The probe into the controversial arms deal led to the arrest and immediate release of Ian Pierce, a director and accountant at arms supplier Futuristic Business Solutions (FBS), last week. Pierce is also a founder and director of Cell C, the new cell-phone operator that will launch services next month.

Pierce was arrested for allegedly failing to co-operate with a Scorpions investigation into the arms deal. He was subpoenaed a second time to bring documents before the arms investigators but failed to appear, says National Directorate of Public Prosecutions spokesman Sipho Ngwema. Pierce has not yet been charged, but will appear in the Pretoria Magistrate's Court later this month.

Cell C is reluctant to comment on the arrest. "This has nothing to do with us. It has no bearing on Cell C or CellSAf," says Zwelakhe Mankazana, a director at both companies.

Black empowerment group CellSAf is a 40% shareholder in 3C Telecommunications, the holding company for Cell C. Saudi Oger, a Saudi Arabian group, which is involved in technology, construction, property and banking, owns 60%.

There have been many allegations of links between Cell C and the armaments deal. Saudi Oger and Cell C have denied them. In statements issued in April last year, Cell C said it had been the victim of a sustained and vicious smear campaign. It denied it was involved with arms manufacturer Denel or with the purchase by Saudi Arabia of SA weapons.

Cross-shareholdings and personal links between Cell C's empowerment shareholders and companies said to have benefited from armaments contracts have fuelled the allegations.

FBS owns 10% of CellSAf, which is made up of 33 black empowerment groupings, including MK's Military Veterans' Association. FBS also owns a stake in another arms deal beneficiary - African Defence Systems. FBS chairman, retired lieutenant-general Lambert Moloi, is also chairman of 3C Telecommunications and a director of Denel. Pierce, a chartered accountant, partner in Pierce & Gampel and director on several boards, did not return the FM's calls.

With acknowledgment to Marina Bidoli and the Financial Mail.