Publication: Business Day Issued: Date: 2007-03-12 Reporter: Linda Ensor

SA’s R13,7bn Fighter Jets Turn into an Expensive Folly



Business Day

Date 2007-03-12


Linda Ensor

Web Link


Government was left with egg on its face *1 on Friday, following revelations that the R13,7bn Hawk and Gripen aircraft it bought as part of the strategic arms acquisition programme might end up being white elephants.

The defence department’s chief director of acquisitions, Maj-Gen Otto Schür *5, told Parliament’s standing committee on public accounts that there was no real use for the fighter aircraft because there was no “conventional threat” *2.

The decision to purchase the Hawk jet trainer and Gripen jet fighter, from British manufacturer BAE Systems and Sweden’s Saab respectively, was highly controversial as it was claimed at the time that they were not the best option for the South African Air Force and would cost substantially more than alternative options.

The acquisition of the fighter planes is part of the hugely controversial multibillion-rand arms deal that has been marred by persistent allegations of corruption against defence department officials and former deputy president Jacob Zuma, among others.

Anticorruption investigations have been launched in Britain, Germany and Sweden amid complaints by investigators that they were not getting enough co-operation from South African authorities.

Schür said the air force was reducing its combat capability as there was no conventional threat against SA or the subregion.

Transport capabilities were of greater importance and were receiving a bigger share of the budget, he said.

“The current need for combat aircraft and combat aircraft support for joint operations is very low because there is no real conventional threat.

“For that reason, the air force is focusing mainly on transport capabilities (both helicopter and fixed wing) as well as the training of new pilots to feed into the squadrons to prepare for future operations,” Schür said.

“Instead of 200 hours a year per aircraft, we may only achieve 100 hours per aircraft. We will not use them as often because there is no need in the short term.

“Until such time as the physical risk to national security escalates, where it requires a larger investment in combat systems, this is a wilful decision to reduce the investment in that environment.”

The head of the South African Air Force, Lt-Gen Carlo Gagiano, has echoed the same sentiments, saying in the department’s 2005-06 annual report *3 that “extraordinary levels of underfunding” meant it would not be possible to use Hawks and Gripens at their optimum level *3.

Schür justified the purchase of the aircraft *5 even though they were not immediately necessary, saying any country had to have the ability to defend its territorial and regional integrity should there be a threat.

With acknowledgements to Linda Ensor and Business Day.

*1       Now it's not just three quarters of an ostrich egg, the full egg of the white elephant bird.

*2      This is nonsense.

How can the Gripens be used when they haven't even been delivered, not even one.

The first Gripen is being delivered in 2008 and then at the rate of a few per year up until (2012 or is it 2015?).

In any case a few Gripens cannot be used until an initial operational capability is attained, and this requires a minimum number of physical aircraft, full support capability and pilot training. This is still some years ahead, at least 3 to 5.

But why does the country need Gripens before 2012?

They don't, because there are two squadrons (38 aircraft) of 10-year Cheetah C third generation fighters flying in the SAAF at present, at least ready to be flown if the SAAF had pilots and jet fuel.

The lifespan of the Cheetah Cs can easily be extended by five years and even ten years.

But we all knew this - so why did Tbabo Mbeki, Joe Modise, et al go about buying 28 fourth generation Gripen jet fighters at about R1 billion each in 1997.

The reason is money, not regional military threats.

After 1994 any serious and honest threat evaluation, which are continually being undertaken by both National Intelligence and Military Intelligence would have shown that there was unlikely to be a conventional military threat for 20 to 30 years. But sure, a country the size of South Africa does need a appropriate air defence capability.

But we had one, 38 essentially brand-new Cheetah Cs, good for the next 15 to 20 years from 1997.

We should certainly have started looking at replacing the Cheetah Cs at some time.

Around 5 years before the Cheetah Cs initial planned life time, would having been a good time to begin a new procurement process for their replacement if it were indeed determined that a life extension was undesirable for any valid reason.

So that would have been about now, the year 2007 AD.

And 5 years would have been plenty of time to acquire 28 replacement aircraft.

The USA is awash with surplus F-16 fighters which in their latest incarnation are both highly capable (more than a match for anything south of the Sahara) and comparatively very affordable.

Sweden, the very suppliers of the fourth generation Gripen JAS-39 is also awash with their indigenous jet fighters.

