Publication: Financial Times Issued: Date: 2007-05-31 Reporter: Michael Peel Reporter:

UK Role in Arms Trade Puts PM's Reputation at Stake

 

Publication 

Financial Times

Date

2007-05-31

Reporter

Michael Peel

Web Link

www.ft.com

 

London: Late in 1996, Terry Crawford-Browne, a South African anti-arms trade campaigner, wrote to the then British opposition leader Tony Blair to ask him to refuse to support a proposed post-apartheid arms deal. Mr Blair's office declined to do so, arguing instead that regulated arms exports were a "perfectly legitimate activity".

"Blair's response to my letter was a chilling insight that the Labour Party would be just as complicit as the Tories," Mr Crawford-Browne claims.

More than a decade on, approaching the end of his premiership, Mr Blair is revisiting the country in which two controversies of his time in office are neatly distilled: Britain's role in the arms trade and its performance in tackling corruption.

After December's abrupt ending of Britain's investigation into bribery allegations surrounding BAE Systems' relationships with Saudi Arabia, the South African case has become the most high-profile of the remaining probes into its dealings.

The South African story began in the mid-1990s, when a newly democratic country decided to invest heavily in new equipment for its armed forces. The domestic political reasons for the decision are complex and much argued over, but the result was a ferocious contest between arms makers across Europe for a share of the R30bn (Pounds 2.1bn) pot.

Two of the main winners were BAE and Saab, the Swedish company in which it has a 20 per cent stake.

Between them, they won contracts to supply a total of 52 Hawk and Gripen aircraft, valued at R15.7bn. The BAE deal was backed strongly at a political level by London: Mr Blair and South Africa's then deputy-president Thabo Mbeki signed a 1999 agreement to promote "broadly based British civil inward investment" arising from the arms procurement.

By then, the arms deal had already triggered discontent in South Africa. People in the military and outside questioned why the government had chosen to buy Hawk aircraft twice as expensive as those offered in a competing bid from Italy's Aermacchi.

Evidence of even more serious doubts about the deal emerged in an abortive official South African investigation held in response to parliamentary pressure over corruption allegations.

In a 2001 interview with investigators seen by the Financial Times, Heinrich de Waal Esterhuyse, a former manager of state arms procurement company Armscor, said he was "concerned" about the "spurious" lobbying of politicians by both the British government's Defence Exports Services Organisation and arms companies, including BAE.

A draft report prepared by the auditor-general in 2001 said there were "fundamental flaws" in the selection of BAE/Saab as the preferred bidder, although this reference was removed from the final report.

The aircraft leg of the probe was then shelved, amid protests that the government was not prepared to fully investigate a deal overseen by many politicians, including Mr Mbeki.

BAE's role came under fresh scrutiny only last year, when it emerged that the Serious Fraud Office was looking at the South African arms deal.

Investigators have already noted parallels with deals elsewhere. Christer van der Kwast, head of Sweden's national anti-corruption unit, says the pattern of agency relationships in the aircraft deal in South Africa is similar to another agreement involving Saab in the Czech Republic. BAE and Saab both deny wrongdoing.

SFO investigators are expected to travel to South Africa soon to interview witnesses, although the already sensitive terrain has become even more difficult since Britain chose to drop the BAE-Saudi case. One of the ramifications of the decision is that South African officials, including Mr Mbeki, have questioned whether London is being hypocritical by scrapping the Saudi probe while continuing with the one in South Africa.

The result is that Britain is facing criticism in South Africa from otherwise antagonistic groups: anti-arms campaigners who attack the weapons deal and government officials who defend it.

It seems as if one of Mr Blair's last foreign trips as prime minister is ending in a country where his reputation as an anti-corruption campaigner is shrouded in rather more ambiguity *1 than he would like.

As one South African involved in the investigation puts it: "If Tony Blair points to corruption in South Africa, he will get a pretty sharp retort *2."

With acknowledgement to Michael Peel and Financial Times.


*1       A properly British way of describing smelly piggy swill.


*2      A refiller of the same troughs with a new set of pigs.