Publication: Noseweek Date: 2005-07-01 Reporter: Reporter: Reporter:

It's My Round



Issue 69



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There has been much speculation about the recent top-level suspensions at state armaments agency Armscor – CEO Sipho Thomo, Boet Van Staden (in charge of surplus military sales at Armscor Business) and his general manager Jan de Necker.

No explanation was given at the time of the suspensions, but last month the Armscor board suddenly reinstated all three, with an explanation that had to make the purported reason for the suspension of such senior staff members look completely ludicrous – if it were true.

In its press statement, Armscor claimed that the three men had been reinstated because a report by Gobodo Forensic & Investigative Accounting had cleared them of alleged irregularities over the “temporary export” of a Ratel infantry assault vehicle to Jordan.

But that was not the issue. The three were suspended on 24 February after Defence Secretary January Masilela sent forensic investigators First Consulting into Armscor with a wide-ranging remit to probe much more than the export of one solitary Ratel.

In March Armscor chairman Popo Molefe countered the arrival of First Consulting by bringing in his own investigators, the Johannesburg firm of Gobodo Forensic & Investigative Accounting. Molefe had used the firm when he was North-West premier and was confident he could rely on it not to deliver any nasty shocks.

First Consulting’s investigators are furious that Molefe and his Armscor board rushed to reinstate its CEO and the other two suspended executives on Gobodo’s recommendation, while its own wider investigation was still under way.

What unwelcome skeletons could First Consulting unearth? Well, for one there’s Defence Minister Mosuioa Lekota’s secret approval of a controversial proposal regarding the continued disposal of surplus military ammunition.

One legacy of South Africa’s jackboot-stomping past is a number of huge military arsenals across the country, in which an enormous array of ageing apartheid-era weaponry is stored: dangerously leaking bombs, infantry assault vehicles, guns galore – and, until recently, more than one billion rounds of ammunition.

While South Africa remains an enthusiastic global exporter of new small arms and ammunition – a very different and enlightened policy was in place for surplus military stock.

Military surplus ammunition sold cheap on the world market has become the stock-in-trade of every revolutionary bad and murderous warlord in the third world, and gangsters everywhere. In 1997 a UN secretary-general’s report on small arms recommended that member states should consider the destruction of all surplus stock. Just three years into freedom, the government of the Rainbow Nation gave this proposal an enthusiastic rubber stamp.

A still-in-force secret cabinet memorandum (No 4 of 1997) decrees that all surplus arms and ammunition smaller than – and including – 12.7mm must henceforth be destroyed and not put up for auction or sale by Armscor, as had been the previous practice. It was left to the National Conventional Arms Control Committee (NCACC) and its chairman (until April last year, Kader Asmal) to enforce the new policy.

So strongly did the Nelson Mandela-led cabinet feel about ridding the world of the threat posed by South Africa’s mothballed weaponry that it decreed that money should no longer be a consideration. “There is no financial implication pertaining to the destruction of ammunition,” says Memorandum No 4. In other words: forget what government could get by flogging the stuff; it must be destroyed.

However, noseweek can reveal that two years ago there was a startling about-face sanctioned at the highest level. This emerges from a letter, dated 17 July 2003 and now in the possession of noseweek, from Armscor’s CEO Sipho Thomo, to Defence Minister Mosuioa Lekota.

It starts off by stating that Armscor Business had been selling surplus 7.62mm ammunition to an arms company in Germany called Industriepark Spreewald Lubben, which had “a responsible means of disposing of surplus small arms ammunition”. In accordance with the requirements of the NCACC, R32m worth of ammunition had already been sold to Spreewald, wrote Thomo. More, valued at R12m, was still to be delivered.

(There is an enormous global demand for surplus but still useable military ammunition; not only in areas of conflict, but for hunting and target-shooting in gun-crazy America. Since selling useable ammunition would be a contravention of Memorandum No 4, the inference in Thomo’s letter was that the R32m worth sold to Spreewald was for destruction by “dismantling”. This is a process in which the copper jacket and lead is melted down to make raw materials for new stock. The explosive can be used as fertilizer or rock-busting explosive in the mining industry.)

More about Spreewald later. In his letter to Lekota, Thomo then makes his proposal: an American company called Century International Arms Corp was “very interested” to buy 5.56mm and 7.62mm surplus ammunition from Armscor, to use for “practicing and hunting”. “The price offered is much more than the German offer and could substantially influence the amount of money earned by stock sales,” wrote Thomo.

