The South African National Civics Organisation (Sanco) received millions of rands from Swedish arms manufacturers who were bidding for the controversial multibillion-rand arms deal.

The Mail & Guardian has found that R2,5-million was pumped into the coffers of Sanco's investment arm, Sanco Investment Holdings (SIH), by Swedish arms company Celsius, which was later taken over by Saab, the Swedish aircraft manufacturer.

A Saab consortium won the contract to supply the South African Air Force with Gripen fighter aircraft five years ago. In 1999, while the government was negotiating with the Saab consortium, Sanco very publicly endorsed Saab's bid.

The arms companies pampered Sanco because of the civic organisation's tantalising proximity to power and its knowledge of how the ruling African National Congress works, as Sanco is an ANC ally.

Moses Mayekiso, former CEO of SIH, this week confirmed that SIH received the R2,5-million from the arms dealers, but denied that his organisation's support for Saab's bid was influenced by the payment.

Mayekiso said SIH supported Saab's bid "because we understood their approach. We knew they wanted to do business in South Africa. We understood that they also wanted to support developmental projects and we had programmes we wanted funding for," he said.

He said the R2,5-million was given to SIH as a loan. SIH, had used the money to establish "approximately" 30 small, medium and micro enterprise (SMME) projects in Johannesburg and in the Eastern Cape.

However, the projects — allocated amounts ranging between R2 000 and R20 000 — had all collapsed, Mayekiso said. Sanco had used the balance of the R2,5-million to cover administration costs. *1

The "loan" has, meanwhile, effectively become a donation. *1 A Saab spokesperson, who asked not to be named, this week said the R2,5-million to Sanco "has been written off internally in connection with Saab's takeover of Celsius".

The spokesperson said: "It is also worth noting that at the time it provided the loan, Celsius was a competitor to Saab within the defence procurement."

Celsius, according to the spokesperson, was "offering submarines, and Saab's partner BAE Systems was offering submarines". *2

This is not the first time Sanco has been embroiled in questionable "donations". In 1995, the organisation was investigated by police following charges that the civics body had accepted bribes from developers in the Free State.

Former Free State minister for safety and security, Papi Kganare, at the time instructed the police commercial crime unit to investigate corruption charges against Sanco and the developers.

It was claimed that the developers had paid, or promised to pay, tens of thousands of rands to Sanco at a time when it could have influenced tender decisions.

Saab's spokesperson said Sanco "had no influence over the [arms] procurement".

He added: "Saab consulted Sanco and others in search of feedback on the appropriateness of its offset and social responsibility programmes. It was these programmes Sanco expressed support for."

Sanco president Mlungisi Hlongwane said his organisation's national executive committee (NEC) was not aware of the relationship between SIH and arms manufacturers.

"I know because I was already president by then. No one in the NEC knew about that relationship," he said.

Investment arm to be scrutinised

Sanco has moved to contain the fallout from the report in last week's M&G that raised questions about the disappearance of millions of rands when Sanco's investment arm was liquidated.

The organisation announced that it will convene a meeting of its NEC on Saturday to discuss the affairs of SIH.

The M&G reported last week that more than R50-million worth of assets and investments belonging to SIH have vanished. In the report, Sanco president Mlungisi Hlongwane also raised concerns about the allegedly irregular transfer of some of SIH's investments to former directors of SIH.

There are indications that the returns from SIH's investments did not reach communities.

The organisation said in a statement that it had no evidence that "any of our officials has been involved in acts of fraud and/or corruption".

However, Hlongwane said last week that former SIH CEO Moss Mayekiso *3 had irregularly transferred Sanco's shares in a company called Hlano Investments *3 to himself and two others, named by Hlongwane as national organising secretary Bonisile Malindi and the late Sandi Mgidlana, the organisation's former head of housing, without the company's approval.

SIH once owned a 19% stake in Hlano, listed as one of South Africa's top 300 empowerment companies, with an annual turnover of R100-million. It appears that SIH now holds less than 5% of Hlano.

Mayekiso has admitted acquiring the shares, but said he had done so legally and in line with SIH's policy.

How many members does Sanco have?

Meanwhile, reports Lloyd Gedye, The South African National Civics Organisation (Sanco) is lucky if it still has 6 000 paying members across the country, social movement activist and former Sanco member Trevor Ngwane said this week.

Sanco spokesperson Justin Mthembu said the civics organisation has 4 300 branches, but could not provide paid-up membership figures.

There is common consensus that the organisation's active and dues-paying membership has declined dramatically in recent years.

Sanco president Mlungisi Hlongwane told an American academic, Elke Zuuren, last year that the organisation's "potential" membership in 2002 had been 6,3-million in 4 300 branches.

Soweto Electricity Crisis Committee chairperson Ngwane said he does not believe that figure can be anywhere near accurate now.

"They are lucky if they have 6 000 members."

Ngwane said Sanco's remaining pockets of support stem from the fact that township residents "still remembered the old Sanco".

Founded in 1992, the organisation grew out of the massive civic upsurge in 1980s, which was the backbone of the United Democratic Front. The organisation had now chosen to "stand with the exploiter", Ngwane said, referring to the relationships it had forged with business.

Director of the Centre for Civil Society Patrick Bond said that at one point Sanco's membership could have been in the millions.

"That is definitely not true today. They are obviously not dues-paying members, anyway."

Sanco general secretary Linda Mngonezulu did not return repeated calls.

With acknowledgements to Wisani wa ka Ngobeni and the Mail & Guardian.

*1   Say R2 million divided by R10 000 = 200 projects, all of which collapsed. A reasonable person would consider this to be unlikely, even amongst those previously disadvantaged.

It is far more likely that this was straightforward greasing wonga, just like the other Swedish and BAE Systems donations to the MK Veterans Association, ANC History Writing Association, etc. and DASA's liberal donations of upwards of thirty-three of its expensive products.

The point is that the Arms Deal was controversial, indeed nonsensical, at all levels, long before it was approved in principle. It was an idea initiated by British Aerospace and the UK's DESO and later supported by all the potential suppliers. Its passage to authorisation by Cabinet and not being blocked by Parliament had to be smoothed by bribery all the way from the onset of the Defence Review in 1995 right to Cabinet approval in November 1998.

*2   It is untrue the BAE Systems were offering submarines in competition with Kokums, a subsidiary of CeliusTech.

As these packages were meant to be government-to-government deals, the British offer initially include 3 secondhand Upholder diesel electric coastal submarines. But these were sold to Canada on 6th April 1998 some time before the Arms Deal prime contract bidding even closed in May 1998.

The Upholder submarines were decommissioned from the Royal Navy in 1993 and were then laid up for several years, after the Royal Navy decided to focus solely on nuclear submarines as a cost-saving measure.

Eventually the only bidders for the SA Navy submarines were Fincantieri of Italy, Kokums of Sweden, HDW of Germany and DCN of France.

So it is a deliberate falsehood or at best disingenious chaff to state that these were BAE Systems.

*3   It is ultra interesting, if not ultra significant, that the following persons are directors of Hlano Capital (Pty) Ltd : Moses (Moss) Mayekiso Sanco Investment Holdings (SIH) CEO Julekha Mohamed Jacob Zuma's Attorney and Business Partner of Shamin (Chippy) Shaikh Siza Cecil Khamepe Husband of Sole Commissioner into Future of Directorate for Special Investigations (DSO)

Them Sons of the Earth - Bumiputera, Cowawonga - Mina funa.