Allegations of corruption

It wasn’t long before allegations of corruption began to surface. In a report dated 18 January 2001, the Western Cape’s director of public prosecutions, Advocate Frank Kahn, and Advocate Jan Lubbe, working for the Heath special investigating unit, recommended further investigation into the deal.

The Heath unit, the forerunner to today’s Special Investigating Unit, had been set up by former president Nelson Mandela in 1996. It was headed by former judge Willem Heath, but he resigned in 2001 because of a constitutional court ruling stating that a judge could not head an investigating unit. In the same year, the new SIU was created by President Thabo Mbeki, by Proclamation R118 issued on 31 July 2001.

In 2000 a joint investigative team, comprising the office of the public protector, auditor-general and the national director of public prosecution (NDPP), began investigating the arms deal. The investigation arose out of a special review conducted in 1998 by Auditor-general Shauket Fakie, in which various issues were referred to – Parliament’s standing committee on public accounts (Scopa) recommended that these issues become the subject of an “independent and expert forensic investigation”, as the joint report of the investigation, released in November 2001, describes it.

Although Scopa included the Heath unit in its recommendation, the unit was not part of the investigations, partly because of the constitutional issue and partly because the ruling party did not approve of Heath’s involvement.

Lubbe later revealed that former justice minister Penuell Maduna had contacted him and Kahn in July 2001, seeking their advice on whether there was anything in the arms deal that warranted an investigation. This was some months before the joint report was released. In their response to Maduna Kahn and Lubbe said:

“[T]here are sufficient grounds in terms of the Special Investigating Units and Special Tribunals Act No 74 of 1996, for a special investigating unit to conduct an investigation, and, in our opinion, such an investigation is warranted.”

But the joint report concluded that “no evidence was found of any unlawful or improper conduct by the government” and that there were “no grounds to suggest that the government’s contracting position is flawed”.

This despite Fakie’s special review, which detected “material deviations from generally accepted procurement practice”, many allegations pertaining to contracts awarded to subcontractors; potential conflicts of interest that had not been adequately addressed; and doubts about offset arrangements. He recommended a forensic audit.

In 2003, however, there were new claims of irregularities in the tender process. Nigel Bruce, a DA MP, produced a letter showing that African Defence Systems was allowed to drop its bid after the closing date, from R32.4-million to R29.64-million a day. This allowed the company to secure the sub-contract from under the noses of rival C2I2 Systems, for the system management system of the combat suite for the South African Navy’s four new corvettes. Shauket Fakie said this was because the company had “made a mistake with its figures”.

In 2008 Thabo Mbeki was said to have received bribes of some R30-million to guarantee that the submarine contract went to a German consortium. The claims were revealed in the press, which reported that they stemmed from a “secret report” put together the year before by a UK specialist risk company. According to the newspaper, Mbeki allegedly gave R2-million of the money to Zuma and the rest to the ANC.

Presidential spokesperson Mac Maharaj, then minister of transport, has also been implicated in arms deal bribery. In 2011 the Sunday Times reported that Maharaj was said to have received bribes from French weapons maker Thales, which is “at the centre of an arms deal probe”. The paper said that Maharaj received 1.2-million French francs (R2.3-million) through an offshore bank account registered in his wife’s name. Shabir Shaik’s Swiss bank account was used as a conduit by Thales to channel the money into the offshore account, the newspaper alleged.

Was there a cover-up?

In October 2009 members of Parliament’s Scopa received a 600-page document submitted by Cape Town businessman Richard Young of C2I2 Systems, one of the losing bidders.

The document appeared to show that the final joint report had been amended to cover up irregularities.

In October 2010 the Hawks, who had been prompted by Young’s revelations to conduct their own probe into the arms deal, suddenly withdrew the investigation. This was announced by Hawks head Anwar Dramat, and the news was not well received, with many expressing disappointment and disbelief.

Regarded as a whistleblower, Young later submitted an affidavit to the Constitutional Court in support of a case filed by campaigner Terry Crawford-Browne, the author of Eye on the Money, an exposé of the arms deal. Crawford-Browne appealed to the Constitutional Court after the Hawks abandoned their investigation because, he said in his affidavit, the huge body of evidence of corruption that had been accumulated made it “irrational and therefore unconstitutional” for Zuma to not order a commission of inquiry into the arms deal.

“The main relief which I seek in this matter is an order compelling the appointment of a commission of inquiry into the arms deals,” he said.

The court gave Zuma a deadline by which to convince it that such a commission should not be appointed, but the president failed to meet the October 2011 deadline and was compelled to make the appointment.

Another whistleblower was current Cape Town mayor Patricia de Lille, who as far back as 1999 submitted documents to Parliament that implicated senior ANC officials in taking bribes related to the arms deal. No action was taken on the De Lille Dossier, as it was known. In a 2007 speech before foreign media, De Lille said that she had been trying for years to expose the dodgy goings-on behind the arms deal, and that the ultimate responsibilty rests with former president Mbeki, who has never been asked to account for any of it.

Overseas suppliers also fingered

Allegations of bribery and corruption have also been levelled at suppliers.

In 2006 German investigators in Düsseldorf probed allegations of bribes, worth up to R137-million, paid to South African politicians, officials and middlemen by the Thyssen group, which led the ship-building consortium. Reports said that Chippy Shaik, at the time the head of acquisitions in the Department of Defence, had asked for money in return for the contract. The story broke in German publication Der Spiegel. But in 2010 the German investigation was called off.

In 2007 the UK’s Serious Fraud Office began an investigation, with the help of local authorities, into the possibility that the BAe deal was compromised by payment of more than R1-billion in “commissions”. BAe could not provide evidence that any services rendered by its agents rendered justified the payment of such an amount.

In 2012 it was Sweden’s turn to release controversial information around arms deal bribery and corruption, this time involving Saab and the Gripen bid. The protagonist was apparently Stefan Löfven, former head of Swedish industrial union IF Metall, and now a politician. The information came via Swedish investigative programme Kalla Fakta, which claimed that in 1999 Löfven and his good friend Moses Mayekiso, a former Numsa secretary-general, were involved in bribes of around R30-million, given under cover of the establishment by Numsa of an industrial school modelled on Saab’s advanced training facility in Sweden. The initiative was supported by Saab and Metall, but Terry Crawford-Browne and Patricia De Lille claimed that the school was a money-laundering front. The allegations were made as part of the De Lille Dossier.

In mid-2013, according to a DefenceWeb report, new allegations surfaced in the Sunday Times against BAe. It was claimed that the company bribed the late former public enterprises minister Stella Sigcau by offering to give her daughter Portia a marketing job in London, allocating money to support Portia for three years, introducing her to BAe banker Lloyds Bank, and providing other perks during her stay in London. The information was provided by an anonymous former BAe employee via encrypted faxes, which are said to now be held by the Seriti Commission.