been off-set with counter-trade promises to build factories in South Africa and thus alleviate the chronic unemployment crisis in this country.

The argument against

The arguments against these purchases have been well summed up by the Anglican Archbishop of Cape Town, Njongonkulu Ndungane, who stresses the need for poverty relief before weapons. He argues that the vast sums of money destined for arms manufacturers should rather be spent on social services. Critics also point out that since there is no credible threat against South African sovereignty, there is no need to spend billions on its defence.

What is the problem with the arms deal?

A good deal or a rip-off ?

The arms procurement package has provoked enormous controversies in the last three years.

The arguments against the deal can be summarised as follows:

ECAAR Allegations

(Economists Allied for Arms Reduction) ECAAR's spokesperson, Terry Crawford-Browne, has made some dramatic claims regarding the deal, which he says comes from information gathered by ANC intelligence operatives who were instructed to look into the deal by the ANC whistleblowers.

These include allegations that:

Is the Arms Package a good deal or Not???

In an effort to find out if the Arms procurement package was a good deal or not, we asked defence expert Mr. Helmut Rohmer-Heitman for his assessment of the deal. The SABC asked him to comment on to the following claims:

Mr. Heitman, a correspondent for the Janes defence Weekly publication, referred to claims made by Mr. Terry Crawford Browne and sent us the following response:


To: Patricia de Lille, MP
From: Terry Crawford-Browne

Sweden's involvement in the R43 billion arms acquisition programme:

The South African government announced in November 1998 that it intended to purchase 28 BAe/Saab JAS39 Gripen fighter aircraft from Sweden at a cost of R10.875 billion, ie R388 million (about US$65 million) per plane. BAe has a 35 percent in the Saab Gripen

because the Swedish armaments industry is no longer economically viable, and the Swedes are trying to spread some of the costs.

The JAS 39 Gripen has been a financial disaster and political embarrassment. Costs have been way, way over budget at about SEK 60 billion (R46 billion), and the Swedish government is desperately trying to export the plane to countries such as Finland, Chile, Brazil, Philippines and South Africa. Only South Africa has agreed to buy the Gripen which is designed for Arctic conditions, not Africa. Aviation specialists say it would be quite useless in Southern Africa because of its short range.

Big business based around the Wallenberg family (which dominates Sweden's economy the way the Oppenheimers used to "own" South Africa) has pressured Prime Minister Goran Persson's government to market the Gripen. Persson's government is shaky and cannot afford to defy the Wallenbergs.

The Minister of Defence, von Sydow, visited South Africa in June 1998 to market the Gripen. The Parliamentary Monitoring Group asked me to attend a parliamentary breakfast hosted by Tony Yengeni. Yengeni was not pleased by my presence. Anyway, his question to von Sydow regarding the generosity of the offsets was very plain. His body language was "how big are the bribes?" Von Sydow replied that the decision was not his to make, but that he had got the message and would take it back to Sweden.

That was the first time that I met Roger Hallhag who is now the Swedish Prime Minister's Special Advisor on International Affairs. (He, you'll remember, was the Swedish representative at the conference at the Centre for the Book in November 1999). Archbishop Tutu had been invited by Swedish church NGOs to speak at a conference in Stockholm a week later in June 1998. He couldn't go, and sent me to make a 15 minute speech. Hallhag was the government's representative also on that occasion.

About 150 academics, politicians and theologians were present, and the conference received excellent radio coverage. I thanked Swedes for their support in the struggle against apartheid, but said Sweden should not now contradict that record by selling weapons to a country that faces urgent crises of poverty but no foreign military threat.

The Swedes like to think that they are squeaky clean, so I also briefly mentioned the Bofors scandal in India of the 1980s which brought down the Gandhi government. The media took over after that, and grilled their politicians about the immorality of selling armaments to countries such as South Africa. When I got back the Swedish Ambassador personally complained to Archbishop Tutu, but he had approved my speech before I left!

A one hour Swedish TV documentary followed in which Helmut-Romer Heitman confirmed that the offsets were actually more important that the equipment itself. Ron Haywood of Armscor and Ronnie Kasrils repeated this, Haywood saying what businessman could pass up on such as deal -- you pay R1 and get R4 back!

In terms of the Gripen deal, the offsets were touted by our government as being worth R48.313 billion and would create 23 195 jobs. Swedish business newspapers started querying whether Swedish taxpayers weren't being fleeced yet again. A Saab executive was quoted as saying that the South Africans (Jayendra Naidoo) were lost in the maze of their own figures. The Swedish archbishop threatened to sell church investments in any companies that participated in the offset programmes.

Then there were the Numsa allegations of funds being routed by BAe through two Swedish trade unions to buy Numsa's support of the arms package. The Auditor General's report refers to the tender specifications being altered in order to favour BAe over the Italians. It is BAe which is "driving" the acquisitions programme including the proposed privatisation of Denel, and Sweden has been sucked by BAe.

Because of the development overruns, the Gripen is already more expensive than the American F16 which costs about US$25 million per plane. Add the costs of offsets, and South Africa is being charged US$65 million per plane.

The attached email from Kristna Fredsrorelsen, Stockholm says that South Africa is being fleeced compared with quotes to Chile, Brazil and the Philippines.

The GCIS release in September 1999 listed 21 possible Swedish offset programmes. The details were extremely sketchy, but several of them appeared to have been linked to Billy Rautenbach's Wheels For Africa Group which held the franchises for Volvo and Saab in Africa south of the equator. Rautenbach has since gone bankrupt, is wanted for murder, and is alleged to be the financial brains behind Robert Mugabe's misadventures in the Democratic Republic of Congo.

The normal commercial recourse for contracts which have been tainted by corruption is cancellation. Should the Minister of Finance repudiate the SA government guarantees, the deals would collapse without cost to South Africa.

Terry Crawford-Browne (Economists Allied for Arms Reduction)
January 11, 2001

With acknowledgement to SABC News.