An AENS probe into a corrupt Apartheid-era arms merchant may have reopened an investigation into bribes paid by Armscor.

Nearly four years after he was supposed to be prosecuted, a former top Armscor official appeared to have walked away scott-free from criminal charges over fraud, theft and the sale of weapons to rogue states.

But now Scorpions investigators are studying the case that appears to be very strong - against a top Armscor official to explain just why he was never prosecuted.

Apart from being fingered as a potential crook by a commission of inquiry headed by one of South Africa's top judges, the out-of-control Apartheid-era arms dealer was also instrumental in a hushed-up multi million Rand fraud scheme in Romania.

AENS investigations into the manager, Marius Vermaak, who headed Armscor's stock sales division prior to 1995, have uncovered his role in a scam that saw secondhand South African Air Force helicopters being sold to Romania at vastly, and fraudulently, inflated prices.

The scam has landed a senior Romanian diplomat and alleged Romanian intelligence agent in SA in jail for two years in his own country.

The Romanian government accepted that a bribe was paid by Vermaak's department of Armscor, but no prosecution was ever brought against the bribe payers in this country by South African authorities.

The culprits appear to have gotten away with their crime.

Vermaak, no stranger to controversy, was a central figure in the Cameron Commission of Inquiry that probed illegal arms sales of AK47s to the Yemen. The Cameron Commission was set up after Rapport uncovered details of how a shipment of assault rifles had been sold by Armscor to the Yemen, a country that was under an international arms embargo.

In making his recommendations, Cameron concluded that Vermaak should be investigated with a view to being prosecuted for fraud and theft. Cameron also recommended certain of his superiors be dismissed for lesser offences.

He did not however recommend Vermaak be fired, almost certainly purely because Vermaak had resigned from Armscor.

But what the Cameron Commission was told was small beer indeed compared to what Vermaak was really up to.

African Eye News Service has obtained a copy of the March 1999 Report of the Auditor-General on the Financial Statements of Vote 11 Defence; The Trading Account for Medical Stock; and the Special Defence Account.

Under the heading "Matters not Affecting the Financial Statements" is a rather understated paragraph that reads

"An internal investigation by Armscor during 1994 identified irregular practices relating to the payment of commission amounting to R12 627 193 (43% of the total amount). Armscor referred the matter to the Investigating Directorate Serious Economic Offences (IDSEO) in August 1995, which completed its investigation in October 1997. A final report was submitted to the Attorney-General, Transvaal to decide whether prosecution, as advised, should be instituted. The Attorney-General indicated that prosecution would commence before the end of 1999."

At the time of writing this report, prosecution had not yet been instituted.

Although nobody is named in this report, prosecutions were already nearly complete in Romania. The Romanian Supreme Court had already heard evidence naming two low-level Armscor personnel and Vermaak in the scam.

On trial was the former commercial attaché to Pretoria, Benone Ghinea.

When AENS approached the National Directorate of Public Prosecutions in Pretoria for comment this week, the investigation file could not immediately be located.

Scorpions investigators took nearly a week-and-a-half to locate the file.

Scorpions spokesman Sipho Ngwema confirmed that Vermaak was one of three people listed as suspects in the then highly confidential probe into the deal which was conducted by the Investigating Directorate into Serious Economic Offences.

The names of the other two suspects in the file correspond with the names of the two suspects named in the Romanian courts as well as with the names given to AENS by confidential informants.

Ngwema said the original investigators had since left the IDSEO, but that the case had been given to a senior investigator to read and establish why no prosecution resulted from the probe.

Ngwema said an answer in this regard was expected shortly after the Easter holidays.

He did not want to be drawn on whether the case would be reopened.

AENS has established that sometime in 1993 Ghinea was approached by a Romanian state-owned aircraft company called IAR Brasov and asked to negotiate a deal with Armscor for the purchase of between 12 and 17 second-hand Puma helicopters.

These helicopters were to be refurbished by Denel and supplied to Romania.

However, Ghinea orchestrated a deal with Vermaak he claimed that the Romanian company should be invoiced for nearly double the amount actually demanded by Armscor in payment.

