Joe Modise, the former minister of defence and one of the figures central to the multi-agency probe into corruption in South Africa's R50-billion arms deal, had a six-bedroom mansion constructed partly at the expense of state-owned armaments company Denel which operates with taxpayers' money.

This week the National Directorate of Public Prosecutions confirmed Mail & Guardian information on Modise's home but said it will not be prosecuting. It says Modise agreed to repay the money spent by Denel to help build his home.

The soft line taken by the prosecutions authority over Modise's expensive gift from a state entity that was, at the time, partially under his ministerial control, raises fresh questions about the integrity of the arms deal probe.

Colm Allan, head of the Public Service Accountability Monitor at Rhodes University, this week said: "On the face of it this appears to be a case of blatant corruption, the abuse of public office for private gain ... Reading the ministerial handbook, Modise seems to have opened himself up for possible prosecution. The ministerial handbook reads: 'Members of Cabinet may not use their position ... to enrich themselves or improperly benefit others.'"

A senior Denel official, who was in place at the time Modise used the company to build his home, told the M&G that the former minister only began to pay back the funds once he realised the Investigative Directorate for Serious Economic Offences was probing the matter. Documents relating to the home had, the source said, been handed over to arms deal investigators.

The M&G has established that Modise kept the home a secret from his colleagues in Parliament and the Cabinet. The property is not registered in his own name but in the name of a trust that does not bear his name.

Records at the Pretoria deeds office show that the property Erf 3403 of Eldoraigne Extension 3 in Midrand, Gauteng and two adjoining Mpumalanga Province plots are owned by an entity called the Modiba Trust. This trust, the M&G has established, is a trust set up by a Gauteng lawyer who acts on behalf of Joe Modise.

Erf 3403 of Eldoraigne boasts a plush home that was specially built for Modise. Work started on the residence in early 1996, while Modise was still the minister of defence. At no time did Modise record his interest in this residence, nor the two Mpumalanga plots, in the parliamentary register of interests. The only residence Modise declares in the register of interests is a home in Germiston.

As a Cabinet minister Modise would have had two residences at the time. One residence would have been maintained at his own cost, the other by the state. This would have allowed Modise to have a home in Cape Town for Parliament and also a home in Gauteng where his ministry is located.

According to rules laid down in the ministerial handbook, maintenance at his official home would have been for the account of the state ó generally through the Department of Public Works. In no way would the ministerial handbook have allowed for a Cabinet minister to use state resources under his own control for his own private purposes.

The M&G has established that after having the Eldoraigne home only partly built by his own builder, Modise booted out the private builders and called in workers from Denel Properties, a subsidiary of the state-owned arms manufacturer, which is 100% owned by the state.

Although Denel was making a small profit at the time of the construction, the arms producer had embarked on a campaign of retrenchments and could ill afford the expense. Income fell more than R200 million from 1996 to 1997, the period the Modise retirement home was being built.

A spokesperson for the national director of public prosecutions, Sipho Ngwema, said the agency had taken note of the deal. Said Ngwema: "There was an investigation, I can confirm that. We have investigated thoroughly and there is no hard evidence of impropriety that could be used in court. The minister claimed he took a loan from Denel and that he would repay it. He has indeed been paying the moneys back."

But even if Modise does pay the money back he should still have recorded the deal in the register of interests. The only way he could have avoided admitting the expense to Parliament would have been if the work on his house was of less than R350 in value, the limit at which MP's have to declare any benefits.

Exactly when Modise began to repay the money could not be established. However, it is understood the repayments started in late 1997 or early 1998. It is claimed that the Investigating Directorate of Serious of Economic Offences was then already probing the matter, and that the Scorpions later also investigated.

At the time the house was built, the board of Denel read like a who's who of Joe Modise's family and business partners.

The director of corporate affairs at Denel, Thembi Tulwane, said the work undertaken was of a very minor nature. She also pointed out the debt was being repaid.

Modise could not be reached at any of his businesses, while his legal representative was in court at the time of going to press.  

With acknowledgment to Paul Kirk and the Weekly Mail & Guardian.