Publication: Business Report Issued: Date: 2006-10-08 Reporter: Wiseman Khuzwayo

BAE Systems, the Hawks and the Role of the British

 

Publication 

Business Report
Date 2006-10-08

Reporter

 Wiseman Khuzwayo

Web Link

www.busrep.co.za

 

Johannesburg - On June 9 2003, Patricia Hewitt, the British trade minister, confirmed to the house of commons that BAE Systems had paid a commission on its contract to supply Hawk jets to South Africa, but claimed no irregularities had been found when a due diligence study was conducted.

It is still unclear who received these commissions but The Guardian newspaper claimed they had been paid to a prominent South African politician as well as a political party. This claim was not investigated in South Africa.

In a response to a parliamentary question about the Export Credits Guarantee Department (ECGD) and the BAE Systems' deal with South Africa, Hewitt said: "The ECGD's application process requires certain details of agents' commission to be disclosed to ECGD in order that it can follow its due diligence procedures.

"In this case such due dilligence procedures were followed and no irregularities were detected. For reasons of commercial confidentiality specific details of the commission paid cannot be revealed."

BAE Systems is Britain's biggest government-sponsored arms maker.

The ECGD's role is to benefit the economy by helping British exporters win business and firms to invest overseas by providing guarantees, insurance and reinsurance against loss.

Before December 2004, when the British government adopted the anti-bribery and corruption procedures in line with the convention of the Organisation for Economic Co-operation and Development, it was legal for UK nationals and companies to pay bribes abroad and claim tax exemption.

In March this year, British trade minister Ian Pearson announced that BAE Systems and other exporters would no longer get government insurance and guarantees for their arms deals unless they revealed the names and addresses of the agents they were paying.

Pearson said: "Applicants for support will now be requested to provide the identities of agents to reduce the risks of the Export Credit Guarantee Department supporting contracts involving bribery or corruption."

BAE Systems spokesperson Linden Birns said his company had not paid any bribes in South Africa.

In July, the German news magazine Der Spiegel reported that German prosecutors were investigating possible kickbacks in the sale of warships to South Africa by a German shipbuilding consortium.

The magazine said there had been a co-ordinated raid on the offices of the consortium partners.

With acknowledgements to Wiseman Khuzwayo and Business Report.