President Thabo Mbeki faces an awkward trip to the World Cup this weekend. The focus of questions about the 1999 arms deal has shifted squarely onto him, with German investigators pursuing allegations that massive kickbacks were paid to help secure the contract to supply warships to the South African navy.
Prosecuting authorities in Düsseldorf are looking into about R140-million in bribes allegedly paid by bidders in the German Frigate Consortium, which has denied any wrongdoing.
German news magazine Der Spiegel broke the news of the investigation on Monday, a fortnight after raids were conducted on offices of consortium members Thyssen Rheinstaal Tecknik and Homwaldswerke-Deutsche Werft.
A part of the investigation, the Mail & Guardian understands, derives from unsubstantiated allegations directed at Mbeki himself – in a letter sent to German authorities in 2001.
The disclosures will add to pressure on the president regarding his own role in the defence acquisition process, which up to now has hinged on his amnesia about meetings he might have had with representatives of the French defence company Thales during the bid negotiation process.
According to Der Spiegel, one strand of the German investigation flows from ”as yet unproven” claims that ”a top South African politician had received a payment in the high millions via a Swiss bank account for his help in facilitating the deal”.
The allegation was made in a letter from a South African citizen received by the prosecutor’s office in 2001.
A well-informed German source told the M&G the letter alleged a meeting took place in Geneva in or around 1999, during which cash was handed over by a middleman operating on behalf of Thyssen.
According to people in South Africa and Germany familiar with the circumstances, the letter was sent by Nicholas Achterberg, a shadowy Johannesburg businessman who has strong German connections. The politician he supposedly implicated was Mbeki.
A former business partner, who asked not to be named, confirmed that he knew about Achterberg’s letter. He said the allegations made in the letter stemmed from an alcoholÂÂ-fuelled conversation over lunch between Achterberg, Philippe Muller, who headed a Thyssen subsidiary in South Africa at the time, and an unidentified Frenchman.
It was not possible to trace Achterberg, who is said to be living on a yacht in the Caribbean, but he did have a business relationship with the Thyssen group.
A spokesperson for Thyssen Krupp Marine Systems in South Africa confirmed that Muller had headed one of the conglomerate’s companies in South Africa, and that he had had dealings with Achterberg involving metals trading. Thyssen now believes Achterberg owes it large sums of money – raising the possibility that Achterberg’s claims were motivated by malice.
Thyssen Krupp ”has substantial claims against Achterberg arising from those deals”, the spokesperson said, stressing that Muller had ”absolutely nothing to do with the Corvettes [the frigates] whatsoever”. Muller has since left the company.
Presidential communications boss Murphy Morobe said he knew nothing about the letter or the investigation other than what had appeared in Der Spiegel and on German television.
Of Achterberg’s claims he said: ”He should have gone to the police in South Africa, there have been investigations into this issue for some years.” Mbeki would not be discussing the allegations with German Chancellor Angela Merkel, Morobe said, adding: ”There is nothing really new there.”
But that claim is belied by the main allegations reported by Der Spiegel.
The magazine left little room for doubt over whether kickbacks were paid: ”The investigators know that certain so-called UEs were paid in the course of the Corvette deal,” it said. ”UE is an abbreviation for ‘useful expenditure’ and refers to bribes paid to foreign companies and declared as tax deductible until the practice became punishable under German law in February 1999.”
Der Spiegel says the investigation of the South African deal flowed from an earlier investigation into ”useful expenditure” claimed by Thyssen on the sale of armoured vehicles to Saudi Arabia.
Tax investigators then also examined other Thyssen affiliates. In the process they ascertained that the company had included similar payments in the balance sheet for the Corvette deal.
Thyssen Krupp, however, said in a statement that it was confident that ”the investigations will not confirm the suspicions regarding the illegal payment of commission”.
But the German investigation is likely to prompt renewed scrutiny of the Corvette deal and Mbeki’s role during the bids.
In January 1995, then deputy president Mbeki visited Germany, a month after Armscor had announced that it was considering buying warships from either the Scottish shipyard Yarrow, or Spanish firm Bazan.
A German consortium involving Thyssen was out of the running. But Mbeki told Klaus Kinkel, the German foreign minister, and members of the consortium that the race was still open. This time the Germans were shortlisted.
That tender was ultimately abandoned in favour of a more comprehensive package, and the Germans were once again among the bidders, ultimately winning the R4,3-billion Corvette platform contract in 1998.
According to the auditor general’s Joint Investigation Team’s report on the procurement process, however, they had failed to meet tender specifications: ”With the exception of Bazan all the bidders failed to comply with the minimum evaluation criteria in respect of financing, technical requirements, and Defence Industrial Participation,” the report said.
The report went on to criticise the process further, saying ”the decision to allow bidders for the Corvette programme to supply information after the offers were submitted constituted a deviation from proper procurement practice”.
Independent Democrats leader Patricia de Lille, who in 1999 told Parliament she was in possession of a dossier that implicated senior African National Congress figures in taking bribes to influence the deal, this week called for an investigation into Mbeki’s role. ”What needs to be established is whether there was a link between his visit and the decision to shortlist the German consortium.”