Press Statement by :

Economist Allied for Arms Reduction - South Africa

13 February 2004

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

021-465-7423
ecaar@icon.co.za 

South Africa's long-running arms deal scandal comes to a head on Tuesday, 17 February when ECAAR-SA's application will be heard in the Cape High Court to have the loan agreements declared unconstitutional and thus null and void. The purpose is to collapse and cancel the arms deal. ECAAR-SA first filed its application in November 2001. The government's extraordinary response then was to affirm under oath that the loan agreements stand independently of the arms deal. This was tantamount to arguing that the purchase of a house is independent of its mortgage.

In March 2003 ECAAR-SA won its "discovery" application for the affordability study documents that warned cabinet ministers of the risks of the arms deal. In an effort to defy and frustrate that court order, Ms Maria Ramos attempted to block publication of those documents arguing that it is not in the national interest for South Africans to know how the government conducts its financial affairs. The government backed down in November 2003 when faced with the prospect of a contempt-of-court judgment.

In August 2002 ECAAR-SA had obtained over the internet the British-South African government loan agreements in respect of the BAe Hawk and BAe/Saab Gripen fighter aircraft. Government's counsel conceded in court in March 2003 that these documents are authentic. He then attempted to intimidate the court saying that it would be naive to cancel the arms deal because the consequences would be so severe.

The representation, covenant and default clauses of the main agreement include gold clauses, and rights of seizure over South African export earnings and foreign assets. In signing this agreement on 25 January 2000, the Minister of Finance has for 20 years ceded control over South Africa's economic and financial policies to European banks and governments and the International Monetary Fund. There is, in addition, no authority either from Parliament or in law for these transactions. ECAAR-SA argues however, that the Constitution is the supreme law of South Africa, and agreements fraudulently and unlawfully concluded are null and void. The financial consequences of cancellation will therefore fall to the British and German (rather than South African) taxpayers who have underwritten the arms deal contracts.

The arms deal is strategically, economically and financially irrational. The Minister of Finance and his colleagues were warned of the risks, and were also alerted to the corruption allegations that have accompanied the arms deal. Attached is a 23 page document detailing ECAAR-SA's arguments, of which two pages are a summary, plus 11 pages of appendices I and II. Please note that there is an embargo until Tuesday morning on appendix II, but that the rest of the document may be published without restriction.

ECAAR-SA is being represented by Advocates John Van Der Berg and Paul Eia who are being briefed by Attorney Charles Abrahams.

Terry Crawford-Browne

With acknowledgements to Terry Crawford-Browne and ECAAR-SA.