/ 31 March 2002

Thabo Mbeki’s brother and the arms deal

Johannesburg | Wednesday

Reports that President Thabo Mbeki’s brother was benefiting from the arms deal had raised questions of serious conflicts of interest, the Democratic Alliance said on Tuesday.

The party’s representative on South Africa’s controversial arms deal, Raenette Taljaard, said recent ”revelations” suggested that a business venture by Moeletsi Mbeki and former Independent Development Corporation (IDC) chairman Diliza Mji stood to benefit handsomely from the Corvette gearbox deal.

Her comments follow the announcement on Tuesday that black empowerment company Dynamic Global Defence Technologies (DGDT) had obtained a 25% stake in the South African armoured vehicle business of the British company Vickers Defence Systems.

The local Vickers subsidiary is called Vickers OMC.

DGDT chairman Mji, and Vickers Defence Systems’ chief executive, Archie Hughes, signed the R25-million partnership deal in Pretoria on Tuesday.

The British company is part of Rolls-Royce plc.

Taljaard said: ”Revelations that Mbeki and Mji have acquired a 25% stake via DGDT in Vickers OMC, where Chippy Shaik played an instrumental role in dropping Maag for Vickers, add fuel to the fire of conflicts of interest.”

The shareholders of DGDT are KMM Investment (Pty) Ltd, an investment holding company jointly owned by Mbeki and Khapametsi Maleke, and Goldenwood Investments (Pty) Ltd which belongs to Mji.

Mji said the deal was a milestone in black empowerment in South Africa. The deal with DGDT was the fulfilment of a black empowerment undertaking made by Vickers Defence Systems when it acquired from Reunert what was then called Reumech OMC in 1999.

However, Taljaard claimed that in September 2001 Mji had used a R22,5-million IDC loan to fund his own business interests in the defence industry.

”The DA is deeply concerned at the flagrant use of taxpayers money to fund personal gain for those well-connected to the ruling elite”.

Taljaard said Shaik tasked a senior Armscor official to write to the German Frigate Consortium to inform it of the importance of the Reumech Gear Ratio to Armscor and the Department of Defence.

”With the President’s brother now personally benefiting from the controversial Strategic Defence Procurement, courtesy of Shaik’s intervention, questions about Shaik resurface — did Shaik act as an agent for the well-connected in the arms deal? If so, whose agent was he? Why is Mr. Shaik being extensively protected and why has no evidence been found against him?”

Taljaard said Mji had further potential conflict of interest and ethical explaining to do. – Sapa