Arms deal 'financially raped' South Africa, says critic

The Pretoria-based Seriti commission of inquiry into the 1999 arms deal. (Madelene Cronje, M&G)

The Pretoria-based Seriti commission of inquiry into the 1999 arms deal. (Madelene Cronje, M&G)

The South African financial system was exploited when government colluded with arms manufacturers during the 1999 arms deal, the Seriti commission of inquiry heard on Wednesday.

“South Africans have been financially raped by the international war business and their governments, albeit with the collusion of our government,” arms deal critic Terry Crawford-Browne told the inquiry’s hearings in Pretoria.

In his sworn statement, Crawford-Browne said that in 2005, Barclays Bank used the loan agreement with British arms manufacturer BAE Systems and its “catastrophic” default clauses to strong-arm then finance minister Trevor Manuel into approving the takeover of Absa bank.

“Absa and its South African clients have since been milked by Barclays Bank and, as payback, Ms Maria Ramos [now Maria Manuel] was appointed chief executive of Absa, which is currently being rebranded to Barclays Africa,” said Crawford-Browne. He said the conflict of interest was glaring. “Given Barclays’s reputation for corruption and malpractices, it beggars belief that Mr Manuel not only approved the takeover of Absa, but trumpeted that it represented a massive vote of confidence in South Africa.”

Irrational purchase
He said it was irrational for the new South African government, which had inherited an almost bankrupt economy, to buy lavish military hardware.

“The purchase was fraudulently disguised through the offset programme as some unique opportunity to stimulate South Africa’s economic development and to create jobs.” He said the arms deal was “guesstimated” to have cost South Africa more than R70-billion, which was likely grossly understated.

Crawford-Browne said evidence showed that Barclays Bank of England financed the acquisition of the BAE Hawk and the BAE/Saab Gripen fighter aircraft. Commmerzbank of Germany financed the purchase of the four frigates and three submarines. Société Générale in France financed Thomson CSF combat suites in the German frigates. Mediocredito Centrale in Italy backed the purchase of 30 Augusta helicopters.

Crawford-Browne said the Commerzbank foreign loan agreements for the frigate purchase contracts ran for 13 years and should have been repaid by 2012. The loan agreement for the submarines was extended until 2016. The Barclays Bank loan for the Hawk and Gripen fighter jets was for 20 years to 2019.

Financial ‘liabilities’
Crawford-Browne said the testimony of Andrew Donaldson, a deputy director general at the treasury, indicated that “the liabilities” had been extended to 2021.

President Jacob Zuma appointed the commission three years ago to investigate alleged corruption in the arms procurement deal.

Government acquired, among other hardware, 26 Gripen fighter aircraft and 24 Hawk lead-in fighter trainer aircraft for the air force, and frigates and submarines for the navy.

Internationally, Crawford-Browne said the British Export Credit Guarantee Agency was notorious for corruption and for blocking investigations into bribes paid by BAE, its largest customer. “Those European governments, their export credit agencies as well as the banks, dismally failed to undertake due diligence to ensure that there was no bribery or other elements of fraud in the awarding and securing of the arms deal contracts.”

‘Most corrupt square mile’
Crawford-Brown said it was little wonder the City of London was sometimes referred to as “the most corrupt square mile anywhere on the planet Earth”.

“The BAE bribes for the arms deal were laundered through a BAE front company in the British Virgin Islands called the Red Diamond Trading Company for payments to ‘bagmen’ including Fana Hlongwane, John Bredenkamp and the late Richard Charter,” said Crawford-Browne.

Hlongwane was adviser to former defence minister Joe Modise. “The trust funds established by Hlongwane to handle the BAE bribes were set up in Liechtenstein and elsewhere by a lawyer who for years worked for [former] British prime minister Margaret Thatcher and her family.” 

Modise ‘poisoned’
Meanwhile, the Seriti commission heard that Modise was poisoned.

“I was told by Bheki Jacobs six weeks before Mr Modise died that he was being poisoned, and that his death would be ascribed to cancer,” Crawford-Browne told the inquiry’s hearings.

“Mr Modise was known to have many enemies and it is also known there was considerable animosity between him and Mr Chris Hani dating from their times in exile.”

Bheki Jacobs, also known as Uranin Vladimir, Hassan Solomon, and Hassan Osman, died at his mother’s home in 2008 after a six-month battle with cancer.

Crawford-Browne said Jacobs was an ANC functionary, trained in the Soviet Union as an intelligence operative.

In 2003, Jacobs was arrested, and later exonerated, for allegedly plotting an assassination. The charge of conspiring to commit murder was watered down and finally dropped.

At the time, Jacobs reportedly believed his one-time comrade and later nemesis, Mo Shaik, to be behind his surprise arrest. They had both been involved in the ANC’s intelligence structures in the early 1980s.

Crawford-Browne testified that there were allegations that when Hani was assassinated in 1993, he was on the verge of exposing Modise’s involvement in, and corruption relating to, the arms deal.

“It has been alleged that Mr Janusz Walus was ultimately employed by the [British arms manufacturer] BAE, perhaps by way of John Bredenkamp, the Rhodesian/Zimbabwean who was the second-largest recipient of those BAE bribes,” he told the inquiry.

Red herring
He said blaming Clive Derby-Lewis for Hani’s murder was merely a red herring to blame white right-wing elements, diverting attention from the British arms industry.

Derby-Lewis was convicted of conspiring to kill SA Communist Party general secretary Chris Hani by providing the gun Polish immigrant Walus used to kill him in the driveway of his home in Boksburg, on the East Rand, on April 10 1993.

The 78-year-old former Conservative Party MP, who was sentenced to 25 years behind bars, has served more than 20 years of his sentence.

Derby-Lewis was initially sentenced to death, which was commuted to life imprisonment when the death penalty was abolished in 1995. He has been repeatedly denied parole.

On Wednesday, Crawford-Browne said Jacobs told him that an investigating team’s report into the arms deal was being doctored pending Modise’s death “so that dead men can tell no tales”.

“I have now consequently reported the allegations of poisoning to the deputy commissioner of police in the Western Cape, but no action was taken,” he said. – Sapa

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