Publication	Mail and Guardian
Date	2007-01-12
Reporter	Sam Sole, Nic Dawes
Web Link	www.mg.co.za

Known as "Styles" because of his fast-lane lifestyle, Hlongwane is said, by several sources in the defence and political sectors, to be a sharp lawyer and a tactical businessman. He returned to the country in the early Nineties and played a key role at the Kempton Park discussions in the sub-group on defence. They credit him as being the power behind former defence minister Joe Modise. Hlongwane was Modise's adviser.

However, at least one source who knew BAE agent Richard Charter says Hlongwane was advising Charter and BAE at the same time. Hlongwane ended his term as adviser when Modise stepped down as minister of defence in 1999, but by that time he had been appointed a director of Denel, at the time a potential acquisition target for BAE.

"Fana was batting for BAE," said one official of the Department of Trade and Industry (DRI). "We started a dialogue around the restructuring of Denel late 1997, early 1998. Hlongwane intervened to stop the analysis. We were told that BAE didn't want DTI doing an analysis on the aerospace industry."

BAE had apparently come to an understanding with Modise about the future of Denel, and Hlongwane, one senior Denel source claimed, used his relationship at the time with public enterprises minister Stella Sigcau's daughter to keep his hand on the Denel rudder. "In the background was Joe Modise," the source claimed. "Fana Hlongwane was his man and Hlongwane was linked to BAE."

When Jeff Radebe took over at the Department of Public Enterprises, a new team found BAE's conditions to bail out Denel impossibly onerous and rejected the deal.

Hlongwane clearly impressed some BAE executives. Following the conclusion of the arms deal he was appointed as southern-hemisphere president of a Swiss company called Wingate Capital, led at the time by Allan MacDonald, a former director of BAE for Africa and Asia.

It was MacDonald who, together with Richard Charter, had helped drive through the Hawk-Gripen deal in South Africa, before leaving BAE in 1999. Despite repeated attempts, Hlongwane could not be contacted for comment.

Basil Hersov

Hersov was slightly evasive this week when questioned by the M&G about his relationship with BAE. He claimed not to recognise the company FTNSA Consulting, which allegedly received R77-million.

After some prodding he admitted to having had an early representative arrangement with BAE in South Africa, which he claimed was later "stolen" by the late Richard Charter of Osprey Aerospace.

He confirmed having been paid out a sum by BAE in recognition of that agreement, but claimed the figure of R77-million was too high. He said the payment was properly disclosed to the authorities, including the South African Reserve Bank.

Hersov was certainly influential. He was the founder of the Airborne Trust, chaired by Charter, which concluded a memorandum of understanding with the MK Military Veterans' Association in March 1998, shortly before BAE was selected to supply Hawk and Gripen aircraft.

BAE pledged to donate R4,5-million to the trust to fund a project to train and reintegrate ex-combatants from MK, but the project went nowhere and Hersov admitted only a few hundred thousand rands had been disbursed.

Hersov declined to answer further questions about his role in support of BAE, citing another engagement.

The late Richard Charter

Charter's Osprey group was the declared agent of BAE on the South African deal, but BAE would never reveal how much had been paid to Osprey in particular or on commissions in general.

According to the SFO, Osprey was paid R27-million, but other investigations have suggested that it was just one payment in a pattern of overt commission payments run through a Swiss legal office.

The SFO investigation suggests Charter was also the beneficiary of Huderfield Enterprises, which got R350-million, but one of the executors of Charter's estate, Brian Eaton, denied that Huderfield belonged to Charter or the estate. He appeared to be familiar with the name, however, and evaded questions about what he knew of Huderfield

Charter served as the chairperson of BAE Systems South Africa, established in 1997, as well as the chair of the Airborne Trust, whose patron was Modise.

Charter had a long-standing relationship with the old South African Defence Force, supplying parachutes and other equipment. He also had an interest in SA Airlink, which was sold after his death.

Following the BAE deal he built a luxury private farm on the Orange River, complete with golf course.

Charter's widow, Janet, who has taken over as a director of most of his companies, did not answer a message left on her cellphone.

One source said Hlongwane was an adviser to Charter, from before 1998, but that the two had fallen out when Hlongwane muscled in on the sale of Airbus aircraft to South African Airways. Before his death, Charter denied having any business relationship with Hlongwane.

