Publication: Mail and Guardian Issued: Date: 2007-02-02 Reporter: Evelyn Groenink Reporter: Sam Sole

Pierre Steyn Speaks Out about The Arms Deal

 

Publication 

Mail and Guardian
Date

2007-02-02

Reporter

 Evelyn Groenink, Sam Sole[]

Web Link

www.mg.co.za

 

Former secretary of defence Pierre Steyn has spoken out for the first time about the arms deal, revealing that he resigned in November 1998 over the decision to force through the purchase of British Aerospace (BAE) Hawk jet trainers at twice the cost of those of the Italian bidder favoured by the air force.

“In the end I resigned because, as secretary for defence, I was going to have to account for the costs to Parliament, which I couldn’t do,” Steyn told the Mail & Guardian.

Steyn has never before spoken publicly about the deal, although extracts have been published of an interview he gave to investigators from the auditor general’s office during the arms deal investigation.

His comments come in the midst of renewed focus on the controversial multi-billion rand weapons purchase.

Independent Democrats leader Patricia de Lille, who first publicised allegations of corruption in the arms deal, this week flew to Europe to meet with investigators from Britain’s Serious Fraud Office (SFO), which is probing the contract for Hawk trainers and Gripen fighters. She will also meet with German prosecutors who are investigating large commissions paid on the deal to sell corvette warships to South Africa.

The M&G last month revealed that commissions of more than R1-billion were paid by BAE on the South African deal to some eight entities, including to the consulting business of Fana Hlongwane, the special adviser to the then defence minister, the late Joe Modise.

In his interview with the M&G, Steyn emphasised the role in the Hawk decision played not only by Modise, but by his two close associates, Ron Haywood and Llew Swan.

Modise appointed Haywood as chairperson of Armscor, the state defence procurement agency in 1995 and Swan as CE in August 1998.

“It was always Modise and his friends Haywood and Swan who had had their minds made up from the start *1,” Steyn recalled. “And there was, of course, also Chippy Shaik, whom I was told to appoint. It was clear he was there to follow the minister’s orders *2.”

Modise also brought Haywood, and later Swan, into Arms Acquisition Council (AAC) meetings where Modise intervened to shift the goalposts radically in favour of the purchase of the Hawk.

To keep down costs, the Air Force had initially proposed a two-tier approach, which would see pilots make a jump from the existing Pilatus propeller trainers straight to the proposed new frontline fighter, meaning the Hawk would not feature.

In November 1997 Modise insisted on a three-tier system *3, which meant calling for bids on a jet trainer that would allow pilots to get jet experience before taking on a supersonic aircraft.

Then, during the adjudication process, Modise urged officials to adopt a “visionary approach” in the case of the jet trainer purchase. “The most inexpensive option may not necessarily be the best option *4,” he told one AAC meeting.

Finally, when it was clear that, in terms of the official selection criteria, the Hawk would lose out to the Italian MB339, which was half the price, Modise instructed officials to prepare a ranking based on a “non-costed option” where price would not be a factor.

In his 2001 interview with the auditor general, Steyn’s anger was palpable: “Their choice for Hawk was patently clear from the start ... It was clear to most of us that the preferred choice of the minister and those who supported him, Haywood, Swan and company; the cost of that particular solution was almost double that of the MB339.”

Even at the crucial Cabinet subcommittee briefing on August 31 1998, where the decision to go for the BAE Hawk and Gripen was taken, Haywood and Swan were allowed to stay while Modise continued deliberations with then deputy president Thabo Mbeki and other ministers. But Steyn, as well as another top official who had raised objections to cost and procedure *5, had to leave.

Both Haywood and Swan deny pushing the Hawk. Swan points out he only joined Armscor in August 1998, when the tenders were already adjudicated. Asked about the Cabinet subcommittee meeting, Swan says he “kept quiet” as he had “just arrived” and “didn’t know what was going on *6 ”. “I didn’t have a clue *7,” he said.

Now Steyn says that with pressure being brought to bear in favour of the Hawk jets, as well as other contracts that he considered “rather expensive”, he could do “little more than alert the relevant structures to the lack of need for a three-tier system *3 and the unaffordability of it all *3”.

“Minister Modise was clearly under the impression that this was a good idea and that costs shouldn’t matter, because we were going to get lucrative offset deals that would give us 65 000 jobs,” says Steyn. “I warned that the offers that were coming in merely contained vague promises of the kind that were not enforceable *8, but they wouldn’t listen.

The Hawk, according to Steyn, was “outdated even then -- and way too expensive”. However, Cabinet had taken a so-called “strategic” view; in keeping with Modise’s “visionary approach”; contracts would be decided not only by cost, but also on the basis of which partner in the European defence industry South Africa was going to develop long-term relations with.

