Media Statement

Economists Allied For Arms Reduction -- South Africa

5 September 2003 

ECAAR-SA
3B Alpine Mews
High Cape
Cape Town 8001

021-465-7423
ecaar@icon.co.za 

The Government Communications and Information Service (GCIS) outburst that Patricia de Lille is telling "blatant lies" is indicative how the arms deal "chickens are coming home to roost". The arms deal has been described as the litmus test of South Africa's commitment to democracy and good governance. The executive has turned Parliament and Chapter Nine institutions into rubber stamps. Cabinet ministers have had no qualms about lying under oath or of defying court orders. Is South Africa's much-lauded constitutional democracy being thrown to the winds?

 Patricia de Lille was subjected to similar abuse in September 1999 when the Memorandum was released to the media. She submitted the allegations and evidence of corruption to Judge Willem Heath's Special Investigation Unit. That evidence included the c2i2 information relating to the combat suites to be installed in the German-supplied frigates. Heath was subsequently dismissed by President Thabo Mbeki. c2i2 is proceeding with litigation against the government.

The facts of then Deputy President Thabo Mbeki's interventions in favour of German warships are recorded in press reports of May 1995. The Cape Times on May 19, 1995 in an article headlined "Battle of the Corvettes" reported

 The Germans, who until recently seemed to be out of it, originally offered a package of technological transfers, with heavy emphasis on the RDP. The other bidders have been puzzled over how they have been let back in, but it emerged this week that deputy president Thabo Mbeki was lobbied on this subject during his European visit in [sic] February. Representatives of the German consortium confirmed this week that they had been invited to reopen the bidding process. One -- unconfirmed -- rumour has it that Germany has offered to buy the Rooivalk helicopter which South Africa has desperately been trying to export.

The Weekend Argus on May 21, 1995 in an article headlined "Corvettes - Thabo all at sea" reported :

 A political row is brewing over the role of Deputy President Thabo Mbeki in international tenders for new corvettes for the South African Navy. [Defence] ministry sources said tenders had been re-opened to accept late bids from Germany, France and Denmark and that the short-list of two -- Scotland's Yarrow Shipyard and Spain's Bazan Shipyard -- had been shelved. Armscor announced on December 24 that tenders from Yarrow and Bazan would be considered in the next round of evaluations. It said Frigate Consortium (a German consortium involving Blohm and Voss shipyard and the industrial giant Thyssen), Svenborg Shipyard of Denmark and DCNI of France had been eliminated. However, Weekend Argus has established that during his visit to Germany between January 6 and January 14 -- a fortnight after the Armscor announcement -- Mr Mbeki told German foreign minister Klaus Kinkel and directors of the German consortium that "the race was still open". Christoff Hoenings, a director of Thyssen telephoned Weekend Argus from Germany yesterday to say that Mr Mbeki had told him and his directors in January that "the race is still open to all contenders". Mr Mbeki had repeated this during a conversation with German foreign minister Klaus Kinkel, said Mr Hoenings. Mr Hoenings said the consortium was putting together revised counter-trade proposals which would be "of great benefit to South Africa".

 These reports were confirmed in March 1996 by former German Ambassador to South Africa, Ambassador Stabreit who during a private visit to this country was my houseguest for ten days. Ambassador Stabreit advised me that the German government had been determined to win the naval contracts "at all costs".

 Noseweek magazine's analysis in June 2001 puts the matter into context and perspective

 The threat posed by the [arms deal] investigation went far beyond the possibility of individual corruption. It is becoming increasingly clear that the arms procurement is intended to play a key strategic role in the President's ambitions in South Africa and Africa. Following the failure of the government's conservative fiscal policy (the GEAR so hated by his Alliance partners) to attract foreign direct investment, the President appears to have naively accepted assurances from the likes of German chancellor Helmut Kohl that the arms deal could be used to leverage foreign investment (via offset or counter-trade requirements) and thereby kick-start domestic growth. The ability to pose a significant military threat also played an obvious role in Mbeki's ambitions for pan-African influence.

Chancellor Helmut Kohl's acceptance of funding from armaments and related companies became a major political scandal in Germany. The Memorandum, released in September 1999 before the arms deal contracts were signed in December, includes

Thyssen is the preferred bidders for the corvettes (Frigates). Ferrostaal is the preferred bidder for the submarines. Both companies [sic] is supported by Tony Georgiades who is facilitating the success of their bid. FW de Klerk is married to Elita who was married to Tony Georgiades. We know that Tony was bankrolling the Nationalist Party and its leaders. FW de Klerk former spokesperson Richard Carter who is currently Corporate Communications Manager of BMW, is working very closely with Tony Georgiades.

Instead of 2 000 ton corvettes sought by the SA Navy, South Africa was induced by Germany to buy 3 500 ton frigates. The Joint Investigation Report into the Strategic Defence Procurement Packages presented to Parliament in November 2001 reveals that the frigate consortium was selected despite its complete failure to meet the tender specifications. Paragraphs 7.7.1 and 7.7.2 of that report declare "with the exception of Bazan, all the bidders involved in the corvette procurement programme failed to comply with the minimum evaluation criteria"..."The decision to allow bidders to supply information after the offers had been submitted constituted a deviation from proper procurement practice".

 The arms deals were government-to-government transactions in which the needs of South Africa and its people were ignored. Germany would win the warship contracts, and sub-contracts would be awarded to France including Thomson CSF. Britain and Sweden would win the warplane contracts. And Italy would win the helicopter contracts. Deputy President Thabo Mbeki chaired the ministerial committee, which also included the Minister of Defence, the Minister of Finance, the Minister of Trade and Industry and the Minister of Public Enterprises.

 The tender procedures were obviously a sham. The German contracts reflected the political influence in the Kohl administration of the steel industry and related armaments industry. The BAe contracts reflected the political influence of BAe Systems within British governments, including kick-backs to both the Conservative and Labour parties. This is how political parties are funded in Europe, as evidenced by repeated arms corruption scandals.

 South Africans are owed explanations from President Mbeki about his interventions in January 1995, and why Germany was awarded the frigate and submarine contracts.

 Terry Crawford-Browne
Economists Allied For Arms Reduction -- South Africa
ECAAR-SA
5 September 2003
3b Alpine Mews, High Cape, Cape Town 8001
021 465 7423
Ecaar@Icon.co.za

With acknowledgement to Terry Crawford-Brown and ECAAR.