Publication: Mail and Guardian Issued: Date: 2008-12-12 Reporter: Sam Sole Reporter: Stefaans Brummer

Arms Playboy's Accounts Frozen

 

Publication 

Mail and Guardian
Date

2008-12-12
Reporter Sam Sole, Stefaans Brummer

Web Link

www.mg.co.za


Fana Hlongwane, the man at the centre of the investigation of South Africa's arms deal, has had five foreign bank accounts frozen, blocking funds totalling more than R160-million.

According to an affidavit by the investigator leading the Scorpions probe of the deal, Hlongwane is now the subject of money-laundering investigations in Switzerland and Liechtenstein and has had accounts in both countries frozen.

The investigation in Liechtenstein appears to flow directly from investigations by the United Kingdom's Serious Fraud Office (SFO).

The SFO is carrying out a probe in parallel with the Scorpions looking at allegations that United Kingdom defence giant BAE Systems paid bribes to secure its South African contracts. The agencies are sharing information.

The affidavit also shows that the Scorpions had to wage a battle against their own Justice Department -- and specifically justice Director General Menzi Simelane, already the target of the Ginwala inquiry -- to be allowed to co-operate with the SFO.

The Mail & Guardian reported last week that the SFO believed Hlongwane -- who served as special adviser to former defence minister Joe Modise - received "commission" payments totalling at least R280-million. Hlongwane has consistently failed to return M&G calls requesting comment.

The Scorpions affidavit -- prepared last month to secure search warrants for Hlongwane and others -- says that in October this year it received a Liechtenstein "request for information … on the interrogation of the suspect Fana Hlongwane".

According to the letter from a Liechtenstein judge, "it is suspected that frozen assets belonging to Fana Hlongwane in … Liechtenstein are linked with active and passive bribery".

The judge details complex transfers between offshore company accounts. The request confirms that Arstow Commercial Corporation, which received payments from BAE front company Red Diamond, paid money to Westunity Business, owned by Hlongwane. Westunity, in turn, paid a Meltec Foundation, which then paid a Gamari Trust, allegedly for Hlongwane's benefit. Gamari's account was frozen.

Also frozen were funds held by an insurance company, which appeared to come from a Hlongwane company in Panama.

In Switzerland, says the Scorpions affidavit, investigations appear to have been prompted by a report on money laundering authorities by HSBC Private Bank, which held accounts in the name of three companies linked to Hlongwane. These were also frozen.

Separately, the Scorpions affidavit reveals how the unit effectively had to leapfrog South Africa's Justice Department to conduct raids on Hlongwane and others late last month. Simelane and former justice minister Brigitte Mabandla protested that this might be unlawful.

The dispute goes back to June 2006 when the SFO sent a formal request for mutual legal assistance to Simelane.

At that stage the Scorpions had a registered "preparatory investigation" into outstanding aspects of the arms deal. The affidavit says the SFO request was not forwarded to the Scorpions.

Rather than grant formal assistance Simelane's department invited the SFO to visit South Africa to conduct informal interviews and assigned the police service to assist.

Implicitly criticising Simelane's decision, the affidavit says: "SAPS [South African Police Services] had not investigated and were not investigating the arms acquisition deal … No SAPS investigator had any knowledge of the progress of the DSO [Scorpions] preparatory investigation, nor any insight into, access to, nor control of the relevant DSO documentation and witness statements that might assist the SFO."

The policeman assigned by the department contacted the Scorpions for advice, resulting in the Scorpions-SFO "parallel investigations" solution.

The Scorpions upgraded its preparatory investigation into the BAE matter into a full investigation in February this year.

The affidavit says Simelane and Mabandla told the SFO and the Scorpions that the latter's "BAE investigation might be unlawful", saying they were concerned the Scorpions had "taken cognisance of" information shared by the SFO and had "relied on this information" to upgrade the investigation.

They also said that receiving information informally meant "bypassing" the Act regulating requests for formal assistance.

The Scorpions affidavit counters: "It is hardly necessary to state that the DSO does not share the previous minister's and the DG's concerns." The Act was "not intended to replace informal co-operation with foreign law enforcement agencies, but rather to supplement this with new, formal means of co-operation".

Justice Department spokesperson Zolile Nqayi said this week that Simelane would not comment beyond saying that the legislation on international criminal co-operation bound him to refer requests to "the law enforcement agency".

This he understood to mean the police and not the Scorpions, though he had no personal preference. Simelane was concerned that the subjects of an investigation could challenge its legality if this was not complied with, he said.

With acknowledgements to Sam Sole, Stefaans Brummer and Mail and Guardian.