Once this fraudulently created invoice was paid, the Armscor manager was then to pay the difference, less his own cut, into a Union Bank, Zurich account in the name of Ghinea and his wife Ana.

At this time Vermaak was already under investigation for his role in a deal where a large shipment of arms were illegally sold to the Yemen - a country where South Africa was not legally allowed to sell weapons.

The discovery of the Yemen arms shipment and its being uncovered by a team of journalists from Rapport newspaper led to the creation of the Cameron Commission of Inquiry. It also led to Armscor investigating their stock sales department very thoroughly, looking for any other irregularities.

The audit picked up on the payment of a commission exceeding R12 million and Armscor called in the Investigating Directorate Serious Economic Offences.

Interestingly enough, the Cameron Commission was still sitting when Armscor made the initial discovery of the bribes paid in relation to the helicopters.

The Cameron report came out in June 1995 but, according to the Auditor-General, IDSEO was only alerted in August 1995, a few months too late for Cameron to probe the matter.

Although the Commission was originally set up to investigate a sale of AK47s to a dodgy middleman called Eli Wazan and then on to the Yemen, the Commission would have almost certainly been able to probe the matter as a related matter.

The commission was after all styled Commission of Inquiry Into Alleged Arms Transactions Between Armscor and One Eli Wazan, and Other Related Matters.

As a result of the IDSEO probe, Benone Ghinea was arrested on a trip back home and charged with corruption following a tip-off to the Romanians.

At the same time as the Cameron Commission was sitting, Romanian prosecutors and police, headed by Romanian supreme court prosecutor Dan Apostol, visited South Africa on a number of occasions to liaise with South African investigators.

Although Ghinea's case brought some media attention in Romania it was never reported in South Africa. At the end of his trial Ghinea was found guilty and sentenced to two years in jail.

Giving one possible explanation for the lack of publicity given to the case in South Africa was a claim made in the Romanian press.

According to Radu Tudor, the Defence and Intelligence editor of the mass circulating Romanian daily, Ziua, the Romanian media widely publicized the name of Ghinea as a member of the Romanian Secret Service.

His name was on a list of secret agents leaked to the media and given widespread publicity. None of the persons named on the list ever took action against the media for naming them.

Had Ghinea really been a spy who had clearly infiltrated Armscor, then the embarrassment factor could have been enormous for South Africa's state security apparatus.

The modus operandi in this fraud is precisely the same as the modus operandi uncovered by the Cameron Commission which recommended Vermaak be investigated with regard fraud and theft.

In the fraud and theft uncovered by the Cameron Commission, Vermaak and Wazan conspired to perpetrate an over-invoicing scam identical to the one Ghinea and Vermaak embarked on.

Describing the scam Cameron wrote "The scam may be illustrated by way of a simple hypothetical example the SANDF wants R100 for an arms consignment; Armscor's costs are R50; the purchase price is therefore R150; Vermaak informs the agent accordingly; but Vermaak and the agent quote a price of R200 to the buyer; the buyer duly pays this amount; and Vermaak contrives to get Armscor to pay the balance of R50 to the agent. The agent also receives from Armscor his commission of 15% on the purchase price of R150.

"The over-invoicing arrangement is described as a scam because Vermaak did not disclose the true facts to his superiors and the SANDF. On the contrary, his motivations for the repayments to Wazan were fabricated. The relevant documents could not be explained by Vermaak's subordinates who compiled them on his instructions, or by his superiors who signed them.

"As noted earlier, Vermaak was obliged to negotiate the best possible price for the sale of surplus stock on behalf of the SANDF. In the light of this obligation and Vermaak's deception, the Commission shares the view of the SANDF that "'the repayment of the amounts of $50 000, $102 455 and $159 825 to Wazan were unjustified and to the detriment of the SANDF and Armscor'".

Cameron suggested that Vermaak should be investigated with a view to him being charged on fraud and theft charges. This does not appear to have ever happened, despite the Attorney-General-s undertaking to the Auditor-General, way back in 1999.

With acknowledgement to Paul Kirk and Rapport.