The Scorpions have reopened the arms-deal investigation in what may be their last major assignment.
The Mail & Guardian has established that the Scorpions recently registered an investigation into South Africa's multibillion-rand purchase of jet trainers and fighter jets from British arms giant BAE Systems and Sweden's Saab.
The BAE/Saab contract, worth R16-billion in 1999 and R30-billion *1 at the current exchange rate, was the single largest purchase of the entire arms procurement.
The "commissions" BAE paid dwarf the R500 000 annual bribe African National Congress (ANC) president Jacob Zuma allegedly took from French arms firm Thales and the $25-million (R200-million) in commissions German prosecutors claim were partly paid to South African officials and Cabinet ministers to clinch the warships contract.
The M&G reported in January last year that Britain's Serious Fraud Office (SFO) was investigating BAE over the payment of more than R1-billion in "commissions" on the South African deal.
The Scorpions' formal declaration of an investigation indicates that they believe South Africans were bribed and could be prosecuted.
This decision may have major ramifications for:
* The ANC, which has resolved that the Scorpions should be incorporated into the police. The party is also alleged to have benefited from the arms deal;
* The legacy of late defence minister Joe Modise, who appears to be a prime suspect in the case; and
* The Scorpions themselves, whose arms-deal inquiries -- most notably into Zuma -- appear central to the ANC's determination to close the unit.
The government controversially contracted in 1999 to buy 24 Hawk jet trainers and 28 Gripen fighter jets from BAE/Saab after an intense bidding process marked by infighting between the Ministry of Defence, the air force and then-defence secretary Pierre Steyn.
Modise changed the evaluation criteria for the jet trainers by excluding cost as a factor, placing BAE in pole position to win the contract.
The so-called ministers' committee, chaired by then-deputy president Thabo Mbeki, took the final decision to go with BAE and Saab despite the fact that Italy's Aermacchi MB339, favoured by the air force, was half the price of BAE's Hawk.
Steyn last year confirmed to the M&G that the Hawk was "outdated even then ... and way too expensive".
Alleged payments
It is unclear who the Scorpions will target. Investigations at the start of the multi-agency arms-deal probe five years ago suggest the focus will be on the agents and the middlemen who received vast "commission" payments -- and on the officials and politicians who may have benefited through them.
This is substantiated by information gleaned by Britain's SFO.
The agents and middlemen include Modise's former adviser, Fana Hlongwane, late BAE agent Richard Charter, British-Zimbabwean arms dealer John Bredenkamp and former Anglovaal chairperson Basil Hersov.
Modise's intervention in the bidding process and his proximity to the agents suggest his already tarnished reputation *2 may be further dented.
Alleged payments to the ANC may also come under the microscope. In his book After the Party, former ANC MP Andrew Feinstein recalls a senior party figure confirming to him that the party benefited financially from the arms deal.
"We received money from some of the winning companies. How do you think we funded the 1999 election?" the politician allegedly told Feinstein.
The M&G has confirmed the Scorpions have already summonsed banks to supply financial records. Summonses have also been issued to the defence and trade and industry departments to provide information relating to the BAE/Saab contracts.
The investigation may help counter allegations of partiality on the part of the Scorpions. The Zuma camp has long maintained that the unit has focused only on Zuma's minor alleged role in the arms deal while ignoring more significant corruption.
But critics may ask whether the Scorpions will also probe the warships contract, about which allegations have been made against Mbeki.
One reason for the unit's focus on the BAE/Saab deal may be that it previously investigated Modise's role, and that the United Kingdom probe has brought important new information to light. Former National Prosecuting Authority (NPA) boss Bulelani Ngcuka allegedly ordered the Modise file closed after Modise's death in 2001.
A further sensitivity for the Scorpions may be that Hlongwane, whose role is central, is a friend and business partner of Siphiwe Nyanda, the former defence force chief and a key player in the new ANC leadership's moves against the Scorpions.
The Scorpions' inquiry is good news for the British investigators who asked the South African authorities for help in 2006.
The Department of Justice and Constitutional Development allocated the matter to the South African Police Service. The British apparently hoped that because of their earlier investigations and institutional knowledge of the arms deal, the Scorpions would take charge of it.
