Cape Town - Economists Allied for Arms Reduction (Ecaar) has accused Finance Minister Trevor Manuel of misleading the courts in saying that loan agreements he signed to finance the purchase of frigates and aircraft had nothing to do with the arms deal.

Terry Crawford-Browne, Ecaar's South African representative, also revealed that Ecaar had come into possession "via the internet" of the BAe loan agreements that provide for the purchase of BAe Hawk and BAe-Saab Gripen fighter aircraft to SA. The implication, said CrawfordBrowne, was that Manuel signed the deal, which effectively put Britain and the International Monetary Fund in a position to dictate SA's economic policy.

The document had been raised during a recent Ecaar court application in March, which sought the cancellation of the arms deal, and its authenticity had been acknowledged by government's senior counsel, Crawford-Browne said.

"Our litigation focuses upon the loan agreements signed by the minister of finance because these give effect to the arms deal. We start from the assumption that without payment there will be no arms deal. The minister (Manuel) responded to our first papers by declaring that the agreements he signed 'are selfstanding loan agreements with binding force and not dependent on any other agreements entered into by government'."

Crawford-Browne said this argument was "tantamount to insisting that the purchase of a house has nothing to do with its mortgage. As the BAe loan agreements prove conclusively, the minister misled the court."

Manuel, who is overseas attending International Monetary Fund and World Bank annual meetings, said the only person who was in contempt of court was CrawfordBrowne "who refuses to accept court findings".

"We are calculating the cost of every time Crawford-Browne goes to court as we believe we are on strong grounds in the case, and we will ensure that every cent of taxpayers' money that is incurred as legal costs due to the silliness of Crawford-Browne is repaid by him," Manuel said via his spokesman.

Crawford-Browne said the main BAe loan agreement had not been made public until now.

Dated January 25 2000, it was between Barclays Bank, the UK secretary of state acting on behalf of the exports credit guarantee department and the South African government acting through its finance department (the borrower) on behalf of the buyers, the Armaments Corporation of SA Ltd.

Crawford-Browne said state counsel had drawn the court's attention to the representation, covenant and default clauses of the BAe document. "He declared that it would be naive to cancel the agreements because of the terrible consequences that would follow. In short, the minister (Manuel) has for 20 years ceded control of SA's economic and financial policies."

With acknowledgements to Chris van Gass and the Business Day.