Cell C, the preferred bidder to operate South Africa’s third cellphone network, finds itself in the enviable position where Saudi Arabian royal interests, ruling party interests and South African "national interests" coincide.

Nape Maepa, sidelined chair of the telecommunications regulatory authority Satra, has claimed in an affidavit that executive pressure led him to recuse himself from adjudicating the third cellular network bid  effectively preparing the way for Satra to name Cell C its provisional favourite, against the advice of consultants.

Conclusive proof has yet to emerge that the president’s office, as alleged, intentionally influenced the bidding process to favour Cell C. But there is enough evidence suggesting that South Africa’s rulers worked themselves into a position where, at the least, they would have been seriously tempted to interfere. In a sense, they have only themselves to blame for the allegations of favouritism.

Part of the reason is a history of extraordinarily close relations between the ruling African National Congress (ANC) and Saudi Arabia’s royal family  sealed by US$60-million (R390-million) Saudi funding for the ANC and spurred by the promise of a Saudi arms purchase worth R8-billion.

The equally close ties between the Saudi royals and Saudi Oger, the company which owns 60 percent of Cell C, completes the incentive. One might well ask how South Africa’s ruling party, recipient of Saudi largesse and eager to clinch the arms deal, could not be tempted to favour a Saudi sweetheart company. Party interests and the “national interest” are at stake.

Saudi Oger is owned, in formal terms at least, by controversial billionaire businessman and former Lebanese prime minister Rafic Hariri and his family. In fact, Hariri and the now ailing Saudi King Fahd have been politically and commercially cozy for two decades. It is often alleged that Fahd’s favourite son, Prince Abdelaziz bin Fahd, is the undeclared co-owner of Saudi Oger.

Hariri’s Beirut information office denies any royal stake, "financial or otherwise", in Saudi Oger. It gave a breakdown this week of the company’s shareholders  all Hariri family members  but withdrew an earlier offer of documentary proof on the grounds that the documents contained “private” information.

Hariri’s office did acknowledge Hariri “remains very close friend[s] with member[s] of the Saudi royal family and he is honoured and proud of it. This friendship is based on mutual respect and is separate from any business interests."

Born to a poor south Lebanese family, Hariri emigrated to Saudi Arabia as a young man in 1967 to enter the construction industry. His break came a decade later when the Saudis desperately needed a venue for a major summit. Hariri built the Taëf Intercontinental Hotel, on royal land, in record time.

Time magazine reflects the conventional wisdom when it says the feat won Hariri "the lasting favour of the late King Khalid and the Saudi royal family. Saudi citizenship was soon awarded [a rare concession], and Hariri went on to build many of the kingdom’s palaces, hospitals, hotels and schools."

In effect Saudi Oger, founded by Hariri in 1978, became an unofficially official royal public works company. Recently it played a key role in an extensive museum and public works development inaugurated by King Fahd to commemorate a century of dynastic rule.

In his book "Rafiq Hariri, a businessman prime minister", former Agence France Presse Beirut correspondent René Naba claims that when Hariri formed Saudi Oger in 1978, he offered co-ownership to Fahd’s then pre-teen son Abdelaziz "to ensure himself lasting royal protection".

Saad al-Fagih, London-based head of the Saudi dissident Movement for Islamic Reform in Arabia, says: "We do not have documents but it goes for granted that Abdelaziz bin Fahd is … the real owner of Saudi Oger. Hariri is a mere nominee. In the 1980s when King Fahd was in good health he used to be thought of as the owner or at least the co-owner of Saudi Oger."

The movement has pointed to royal "favouring" of Saudi Oger as evidence  such as the Saudi finance minister’s 1998 issue of special bonds totalling almost $1-billion (R6.5-billion) to repay debts to Oger, while other creditors had to wait.

Hariri’s critics charge he has never bothered with procedural niceties. As King Fahd’s envoy during 1980s negotiations to end the bloody Lebanese civil war, Hariri was in poll position to be appointed prime minister in his native Lebanon  essentially a client state of neighbouring Syria and Saudi Arabia.

When Hariri ascended that throne in 1992, many of his employees landed top jobs in his administration. Fouad Sanioura, financial director of his holdings, became minister of state for finances, and his Merril-Lynch portfolio manager got to be central bank governor. The father of Hariri’s business-partner-son-in-law Nizzar Dalloul landed the defence portfolio.

The job to rebuild war-shattered central Beirut went to Solidere, a company Hariri co-owned, and the cell network licence went to Libancell, in which Dalloul played a key role. In a 1996 media crackdown most broadcasters were shut down, leaving Hariri’s own extensive media interests untouched and advantaged  leading to strong censure from international human rights and free speech groups.

