More than £100m was
secretly paid by the arms company BAE to sell warplanes to
South Africa,
according to allegations in a detailed police dossier
seen by the Guardian
yesterday.
The leaked evidence from South African police and the British Serious Fraud
Office quotes a BAE agent recommending "financially incentivising" politicians.
In the arms deal, the new ANC government in South Africa agreed to spend a
controversial £1.6bn buying fleets of Hawk and Gripen warplanes.
Critics said the country, beset by unemployment and HIV/Aids, could not afford
it. The Hawks, rejected by the military,
cost twice as much as Italian equivalents.
But the then South African defence minister Joe Modise and a
key official, Chippy Shaik, insisted on the
purchase.
BAE is accused in the reports of corrupt relationships with an arms tycoon, John
Bredenkamp, recently blacklisted in the US for his links with Robert Mugabe of
Zimbabwe. Bredenkamp's blacklisting freezes his assets in the US.
BAE's former marketing director for southern Africa, Allan McDonald, has been
speaking to police, the leaked files say. He allegedly told them Bredenkamp
"gave progress reports directly to Mike Turner". Turner, who has been
interviewed under caution
by the SFO, stepped down last year as BAE's chief executive.
Bredenkamp-linked companies were paid £40m by BAE to promote the arms deal.
According to McDonald, "Bredenkamp suggested identifying the key
decision-makers, with a view to 'financially incentivising them' to make the
right decision".
The Bredenkamp team claimed he said, "We can get to Chippy Shaik". A seized memo
also referred to "third world procedures". An SFO affidavit says: "I believe
that a reference to 'third world procedures' is a veiled reference to the
payment of bribes."
Offshore financial advisers of the Thatcher family are also named as potential
witnesses in affidavits. Jersey accountant Hugh Thurston, who advised the former
Conservative prime minister and her family, has given information to SFO
investigators.
He was involved, according to the police report, in setting up offshore
companies for a South African politician's aide. The aide, Fana Hlongwane, was
adviser to Modise. Hlongwane's cash was
allegedly covertly distributed to accounts offshore and in China.
Another member of the former Thatcher circle, and a potential witness, named in
the files is businessman Alan Curtis. Curtis, sometime chairman of Lotus Cars,
was a business associate of the late Denis Thatcher and his son Mark. A British
Virgin Islands-registered, Swiss-based, offshore company linked to him received
£8.5m, the report says, for its part in helping promote the 1999 arms contract.
Curtis, at home in Farnham, Surrey, yesterday denied to the Guardian that he
operated Brookland Management, the company concerned. He said he was only
involved in promoting "social programmes and job creation".
A lengthy affidavit from the SFO in London, leaked to the Mail & Guardian
newspaper in South Africa, accuses BAE of "covert" behaviour and of withholding
information.
SFO principal investigator Gary Murphy says in the affidavit, sworn on October
9: "I believe that BAE have sought to conceal from the SFO the involvement of
[Joe Modise aide] Fana Hlongwane."
BAE is also alleged to have drawn up an
untruthful "line" about Hlongwane for its press office in
2003. A seized document says that if asked if BAE had ever had any relationship
with Hlongwane, it was to say: "No, never - we knew him only as
a member of the minister's entourage."
It is alleged that in fact, the company
was paying him millions of pounds, through
a variety of secret routes.
A Swiss bank, HSBC in Geneva, has now frozen $11.4m of Hlongwane accounts and
sums of £400,000 and €3m controlled by him at Liechtenstein banks have also been
discovered and frozen.
A letter from a Leichtenstein judge is quoted in the dossier, saying: "It is
suspected that frozen assets belonging to Hlongwane ... are linked with active
and passive bribery and corruption by the company operating as
BAE Systems PLC,
using a system of international representatives."
The contents of all these documents have surfaced after being presented to a
South African judge as grounds for issuing search warrants on seven premises
last week. The Scorpions, the special police unit working on the case in South
Africa, currently faces disbandment because of political hostility to their
work. This follows the closedown of the SFO's own inquiry in London into BAE's
multimillion pound payments to members of the Saudi royal family. Tony Blair, as
prime minister, forced the SFO to call off the inquiry on alleged grounds of
"national security".
Bredenkamp has denied all wrongdoing. BAE would not respond to the specific
allegations, but said: "We continue to support the SFO in its inquiries, with
access to people, information and premises whenever requested and wholeheartedly
support a rigorous approach, in the hope that it brings to a conclusion
inquiries which are now in their fifth year."
With acknowledgements to
David Leigh, Rob Evans and The
Guardian.