Publication: Sunday Independent Issued: Date: 2007-01-07 Reporter: Eleanor Momberg Reporter: Santosh Beharie

New Arms Deal Bribe Investigation

 

Publication 

Sunday Independent
Date

2007-01-07

Reporter

 Eleanor Momberg, Santosh Beharie

Web Link

www.sundayindependent.co.za

 

Scorpions and British police reportedly join forces after allegations that Modise adviser was paid to favour BAe

A former adviser to the defence ministry, now in the arms-manufacturing, supply and export business, is being investigated by Britain's Serious Fraud Office (SFO) for allegedly receiving substantial kickbacks from BAe Systems - the British company that won the contract to supply South Africa with 24 Hawk 100 trainer jets.

Britain's Guardian newspaper reported yesterday that businessman Fana Hlongwane, a former adviser to defence minister Joe Modise, who died in 2001, was being investigated for receiving "substantial payments" from BAe Systems.

Hlongwane was reported to have been in a position to influence who would be awarded the £1,5 billion (about R21 billion) contract. It was won by BAe, although BAe charged nearly twice the price of a rival Italian bidder for its aircraft. The investigation centres on claims of substantial payments to Hlongwane while he was Modise's adviser. At the time, Hlongwane was also a director of the parastatal arms company Denel, and of Osprey, a company BAe named as its agent handling commissions paid in South Africa.

Questions were raised about the aircraft-acquisition component of the arms deal when Modise changed the formula by which the winning bidder would be chosen. BAe and Saab won the bid to supply the Hawks and 28 Gripen fighter jets.

BAe has acknowledged that it paid tens of millions of pounds in secret commissions to win the bid. The company originally intended to pay 12 percent of the contract price in commissions, but agreed to cut that back to 7 percent - more than £100 million - following questions from the British authorities underwriting the deal.

BAe made a substantial donation to the ANC after the contract was signed.

Hlongwane is a former Umkhonto weSizwe (MK) high command member. He was part of the high command delegation that testified before the Truth and Reconciliation Commission about the ANC armed wing's actions in South Africa during the struggle to end apartheid.

Hlongwane - once wined and dined by Tony Yengeni's co-accused, Michael Woerfel, the former European Aeronautic Defence and Space Company South African representative - is reported to own most of Ivema, a company that "provides innovative and specialised solutions for defence, security and humanitarian aid clients". He is also a part owner of a military vehicle company, Uri.

Hlongwane employed former South African National Defence Force chief General Siphiwe Nyanda, who since his departure from the SANDF has been an Ivema board member and security consultant, as the chief executive officer and managing director of Ngwane Defence Group, launched by Jeff Radebe, the transport minister, at last year's Africa Aerospace and Defence expo.

Ngwane is a majority black-owned and controlled South African company run by former MK and SANDF commanders. Its main focus areas are military vehicles, small- and medium-calibre weapons, security and humanitarian aid.

According to Business Day, Ivema is one of the companies comprising Ngwane, along with Milkor Marketing, design company IAD, Midrand-based rifle-maker Truvelo Manufacturers, grenade-launcher maker Sonoro, and Uri.

Hlongwane could not be reached for comment yesterday.

According to the Guardian report, the Scorpions were handling a "mutual legal assistance" request from the SFO to investigate Hlongwane's financial accounts in relation to the 1999 deal.

Allegations of corruption related to the controversial multibillion-rand arms procurement process were earlier lodged against Modise. These included that Modise had received a £500 000 bribe from BAe and $10 million from a German consortium contracted to sell submarines to South Africa.

While the Scorpions claimed not to know of a joint investigation with the SFO into Hlongwane's role in the arms deal, the SFO would neither confirm nor deny the report yesterday. Scorpions spokesperson Makhosini Nkosi said yesterday that he was not aware of any "mutual legal assistance" between his organisation and the SFO. He said he had never heard of Fana Hlongwane before.

Patricia de Lille, who produced a dossier of evidence supporting allegations that ANC politicians and business people were involved in irregularities around the arms deal, welcomed the SFO probe. She said she would travel to Germany soon to give information to prosecutors investigating claims of corruption in the supply of warships to South Africa by Thomson CSF and Thyssen Krupp.

The Guardian reported on the South African investigation soon after the British government abruptly halted an SFO inquiry into bribes allegedly paid by BAe to Saudi royals. It reported that British Prime Minister Tony Blair said Britain's security would be endangered if the investigation continued.

With acknowledgements to Eleanor Momberg, Santosh Beharie and Sunday Indepenent.