John Bredenkamp and Jules Pelissier

Jules Pelissier, an ex-Rhodesian special-branch police officer, has long been considered Bredenkamp's right-hand man in the arms-sales business.

Bredenkamp made his fortune trading tobacco and sanctions-busting out of the old Rhodesia, and moved into international arms broking, allegedly making lucrative business out of the Iran-Iraq war.

Bredenkamp's United Kingdom premises were raided by the SFO last year in a move apparently linked to its BAE investigation.

When the M&G phoned Bredenkamp's Breco head office in the UK this week and asked for Pelissier, his secretary was about to put us through to him when she asked who was calling. Suddenly, Pelissier was not available.

Bredenkamp's spokesperson, Costa Parfitis, said his boss denied having anything whatsoever to do with the South African arms deal as far as BAE was concerned. He said he had "availed himself" to the SFO and had nothing to hide.

However Bredenkamp -- and Pelissier -- have also long been associated with the company Aviation Consultancy Services, which is an agent for a number of aircraft manufacturers around the world, including BAE.

One well-placed source told the M&G that ACS was the declared agent for Augusta during the South African deal. Augusta was selected to supply light helicopters to the South African National Defence Force.

David Clark

Clark, based in Neuchâtel, Switzerland, is clearly a money man and may well be a front for someone else. He refused to comment on the SFO claims. A Briton, he appears as a director in three South African companies: Bluebay Capital, Chesnomprop and Elm Investments.

Joe Modise

Modise, who died of cancer in 2001, is very much the ghost at the arms-deal banquet, and the web of sleaze allegations surrounding his conduct has never been adequately cleaned up. The former Umkhonto weSizwe commander was minister of defence from 1994 to 1999, and played a central role in the policy-making and procurement processes of the arms deal.

He has consistently been accused of improperly influencing the decision to buy BAE Systems' Hawk trainer aircraft instead of the cheaper Aermacchi jets preferred by technical assessors. He personally intervened to eliminate price as a criterion, moving the Hawk to the top of the list.

While still minister of defence he acquired shares in Conlog, an electronics company that stood to benefit substantially from "offset" contracts that suppliers like BAE were required to enter into in terms of the arms deal.

The report of the joint investigating team to Parliament described his conduct as "extremely unfortunate", but cleared him of corruption.

The M&G subsequently reported that two members of his extended family were directors of a company called Futuristic Business Solutions (FBS), which concluded a R1,2-million deal with warship supplier Thyssen to influence purchase decisions in the arms deal while Modise was still minister.

Before Modise's death, Scorpions investigators made considerable progress in probing the Conlog deal as well as Modise and Hlongwane's involvement in the arms deal more generally.

After Modise died, Scorpions boss Bulelani Ngcuka allegedly backed off the investigation, a decision some in the National Prosecuting Authority acknowledge has helped create the impression that Zuma is being unfairly treated. At the time of his death, Modise's closest associates were a group of white arms-company executives drawn from the greasy brotherhood of the sanctions-busting era -- a strange legacy for a man claimed as a hero of the liberation struggle.

Rot on a global scale

A long-running series of articles by our London-based sister newspaper, the Guardian, suggests that large amounts of cash are filtered through a covert network of front companies around the world to disguise corrupt payments by BAE Systems.

The Guardian first disclosed in 2003 how the company operated a £20-million slush fund to "entertain" Saudi princes who might favourably influence its chances of winning the "al-Yamamah" deal to buy warships and fighter jets.

Citing SFO documents and other legal files, the paper said BAE was aware of allegations that its own executives were skimming cash off this fund, but was refusing to investigate because "this is a means of covering up corruption".

"Allegations include the provision of prostitutes, sports cars, yachts, first-class plane tickets, Mercedes cars with drivers, unlimited restaurant meals, cup final tickets, club memberships, gambling trips, TV sets and sound systems."

An internal BAE security report referred to allegations of "sex and bondage with Saudi princes".

In October the Guardian's David Leigh and Rob Evans discovered that the scale of the payments was much bigger than the £20-million.

"The government was yesterday scrambling to recover secret documents containing evidence suggesting corrupt payments were made in Britain's biggest arms deal. The documents detail for the first time how the price of Tornado warplanes was inflated by £600-million in the 1985 al-Yamamah deal with Saudi Arabia. A telegram with the details from the head of the Ministry of Defence's sales unit had been placed in the National Archives. Yesterday it was hastily withdrawn," it reported in October last year.

