Publication: everfasternews Issued: Date: 2006-07-12 Reporter: James Myburgh Reporter:

Mbeki, the Macguffin, Bazan, and the Scuppering of the Original Corvette Contract

 

Publication  ever-fasternews
Date

2006-07-12

Reporter

 James Myburgh

Web Link

 www.ever-fasternews.com

 

In movie terminology a MacGuffin is the object "that motivates the characters and advances the story." It can be anything from the valuable piece of jewellery in a heist-movie to the secrets in a spy story.

Although an immense amount of information has come out about President Thabo Mbeki’s involvement in the South African arms deal, and his efforts to quash the inquiry into it, what has been missing all along is the MacGuffin – the thing that would explain the motivation behind the ANC leaderships’ strange behaviour. Quite apart from all the irregularities later documented in the process of acquiring the arms, what were they trying to hide when they blocked Heath, got rid of Feinstein, subordinated Scopa, and persuaded the Auditor-General to water down the final report?

It is in this context that the allegations made recently in Der Spiegel are so interesting. In November 1998 the South African cabinet announced that South Africa was, as part of the country’s massive arms deal, to buy four corvettes for R6-billion from the German Frigate Consortium (along with another three submarines for R5.2 billion) Der Spiegel claimed that the public prosecutor in Düsseldorf suspected that “more than 30 million Mark in bribes may have flowed in the direction of South Africa” from the German bidders for the corvette contract. It added that in 2001, the public prosecutor had “received a letter from South Africa, which contained the allegation, which has not been proved to date, that a top South African politician received a multi-million amount via Switzerland for his involvement in the deal during 1999.” According to the Mail & Guardian, citing a “well-informed German source”­“the letter alleged a meeting took place in Geneva in or around 1999, during which cash was handed over by a middleman operating on behalf of Thyssen.” The letter was sent by Nicholas Achterberg, “a shadowy Johannesburg businessman who has strong German connections. The politician he supposedly implicated was Mbeki.”

Although the public prosecutor in Germany seems pretty sure that bribes were paid, there seems little actual evidence (beyond some untested allegations) as to who exactly the recipients were. Nonetheless, there is a great deal of strange behaviour around the awarding of the contracts that has yet to be fully accounted for. In particular the reports from Germany throw the spotlight upon Mbeki’s intervention in 1995 to scupper the original awarding of the corvette contract to the Bazan-shipyard of Spain.

Bidders from five countries had been shortlisted by the South Africa for the construction of corvettes for the South African navy, these were France, Germany, Denmark, Britain, and Spain. An article in mid-November 1994 commented that Bazan had put in by far the lowest bid of “about R850 million rand compared to double that price for the French design.” In late December 1994 Armscor, South Africa's arms procurement agency, announced that the shortlist had been reduced down to two: Yarrow Shipbuilders in Scotland and Bazan. In early May the defence force chief, General Georg Meiring, and the navy chief, Vice-Admiral Robert Simpson-Anderson, recommended to cabinet that of the two remaining contenders, Bazan should be preferred over Yarrow. It was just up to the cabinet to give final clearance for the deal, and it would have gone ahead.

However, there was a great deal of opposition from within ANC to the deal, and in the Sunday Times (14th May 1995) there was extensive briefing by the ANC in cabinet against the way the navy and Armscor had reached their decision. Among the complaints made by ANC cabinet ministers were that there had been insufficient consultation with them and the money could be better spent on social-welfare. The following week it was announced that the cabinet had put the decision on hold. (Finansies & Tegniek claimed in July that the ANC’s National Working Committee was the organ that had actually made the decision.)

According to one article a source close to President Mandela stated that the “feeling right now is to just drop the whole thing, and the general feeling [on the ANC side of] Cabinet is that we don’t need them.”  The Sunday Times claimed that “Sources in the president’s office said that the night before this week’s cabinet meeting, President Nelson Mandela had expressed the view that the corvette programme be scrapped. ’He felt that it was not one of the new government’s priorities’, a source said. However, he had been persuaded by Mbeki and other ministers that the matter should be more thoroughly discussed and investigated. ‘Either way, if the programme is to be scrapped or approved, Mr Mandela was convinced that more discussion should precede a decision.’”