The NPA declined to comment.
Investigation target: The Airborne Trust
The mysterious Airborne Trust brought together almost all the main players linked to the BAE Systems bid to sell jets to the South African Air Force: sellers, agents, the minister of defence and the ANC.
The trust was established in 1995 to assist veterans of the ANC's armed wing under the auspices of the Umkhonto weSizwe Military Veterans' Association (MKMVA), whose patron was Modise.
Modise was also patron of the Airborne Trust, which paid for a trip to the United Kingdom recorded in Modise's 1998 parliamentary declaration of gifts.
In March 1998, just months prior to the award of the contracts, the trust, BAE and MKMVA signed a memorandum of understanding at the ANC headquarters in which BAE pledged to donate R4,5-million towards an industrial park that would benefit veterans. The project never got off the ground.
Airborne's founder was industrialist Hersov, an early representative for BAE in South Africa, who later received commission payments from BAE relating to the South African deal.
Charter, BAE's official agent, was also chairperson of the Airborne Trust. Among the original signatories to the trust's bank account were Ron Haywood *3 and Dirk Ackerman *4, respectively chairperson and board member of Armscor.
Later trustees included local BAE board member and ANC stalwart Diliza Mji, Llew Swan *5, the chief executive of Armscor, and retired MK veteran General Lambert Moloi.
The trust was managed by Michael Chemaly, who told the Mail & Guardian this week that he was not aware of any summonses -- although the M&G is aware that the Scorpions subpoenaed some of the trust's bank records during their earlier investigation.
The M&G can also reveal that the original donor for the trust was one of the grey eminences of the British arms trade: Alan Curtis, one of the so-called "Savoy Mafia", a group of arms brokers, intelligence officers and bankers who gathered regularly at the Savoy hotel in London during the Thatcher era.
They were the key architects of British arms sales to Saudi Arabia -- as well as to Iraq during the Iran-Iraq war. Curtis was a friend of Margaret Thatcher's husband, Denis, and, according to security writer RT Naylor, one of the Savoy Mafia's recruits was her son Mark, reputed to have made £12-million out of the infamous BAE-Saudi al-Yamama arms deal.
The M&G understands that the United Kingdom SFO is investigating whether Curtis may have also received commission payouts on the South African deal.
JM and the playboy
If late defence minister Modise is the ghost at the arms-deal banquet, Hlongwane is the guest who got it all.
Hlongwane, Modise's close adviser at the Defence Ministry, is private. This week, as before, he did not return calls to answer allegations about the tens of millions that BAE allegedly paid him for "consulting".
But the very high walls obscuring his Hyde Park, Johannesburg, mansion have not contained the rumour about an alleged extravagant lifestyle. A contributor to an online discussion group wrote last year: "There is a Playboy mansion in Hyde Park ...
"The guy is a black multimillionaire like Hugh [Hefner] and the girls are just as pretty and blonde. One of them drives a Ferrari, another a Porsche and the list goes on; they wear Gucci this, Fendi that and they travel around the world just for shopping ... The guy's name is Fana Hlongwane [so I've heard]."
Modise, who died in 2001 aged 72, and Hlongwane (49) were regarded as very close during Modise's 1994 to 1999 term at the Defence Ministry. Both, it is alleged, got improperly close to BAE during that time.
In 1997 already, Modise secretly got shares in the Conlog/Log-Tek electronics group, which stood to benefit substantially from arms-deal offset agreements, including with ABB, a sister company of BAE partner Saab.
The known high-water mark of Modise's alleged batting for BAE was his 1998 intervention to urge a "visionary" approach, excluding cost considerations, which led to BAE's Hawk jet trainer being short-listed and ultimately selected over Aermacchi's much cheaper offer.
Hlongwane, meanwhile, was advising not only Modise but also BAE and its declared agent in South Africa, Richard Charter, said a source who knew Charter. A government source confirmed the impression.
Investigations by the SFO have revealed that BAE agreed to an annual retainer of £1-million *6 with Hlongwane in 2002 and a "settlement" in 2005 to pay him $8-million (now about R64-million) "in relation to work done *7 on the Gripen project".
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