Thomo was proposing selling surplus ammunition in a useable state – a clear breach of cabinet Memorandum No. 4.

Outlining what he describes as The Opportunity, Thomo went on to inform Lekota that Armscor Business had been tasked by the defence department with selling [an additional] 250 million rounds of surplus 7.62mm and 5.56mm ammunition – with another 700 million rounds to follow “in the near future”.

If these 950 million rounds were to be dismantled or destroyed, revenue would be just R12m, says Thomo. But if Armscor Business was in a position to sell the ammunition [as useable] it would generate revenue in the vicinity of R104.5m!

In his letter, the Armscor boss then presents what he describes as a “Problem Statement”. “The NCACC has informed us that due to cabinet Memorandum No 4 of 1997, as well as the current revision thereof, they would not favourably consider the approval of either the contracting permit or an export permit for the sale of 5.56mm and 7.62mm ammunition to the USA and Germany.”

Thomo draws Minister Lekota’s attention to Memorandum No 4’s statement that there was no financial implication pertaining to the destruction of ammunition. Clearly misreading – intentionally or otherwise – what the cabinet had meant, Thomo adds: “The contrary is addressed in our analysis set out above.”

The letter ends: “We request that the possibility to continue with the sale of small arms ammunition to the USA and Germany be reconsidered as a method of disposal.”

At the bottom of this document, Lekota appended his signature of approval to this proposal. The whole letter is ambiguously worded, but the most obvious reading is that Lekota was giving the ministerial go-ahead for the sale of useable surplus ammunition in order to secure extra profits for the Department of Defence.

Lekota legalized the whole thing the following year, when on 28 May 2004 he issued new National Conventional Arms Control Regulations. The relevant one reads: “An export permit may not be issued for any conventional arms of a calibre of 12.7mm (.50 inch) or smaller, including the ammunition for such arms, that is surplus to state or parastatal stock and have been designated by the committee for destruction. The words in italics are Lekota’s addition to the old regulation.

This ambiguously-worded addition would seem to have given the NCACC a loophole to approve exports of surplus ammunition it had not designated for destruction, ie, reuseable ammunition that could be sold for a handsome profit to global trouble spots and the hunters and target-poppers of America. Which, of course, is precisely what the cabinet in 1997 had been so anxious to prevent.

Lekota hadn’t been a part of that Mandela-inspired bunch, however – he was not to join the cabinet as minister of defence until 17 July 1999.

Kader Asmal, who now heads the parliamentary defence committee, relinquished his position as chairman of the NCACC in April 2004, when he stepped down as a cabinet Minister. He is apparently unaware of Lekota’s approval to sell the 950m rounds as useable ammunition the previous year. “To the best of my knowledge, no export in my time took place in breach of cabinet or NCACC policy decision,” he says.

The whole racket, noseweek can reveal, was officially brought to the attention of the department of defence last year by Ivan Monsieur, managing director of a Pretoria arms and ammunition manufacturer, New Generation Ammunition.

In a letter to Bruce Ramfolo, the department’s chief of acquisition and procurement dated 8 April 2004 – seven weeks before Lekota issued his new regulations – Monsieur told how the US commercial market was flooded “and has been for the past eight years” with surplus military ammunition originating from the SANDF.

“Most ammunition is available in its original packing with seals intact,” wrote Monsieur. “Four calibres are involved: 5.56mm (R4 and R5 ammunition); 7.62mm (R1 ammunition); .303 (Lee Enfield) and 7.62mm (AK47 ammunition).

He points out: “The condition of sale of military surplus is that all ammunition must be demilitarized by the buyer and cannot be re-sold in its original state and/or packaging.”

Pretoria Metal Pressings, the ammunition manufacturing division of parastatal Denel, has a production capacity of a million rounds a day. Monsieur claims that PMP exported 5m to 10m surplus rounds in its “original state (mixed to disguise with new production)”, to Century Arms in Florida.

Seven years ago, wrote Monsieur, his company was approached by an American importer regarding the possible sale of surplus AK47 ammunition (16m rounds were thought to be lying in Defence Department arsenals).

“Then all of a sudden the existence of “the German” became apparent who had gained access to all the munition depots in SA months before and was busy buying up large quantities of AK47 ammunition.”

The German was later identified as Wolfard Fritze, of Swiss-registered company FGS Frex. “In no time tens of millions of rounds of AK47 ammunition were exported, at very low cost to Fritze (US$25/1000 rounds, including shipping).”