Explaining his decision in the Senate (1 June 1995) President Mandela conceded the navy’s need for patrol corvettes. However he went on to say, “Since we are working with human beings, one side says we need these corvettes while the other says that we need more houses, schools, clinics and that this money could be used for these projects. We are at peace with the rest of the world. One cannot run ahead of one’s people. One has to convince them that this is the correct approach. This matter is being resolved.”

He also hinted darkly at impropriety in the tender process, stating that it did not appear that the matter was originally well handled. “I have letters from the presidents and premiers of the Nordic countries. Prime Minister John Major has been bombarding me with letters on this matter. The French and Chancellor Kohl also want this contract. We have to hand(le) this in a way that would satisfy everybody, and that would show that these tenders have been properly examined. Unfortunately, the background of this tender has unfortunate aspects which requires us to look at the matter afresh.”

However, Helmoed Romer Heitman, the Jane’s Defence Weekly correspondent, poured cold water on such insinuations.  “Discussions with people involved in four of the five offers suggests to me that the tender process was professionally handled. So does the result. The Danish Thetis is a lovely ship but is hampered by its single propeller and would not be able to perform all the necessary roles. The French Souveranite is a highly desirable state-of-the-art ship but is rather small and far too expensive. The German Meko 100 is too small to be really effective in our waters and also too small to allow ready upgrading during its life. It is also expensive.” Conversely, the two ships on the final short list would actually have been up to the job. Technically, Bazan was closer to what the navy wanted, and it was the most affordable. The Yarrow ship had not impressed and was also considerably more expensive. (Sunday Times 4 June 1995) The Deputy Defence Minister, Ronnie Kasrils, had earlier dismissed claims against the tender process, stating that it had been above board and correct.

At around the same time the ANC in cabinet were scuppering Bazan’s contract, there were allegations of political interference by Mbeki in the tender process in favour of the German bidders. In the Sunday Times (14 May) Jurgen Koopmann, the managing director of the German consortium, had expressed his dissatisfaction that, “despite two assurances from Deputy President Thabo Mbeki this year that the Germans were still in the race, Armscor had maintained Blohm and Voss’s [Thyssen’s shipyard] disqualification.”

The following week the Freedom Front MP, Piet Groenewald, said that a representative of the German consortium had told members of a parliamentary defence committee that Mbeki had promised, during a visit to Germany earlier that year, to reopen the tender process. “They said they had a letter from Mr Mbeki asking them to apply again” (Citizen 17 May 1995).

It then emerged that a fortnight after Armscor had made its announcement in December 1994 Mbeki went to Germany on an official state visit (between the 6 and 14 of January 1995) where he met with various senior government officials and industrialists. Christoff Hoenings a direct of Thyssen told a newspaper that Mbeki had told him and his directors on this visit that “the race is still open to all contenders”. Mbeki had then repeated this during a conversation with German Foreign Minister Klaus Kinkel. In response to these reports Douglas Gibson, the DP’s spokesman on defence, was quoted as saying that “on the fact of it, it appears that there has been some political interference.”

Answering a debate in the senate in June 1995 Mbeki admitted, in his usual convoluted way, that he had intervened (apparently) to reopen the tender process – but he denied any impropriety. He told the senate that, “Senator Van Niekerk asked a specific question about the Corvettes. He charged that we had interfered in the tender process. What happened in regard to this matter was that a number of countries that had tendered and not appeared on the final shortlist, raised various concerns about this process. I was personally very worried because a suggestion was being made that it may very well be that even as a new Government, we might have acted in a way that was not even-handed. I communicated this to Armscor and to the leadership of the Navy and told them that under no circumstances could we allow a situation where anybody in the world carried the notion that we acted in a manner which was not even-handed. As a consequence of this, Deputy President De Klerk and myself saw the Tender Board and discussed the matter with them. We agreed with the Tender Board to appoint four people who would work with them to address the matter of ensuring that there were no suggestions of mala fide activity. As a consequence, Deputy President De Klerk appointed two people, I also appointed two people who sat with the Tender Board *1 which had no problem with this particular process and have since reported to me and Deputy President De Klerk. I am sure that if the hon senator were to check the story, my colleague Deputy President De Klerk would confirm it. I did not interfere in any tendering process. I think it does help sometimes to ask before one makes any accusations.” (Hansard, Tuesday 13 June 1995) From Mbeki’s opaque phrasing it seems that this inquiry had not uncovered any wrongdoing. If it had, he would undoubtedly have said so.