Hariri’s gargantuan charity projects, as well as his single-minded rebuilding of Beirut, earned him countless admirers. But the "confusion" of business and state raised eyebrows internationally, while the multi-billion rand foreign debt which Hariri’s reconstruction strategy bequeathed the country has led to a re-evaluation of his achievements.

Since Hariri’s ouster as prime minister 18 months ago, several of his close associates have been investigated on allegations of corruption, including Sanioura, now co-accused on charges of squandering $50-million or more (R325-million) on a Beirut garbage incinerator. Attempts to verify with the US Lebanese embassy whether Hariri himself remained subject to investigations, as earlier reported, resulted in a response from Hariri’s office  underscoring how influential he remains.

Hariri’s office said it was “absolutely untrue” that he was being investigated, and claimed legal moves against Hariri loyalists were “politically motivated”. The office claimed Hariri "never conducted business" during his term as prime minister. It said he donated all his Solidere profits to charities; that a Finnish government company won the cellphone tender and that "the Finnish government" had chosen the Lebanese partners including his relative; and that “the operation of the law", not Hariri, was behind the media clampdown.

South African and ANC relations with the Saudi royal house grew apace during the 1990s. Nelson Mandela travelled to Saudi Arabia as early as 1992 to secure backing for the ANC. In 1994, by then president, he was back for a two-week holiday and to cement diplomatic relations.

In 1995 then-defence minister Joe Modise was there to discuss "military co-operation" and in December 1996 then-deputy president Thabo Mbeki beat the same trail, announcing after meetings with Defence Minister Prince Sultan bin Abdelaziz and Crown Prince Abdullah bin Abdelaziz that the Saudis were interested in South african arms.

In September 1997 Prince Sultan visited South Africa for talks with Mandela, Mbeki and Modise. Simultaneously, news leaked of the multi-billion rand deal in which Denel missiles and G-6 cannon would be exchanged for Saudi oil. Government and Denel claimed the publicity wrecked the deal, but the poor state of the Saudi fiscus and royal power struggles are more likely explanations. Recent confirmation that South Africa paid R100-million commission upfront three years ago underscores the urgency to get the deal back on track.

Since 1997 bilateral relations seemed to revolve primarily around attempts to revive the arms deal. Mandela, accompanied by his defence, minerals and energy, and public enterprise ministers was in Riyadh in November 97, followed a year later by Mbeki, again with the defence and minerals and energy ministers. Mandela called again in December 1998.

Around the same time, Saudi Oger established a presence in South Africa. Publicly announcing the group’s presence some months later, in May last year, Saudi Oger deputy chair Emad Baban was quoted as saying: "The South African government encouraged us to invest here." He said the company wanted to spend R3-billion, but did not yet name the cellular project.

The Oger announcement came shortly after Mandela, at an election rally, dropped the fact that Fahd wrote the ANC a $10-million cheque, on top of $50-million the Saudi king had donated earlier.

It also coincided with another flurry of diplomatic activity: Libyan leader Mu’ammar Ghaddafi had just handed over the Lockerbie bombing suspects after intensive international negotiations led by Mandela and King Fahd, with the active involvement of Mandela’s director-general, Jakes Gerwel, and the powerful Saudi ambassador to Washington, Prince Bandarbin Sultan.

Mandela decorated Prince Bandar and Crown Prince Abdullah in South Africa for their role in the negotiations. Also decorated was Gerwel, who later emerged as one of the local Cell C partners alongside Yusuf Surtee, Mandela’s "tailor" friend. Surtee acted as Mandela’s special envoy to Saudi Arabia since the mid-1990s and was centrally involved in the arms negotiations.

In October, during Satra’s public hearings for the cellphone licence, Mandela, then retired, was hosted by Prince Bandar in Washington. Hariri, who collaborated closely with Bandar during the 1980s Lebanon peace negotiations, jetted in to join them. Hariri’s information office commented: "The dinner was intended to meet with this South African icon [Mandela] and not to make business deals, and any suggestion to the contrary is not only an insult to Mr Hariri but also to Mr Mandela."

Hariri and Cell C deny they banked on their political advantage. The president’s office has, similarly, denied its interventions were at all improper. But allegations have flown thick and fast. The fact that the ANC has saddled itself with a conflict of interest -- arguably beholden to Saudi wishes -- does not help allay fears of favouritism.

Note: edited versions of this story appeared in Sunday Independent and Sunday Tribune 20 Apr 2000.

With acknowledgement to  Stefaans Brummer, Sunday Independent and Sunday Tribune.