Indeed, so mush awash that they have a problem.

Before the wall came tumbling down in the late 1980s, Sweden (naturally) considered the Soviet Union as her biggest military threat. Being only a hop and skip from this perceived enemy, the Swedish Air Force invested in some 204 Gripens.

But with the break-up of the Soviet Union and some of the ex Soviet states , including Russia and Ukraine even wanting to join NATO (can one actually believe this happening in their lifetime? - but it's true), the Swedish Air Force realised it had invested in some 50% too many Gripens.

Some of these aircraft would already have been delivered by its manufacturer Saab and others would have already been ordered to be delivered over the next few years (probably with a threat of cancellation by Swedish Air Force).

So around 1995 Saab knew it was in big trouble and knew it had to find an export market for these excess Gripens.

So Saab started looking around for buyers in a post-USSR world awash with excess military hardware, including a range of top line jet fighters, as well as in a western world determined to reap a peace dividend.

Saab realised that selling its indigenous Gripen was a very hard sell indeed.

So Saab flew off to the recognised non-US masters of the "hard sell", British Aerospace. With tthe UK not having a light fighter aircraft of its own, BAe recognised the opportunity and responded positively in two ways :
Now all Saab had to do is sit back and watch the masters get rid of 102 Gripen JAS-39s.

And so the British experts rushed to the four corners of the globe with their swag bags of wonga ready to splodge.

First in line were South Africa, the Czech Republic, Hungary, Finland and Poland.

South African quickly excluded competition from the US in respect of the Armscor missile technology smuggling issue.

However, BAe and Saab quickly came up against US competition for their Gripen JAS-39 in the form of military heavyweight Lockheed Martin and its F-16 and F-18.

So BAe did its normal thing, bribed all and sundry across the length and breadth of each home country in the respective arm of service, defence department and parliament. The Americans squealed louder than stuck pigs and were successful in Poland, who had initially chosen US aircraft, only to have this overturned in favour of the Gripen and then overturned back to the US F-16 and Finland which opted for F-18s.

However BAe/Saab were successful in Hungary, which purchased 14 aircraft, and the Czech Republic which initially opted to purchase a number of new Gripens, but later changed this in favour of leasing 14 used aircraft for a sum of SEK 6, 5 billion (SEK1,00 is the equivalent of R1,00) from Sweden for a period of ten years.

The Czech deal especially is really lucrative, so much so that it attracted "commissions" of about SEK 1 billion or about 16%.

Clearly the main middleman, Count Alfons Mensdorff-Pouilly was to receive 4% while two others, Otto Jelinek and Richard Hava were to receive about 2% each.

If the outright purchase option had been exercised Count Alfons Mensdorff-Pouilly would have received about SEK 540 million (about R550 million) while Otto Jelinek and Richard Hava would have received about SEK 400 million each.

With the lease option having been exercised and the percentages remaining the same, the actual commissions would have been about a third of the numerical values.

*3      2005-06 Annual Report ? - how is it possible to use something at below its optimum level when one doesn't have the darn thing?

Me thinks there's some serious bull-dusting going on here, mostly probably softening up parliamentary and public opinion for the inevitable.

Could it possible be that when corruption is proven following the British and Swedish investigations, that Armscor cancels the contracts *4 before delivery takes place. Remember no Gripens and very few Hawks have been delivered and if the Cheetah Cs are still good, there's an ongoing situation of extraordinary underfunding and whatever funds that are available are needed for the Airbus A400Ms, then who knows.

*4      In terms of the supply agreements Armscor can cancel these if bribery or corruption is proven.

In the case of the corvettes, although bribery has been proven, by the time the Supreme Court ratified the verdicts, all four corvettes had been delivered and therefore it would have been detrimental to the country to cancel the contracts and hand back the corvette to the European South African Corvette Consortium (ESACC).

*5       Brig-Gen (as he then was) Otto Schür, was the DoD's Director of Air Force Acquisition in the heady days of the aircraft selection and contracting.

He would know that the SAAF was not yet ready to acquire an advanced light fighter aircraft, firstly because the SAAF already had the Cheetah Cs and secondly because the SAAF Operations Council had formally decided in 1997 that it was unaffordable.

He would also have known that the selection process for the lead-in fighter trainer led to the clear selection of the MB-339FD by both the SAAF and the DoD.