Mostly of Chinese origin, this old ammunition had armour-piercing bullets (imports of which are forbidden in the US). “Fritze transported substantial quantities of this ammunition in its original state to the US, defying the [US] import ban on steel core ammunition.”

Monsieur claims in his letter to the Defence Department that Fritze had bought over 400m rounds of surplus army ammunition. “The last lot left South Africa as recent as mid-February 2004 (80 containers with 60m rounds of 7.62mm ammunition.)”

He names the man who organized these sales as Armscor’s Boet van Staden.

Monsieur says that on several occasions he informed Armscor’s then second-in-command Ken Jones and Captain Fred Marais (who ran the Directorate Conventional Arms Control, secretariat of the NCACC), that “vast quantities of SA surplus were available in the US. We showed publicity from US magazines offering the commodity with pictures, on some of which even the lot numbers were visible.”

Finally, said Monsieur in his letter, Armscor’s Ken Jones decided to investigate, dispatching Boet Van Staden to America to inspect “these famous lots” in the warehouse of PW Arms, in Seattle, Washington. “Van Staden met with PW Arms representative Mr Dan Tobin, but declined to take the 45-minute trip to his warehouse, stating that he had had enough with the lot numbers. This obviously defeated the purpose of the trip,” wrote Monsieur.

He says (on his return to SA) Van Staden claimed to Jones that Tobin was two hours late and he had no time to go to the warehouse, as he had to fly back to Texas. “This was a lie,” wrote Monsieur. “We suspect that he clearly did not want to be seen together with the compromising goods.”

Weeks after this fruitless trip, says Monsieur, Ken Jones was moved from his number two position at Armscor and shifted to an end-of-career function in special projects. He subsequently left the agency.

As for those 60m rounds of 7.62mm surplus, Monsieur tracked their route for supposed dismantling in Germany by Fritze’s business partners, Industriepark Spreewald Lubben.

He says in his letter that early last year 80 empty containers were shipped by Laser Logistics from Cape Town to the army’s weapons depot at De Aar. There they were loaded with the 60m rounds and shipped to Hamburg. From there Fritze’s FGS Frex company supposedly trucked them to Lubben, for dismantling by Spreewald. Monsieur claims that instead most were shipped to Classic Arms Inc in North Carolina.

There are court records to rely on here. For although PW Arms had made an exclusive supply agreement with Fritze, he had diverted six containers of .223 (5.56mm) and .308 (7.62mm) ammunition, which was part of a 50 million-round consignment he sold to one of PW Arms competitors in the US.

On 24 October 2003 Stuttgart Regional Court’s commercial division ordered Fritze and Spreewald to deliver this ammunition to PW Arms within seven days, or pay the company Euro 2.1m in compensation. Monsieur’s letter concluded: “The above trail of events contradicts every compliance report in hand with the NCACC regarding the disposal of surplus ammunition by means of dismantling.”

He still believes that Marais’s suspension, and those of Boet Van Staden, Jan de Necker and Sipho Thomo, were connected to this bombshell letter to the Defence Department. Monsieur says that, following his revelations, export sales of re-useable surplus ammunition have stopped, while his allegations (he hopes) are probed by First Consulting.

“Look at the whole line,” says Monsieur. “Van Staden is the main guy at Armscor Business in charge of sales of surplus military goods. His boss is De Necker, CEO of Armscor Business. His boss is Sipho Thomo, the CEO of Armscor. Fred Marais recommended approval of the export permits.”

We couldn’t speak to DCAC boss Fred Marais, who was responsible for the issue of surplus ammunition export permits. For more than six months he has been suspended.

Meanwhile, the Internet is alive with evidence of intact SA surplus ammunition in the US. Tap “surplus ammunition” into Google and it’s detailed by the metre.

One chat room discusses bulk supplies of .223 (5.56mm) good quality, reliable practice ammunition. “Sundance” reports: “I have found .223 M193 South African; non corrosive, Berdan primed, 55gr FMJBT, late 80s manufacture, $119/900 rounds or $335/2700 rounds.”

“Christopher” comments: “The 55 grain South African stuff is supposed to be quite good. Ammoman has it for $149/k, so your price looks right.”

“Sisalive” joins in: “I use the SA stuff in my ar-15 and it works great. My dad used some in his mini-14 this weekend and it worked flawlessly.”

“Gino”: “Yep, I really like the South African stuff.”

“Chris Orndorff”: “I get mine [South African] from AIM Surplus. Depending on quantity, $33-$34 p/300 round battle pack.” 

With acknowledgement to Noseweek.