Publication	The Guardian
Date	2001-05-28
Reporter	Chris McGreal
Web Link	www.guardian.co.uk

Public suspect that inquiry into corruption will fail

South African investigators begin public hearings today into alleged corruption by senior politicians in the hugely controversial purchase of £4bn worth of weapons from European manufacturers.

But scepticism about the effectiveness of the public protector's investigation - one of three by government agencies looking into the accusations of corruption - has grown as the African National Congress has sought to use its overwhelming majority in parliament to limit the political damage.

The public hearings will examine dozens of allegations of financial irregularities, nepotism and other wrongdoing.

One part of the deal under scrutiny is how British Aerospace won a £420m contract to supply training planes for fighter pilots. South Africa's air force chiefs selected an Italian aircraft that is cheap and modern, but the politicians later amended the specifications to favour the ageing British Hawks, twice the price of the Italian tender. The government says the changes were made for operational reasons. The air force has quietly derided the claim.

The investigators are examining claims of a link between the contract and BAe's funding of overseas trips for cabinet ministers and MPs, and its donation of £500 000 to the ANC's military veterans' association.

The weapons deal came under fire even before the contracts were signed. Critics, ranging from the unions to churches, questioned why the country needed to spend twice its housing budget on warships and fighter aircraft.

The finance ministry warned that such vast spending could destabilise the economy, particularly if the rand fell sharply against the dollar. The government dismissed such fears, claiming that the deal would create 65 000 jobs and bring in three times the cost of the weapons in foreign investment and trade.

Questions about its propriety were first raised in parliament in late 1999 by the fiery Pan Africanist Congress chief whip, Patricia de Lille, who alleged that ANC politicians took kickbacks from foreign arms manufacturers.

In September, a report by the auditor general, Shauket Fakie, concluded that proper tendering procedures were not followed, and called for further investigation into alleged nepotism in the subcontracting. He raised direct questions about the BAe contract.

At the centre of the inquiry are the former defence minister, Joe Modise, and the head of arms procurement at the defence secretariat, Shamin Shaik. Among other things, they are accused in documents submitted to parliament of pressuring foreign arms manufacturers into subcontracting work to two local firms in which their relatives have major stakes.

One company, the US firm Bell Helicopters, pulled out of the bidding, claiming that Mr Shaik had tried to pressure it into subcontracting work to a local company, Futuristic Business Solutions (FBS). Among FBS's directors are two of Mr Modise's relatives. FBS also allegedly demanded the payment of a £90 000 "administration fee" for concluding the contract.

The winning contractor, the Italian company Agusta, did subcontract to FBS.

A document by the government's defence secretariat also raises questions about the process by which a subcontract to fit electronics to new warships was awarded. The main deal finally went to a French company, Thomson CSF, and was partly subcontracted to its local subsidiary, African Defence Systems (ADS). Mr Shaik's brother, Shabir, is a director of both Thomson and ADS and his wife is a senior executive with ADS.

Mr Shaik says he stepped down as chairman of the procurement committee meetings when a conflict of interest arose, but the defence secretariat document says he sat in on crucial meetings.

FBS and ADS have little or no manufacturing capability. The firms have received hundreds of thousands of pounds in "administration fees" from European arms manufacturers to finalise the contracts and meet the requirements for a black empowerment partner.

Soon after he left the government, two years ago, Mr Modise became the chairman and a major shareholder in Conlog, another firm with a big stake in the arms deal.

The ANC's chief whip in parliament, Tony Yengeni, is also under investigation for receiving a £32 000 Mercedes-Benz four wheel drive from one of the arms manufacturer, European Aeronautic Defence and Space Company, which won a contract from the government. At the time, Mr Yengeni was chairman of the defence committee. He has denied any wrongdoing but has twice failed to provide parliament with a satisfactory explanation of how he came by the car.

Parliament's previously non-partisan public accounts committee last year launched its own inquiry into the allegations of corruption. The ANC leader of the committee, Andrew Feinstein, agreed that there were sufficient grounds for a full investigation by a number of government agencies, including the special investigating unit under Judge Willem Heath, who has a public reputation for independence and thoroughness.

Mr Feinstein was summarily hauled in by Mr Yengeni and dismissed as the ANC's leader on the public accounts committee. The chief whip said he would sit in on all subsequent meetings of the committee.

President Thabo Mbeki then waded in with an extraordinary television broadcast in which he rubbished Judge Heath. He waved a document he said was the judge's work and was aimed at blackening Nelson Mandela's name by implicating him in corruption. As it turned out, the document was by a journalist, did not implicate Mr Mandela, and Judge Heath had not seen it.

In the end, the constitutional court rode to the ANC's rescue by ruling that a sitting judge could not head a state investigation agency.

This month Mr Yengeni staved off almost certain parliamentary censure over his Mercedes by pressuring ANC members of the ethics committee to refer the matter to the arms deal investigators.

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The torture never stops, the torture never stops.

The torture will never stop.

Aluta continua.