On that basis it could be argued that the “biggest slice should go to the UK [United Kingdom]”, as a defence official put it recently.

However, says Steyn, “It is one thing to order the materials you need from a preferred trading partner and quite another to have trading partners decide what they want to sell and then modify your requirements to serve their wishes *9.” And that, Steyn thinks, is what happened *10.

With acknowledgement to Evelyn Groenink, Sam Sole[] and Mail & Guardian. 


*1      It started with the Defence Review in 1995 which gave the UK, represented by the US Embassy, DESO and BAe, to market their products to Modise, Fana Hlongwane, et al over a period of three years.


*2      The ubiquitous Chippy Shaik. Modise prime runner. Modise told Steyn to appoint this completely inexperienced MK cadre to the prime position of Chief of Acquisitions and then completely bypasses Steyn, being Secretary for Defence, the official line manager.


*3      The 2-tier system does not imply a jump straight from a turbo-prop Astra to a Mach 2 single-seat 4th Generation fighter.

Both the Cheetah and Gripen (and many other modern jet fighters besides) have dual-seat versions which (other than for the delivery of nuclear weapons which require a navigator for accurate weapons delivery) are used to train pilots before they fly solo in jets.

But in any case I think the tiers actually apply to training and not the entire air force structure i.e. :

2-Tier System
1 - Turbo-prop  (Astra Pilatus)
2 - Advanced Fighter Trainer (Mach 1 jet)
then single-seat Future Medium Fighter.


3-Tier System
1 - Turbo-prop  (Astra Pilatus)
2 - Lead-In Fighter Trainer (sub-sonic 1 jet, e.g. Aermacchi MD339FD or Hawk 100)
3 - dual-seat Advanced Light Fighter Aircraft (ALFA)
then single-seat Advanced Light Fighter Aircraft (ALFA)

The difference is in the cost and logistics of operating an extra class of jet aircraft.



*4      The best option for Modise was the one that generated the most cash for him, his new business buddies, his old MK buddies and His Party. Never mind the SAAF and the South African taxpayer.


*5      Heinrich (Erich) de Waal Esterhuyse, the Acting Managing Director of Armscor.

Another clever trick Modise played was getting rid of the then MD of Armscor, ultra-experienced Tielman de Waal. So his buddy, Ron Haywood, filled the positions of Chairman and MD simultaneously for about three years. Then another buddy, Llew Swan comes in clueless at the end of the selection process to manage the contracting process from August 1998 to December 1999. His job done, Swan resigned from Armscor soon after the contracts were signed, some half way through his 3-year contract period (or was it 5 years?)

Continuing his tricks, as soon as Modise's conduct forced Steyn's resignation at the end of the selection phase, Modise never replaced Steyn immediately with a permanent appointee. Instead he allowed Chippy to run even wilder by appointing another trusted ANC/MK cadre, Mamatho Netsianda in an acting position until 30 November 1999. Yet another trusted ANC/MK cadre, January Masilela took over as SoD on 1 December 1999 to sign the Arms Deal contracts worth R30,25 billion in 1998 Rands just 3 days later.

The torture never stops.


*6      Never knew what was going on.


*7      Never had a clue.


*8      The biggest bullshit for buck we ever bought.


*9      Under the 2-tier system, neither of British Aerospace's products that they had been punting so hard, i.e. the Hawk 100 and Gripen JAS39, met the SAAF's stated requirement defined by the SAAF Staff Target (ST) and Staff Requirement (SR) for the Advanced Fighter Trainer (AFT) and Future Medium Fighter (FMF).

So Lt Gen Hechter disappears for a one-on-one with Modise and comes back with approval for a the 3-tier approach and sudently Project Kambro for the FMF disaapears, Project Ukhozi transmogrifies into a requirement for a Advanced Light Fighter Aircraft (ALFA) and a new project is registered for a Lead-In Fighter Trainer (LIFT).

Suddenly the Hawk 100 eminently fits the bill for the LIFT and the Gripen for the ALFA and BAe are in like Flynn.

One problem though, the Aemacchi MD339FD fits the official SAAF LIFT requirement as well as the Hawk 100, but costs half  and therefore has a better Military Value according to the registered evaluation system and therefore is appointed by the SAAF and the Armaments Acquisition Steering Board (AASB) as the SAAF's selection.


*10     Yes, that's what happened - but why.

It's all because of the non-costed option BAe could add on 12% (*11) of the actual price to the Hawks and Gripens and then spread around R1 billion plus to Modise and his old frioends and new friends and His Party.


*11     Maybe reduced to 7% at the end of the day.