"The Ministry of Defence documents reveal that the price of each Tornado was inflated by 32%, from £16,3-million to £21,5-million. It is common in arms deals for the prices of weapons to be raised so that commissions can be skimmed off the top. The £600-million involved is the same amount that it was alleged at the time in Arab publications was exacted in secret commissions paid to Saudi royals and their circle of intermediaries in London and Riyadh, as the price of the deal," it concluded.

And in mid-December, after British Prime Minister Tony Blair had ordered the SFO to cancel its Al Yamamah probe, the paper reported that investigators had found "that in recent years an enormous sum -- more than £1-billion -- had been secretly shuffled through BAE's accounts.

"It was passed through two anonymous offshore companies, registered by BAE in the financial 'black hole' of the British Virgin Islands. One was called Poseidon Trading Investments, set up in 1999, the other Red Diamond, set up in 1997. Neither's existence was disclosed in BAE's published accounts, and BAE refuses to give any explanation of their purpose."

Red Diamond, according to the SFO's request for assistance from the Scorpions, was also used to pay South African intermediaries.

"The flow of secret money was coordinated through Switzerland where BAE set up another anonymously owned company called Novelmight. BAE kept its secret commission agreements with agents around the world in the custody of Geneva lawyers," the paper wrote.

The Saudi deal was just one of several under scrutiny. The sincerity of Blair's much-vaunted Africa policy was sharply called into question after he forced a deal to sell a BAE air-traffic control system through a reluctant Cabinet.

"BAE Systems is being investigated for suspected corruption over an arms deal with the heavily indebted African country of Tanzania, in which commissions of more than 29% may have been paid", the Guardian reported in November.

"The £28-million military air-traffic control sale was pushed through the Cabinet in 2001 by Tony Blair against the heated opposition of then development minister Clare Short, who subsequently alleged corruption. Both the prime minister and BAE reassured critics at the time that the sale was above board … Tanzania, had no need for an expensive military system to handle its civilian air traffic, and was at the time asking for its debts to be cancelled.

Westminster sources say that the SFO and the Ministry of Defence police, who are conducting a joint investigation into BAE's deals around the world, believe that millions of pounds were paid into Swiss banks to cement the sale".

NGWANE DEFENCE AND THE BUDDY SYSTEM

From the former head of the defence force, to veteran arms dealers and one of the country's top diplomats, Hlongwane is relying on some well-connected friends to get his fledgling defence company off the ground.

Ngwane Defence sells vehicles through its Uri and Ivema divisions, sniper and assault rifles manufactured by Truvelo in Midrand, as well as riot-control gear and equipment aimed at emergency relief and demining operations. Its senior staff have strong connections in the government, the defence establishment and the global arms trade.

Ambassador George Nene is Deputy Director General of Foreign Affairs, heading up South Africa's multilateral diplomacy. He was previously permanent representative at the United Nations, and still serves on several committees of the world body. That hasn't stopped him from taking up an appointment as a director at Ngwane Defence.

Nene's work for the government and the United Nations not only places him in contact with potential clients for Ngwane, but also may place his diplomatic and commercial interests in conflict. He declined to comment.

He has several other business interests, including two other companies in which he shares interests with Siphiwe Nyanda -- both men are directors in Thsireledzo and Micromatica 27.

Retired general Siphiwe Nyanda stepped down as head of the South African National Defence Force in May 2005. He is CEO of Ngwane, and last year told Business Day that the company "should definitely have a slice" of the local defence market. Nyanda has been a vocal supporter of Zuma, who was compelled to resign as deputy president over allegations that he took bribes in return for protecting the interests of French arms company Thompson-CSF/Thales. Nyanda maintained interests in at least five private business, including a security firm, while he was commander in chief of the defence force.

Jane Anne Collier is Ngwane's operations chief. She began her career at BAE systems in the 1980s when it was known as British Aerospace, and is married to BAE's Bernard Collier. He heads the local team at BAE Systems, which handles the company's obligations to invest in South African companies.

Christo Stockenström, a Pretoria-based lawyer, is a key player at Ngwane, with a history as a fixer in the arms trade.

Brigadier General Damian de Lange is a top South African National Defence Force official who previously headed the foreign relations division in the Ministry of Defence, and as such, would have played a substantial role in government-to-government arms transactions and defence cooperation more broadly. He joined Ngwane in 2004.

With acknowledgements to Sam Sole, Nic Dawes and Mail & Guardian.