At the time the corvette contract was suspended the general impression created was that the corvette programme was being allowed to die a 'quiet death'. In fact, the ANC in cabinet had merely kicked for touch. It is not clear whether this was because public opposition was too great, or because Mbeki had been unable to find any substantive basis for re-opening the tendering process to allow the Germans back in. What suggested the latter was the fact that by January 1996 it seemed that the ANC had decided to buy the corvettes after all­but instead of going back to Bazan, which they could have easily done, were planning to re-open the bidding process. Thus, in late January 1996 it was reported that the SA navy’s order for four corvettes would once again go up for tender. Defence standing committee chairman, Tony Yengeni, said that the tender process would be re-opened, “because there had been complaints from a number of countries about irregularities and problems.” He added that it had to be above board and correctly handled. “We don’t want to antagonize any country because of the way it is handled.”

Although a formal decision was not taken until much later the German Frigate Consortium re-embarked on an aggressive lobbying campaign aimed at ANC politicians. It was reported in February 1996 that Housing Minister, Sankie Mthembi-Mahanyele had met with Thyssen on a trip to Germany – and been offered financial assistance with South Africa’s housing programme as part of its counter-trade offer for the corvettes. In May 1996 the Sunday Independent reported that during President Mandela’s visit to Germany that month, Chancellor Helmut Kohl “pressured by his own industrialists was expected [inter alia] to focus on the R1.7 billion contract to supply four corvettes to the South African navy.”

In September 1996 The Star confirmed that the tender process as to be re-opened for the purchase of new corvettes for the navy as soon as Parliament approved the defence review. It cited informed sources as saying the decision was “certain”. However, rather than re-opening the process to a “long list” of 25 shipbuilders, the only countries that would be allowed to re-tender were the five that had made the 1994 shortlist. By this time it was reported that the expected rand cost of the corvettes had doubled to R3-billion due to a slide in the value of the currency.  

In April 1997, speaking at the 75th anniversary of the SA Navy, President Mandela now gave his public support for the corvette programme. “The need to modernize our fleet is not a matter of debate”, he stated. The government recognized “our responsibility for ensuring that our country has an adequate and appropriate naval force.”

In May 1997 Defence Minister, Joe Modise, stated that defence review was now complete and cabinet would soon be asked to approve the purchase of four corvettes and a number of submarines the following month. It seemed that informal bidding had already been going on for some time, as he said the deals now being offered were too good to be passed up. “It is tantamount to us getting some of this equipment for nothing. A number of countries are…coming with attractive packages that are going to result in us getting back the exact amount we are paying on the equipment in the form of investments in South Africa.” In August 1997 it was reported that the bidding process had finally formally begun.

What was odd about the South African government’s eventual decision to buy the corvettes from the German Frigate Consortium in November 1998 was that they were purchasing them for four times the rand price they could have bought them for in May 1995. Moreover, as even the watered down Joint Investigative Team report found that “With the exception of Bazan, all the bidders involved in the Corvette procurement programme failed to comply with the minimum evaluation criteria in respect of financing, technical requirements and Defence Industrial Participation.”

With acknowledgements to ever-fasternews and James Myburgh.


*1       This is really interesting.

Just who were these four appointees to watch over the work of the Tender Board?

Why did this not come out in the joint investigation?