/ 14 December 2007

Arms deal: ‘Ministers got millions’

It’s official: German prosecutors believe Tony Georgiadis, the shipping tycoon regarded as close to President Thabo Mbeki, helped channel millions of dollars in arms deal bribes to ”South African officials and Cabinet members”.

The explosive allegation is contained in a request for legal assistance, seen by the Mail & Guardian, that the German embassy in Pretoria forwarded to the Department of Foreign Affairs on September 28.

The document, a formal request for South African help to follow leads, presents the firmest outline yet of a criminal probe, led by state prose­cutors in Düsseldorf, into the sale of four naval corvettes to South Africa.

The German request follows a similar one from Britain last year, swelling a body of evidence that flatly contradicts government’s insistence that the main contracts in the controversial arms deal were not tainted by corruption.

Accused persons

The request lists 10 ”accused persons”, Georgiadis prominently among them, and states that contraventions of German anti-bribery legislation, fraud and attempted tax evasion are being investigated.

The other nine suspects are mostly executives from German companies making up the consortium chosen as preferred supplier for the corvettes in November 1998 and awarded the multibillion-rand contract in December 1999. Georgiadis this week flatly denied wrongdoing.

Georgiadis, of Greek extraction but London based, shipped oil to apartheid South Africa in contravention of sanctions and developed close relations with members of the previous government.

He extended his sphere of influence to the ANC after 1990, developing relations, according to several accounts, with Mbeki, Deputy President Phumzile Mlambo-Ngcuka, her husband and former national prosecutions head Bulelani Ngcuka and Penuell Maduna, a former minister.

The presidency has deflected questions about Mbeki’s relationship with Georgiadis. The M&G sent questions to presidential spokesperson Mukoni Ratshitanga in February. He responded in October, saying: ”I am advised that Mr Anthony Georgiadis has been in contact with the African National Congress since the early 1990s. Your questions should therefore be directed to the ANC.”

An inquiry directed to the head of the presidency in the ANC, Smuts Ngonyama, went unanswered until this week, when he said: ”I wouldn’t be able to answer any questions on this — I have absolutely no clue.”

Mbeki’s ear

Georgiadis reportedly had the ear of Mbeki while acting as a lobbyist for German arms interests during the acquisition process. Mbeki chaired the Cabinet subcommittee that oversaw the acquisition.

The M&G first highlighted Georgiadis’s role in February after the German magazine Der Spiegel revealed that Düsseldorf investigators were probing ”commission” payments of $22-million (about R150-million) to a company in Liberia. The M&G identified this company as Mallar Incorporated, a secretive letterbox company, and said that Georgiadis was believed to be behind Mallar.

The German request lists three amounts of ”bribe money” allegedly paid by the corvette consortium, led by Thyssen Rheinstahl Technik — $22-million, $3-million and DM1-million. It also confirms Georgiadis’s allegedly central role in the largest of the three.

Bribe money

The request states: ”For the payment of these bribe monies, so-called ‘commission agreements’ were arranged by Thyssen Rheinstahl Technik with Liberia-based Mallar, which is represented by Tony Georgiadis, who distributed the money, for an amount of $22-million.

”At least the major part of these amounts had been paid to South African officials and Cabinet members directly or indirectly after the [German] international anti-corruption law had become effective.”

Before February 1999, when this law came into effect, foreign bribery was not an offence in Germany.

Thyssen has strenuously denied wrongdoing. The company said this week: ”ThyssenKrupp is confident that the suspicion of illegal commission payments will not be confirmed in the further course of the public prosecution office’s investigations.”

The German document states that Georgiadis expressly denies he passed on any money to South African politicians or officials. It concedes that the names of the recipients ”are known only to a certain extent”.

Georgiadis told the M&G this week: ”I flatly deny that I have been involved in any wrongdoing and I have not been in any way involved in bribing anybody. Beyond saying the above I have no comment.”

Three cheques

However, the German document reveals that in a raid on the home of Christoph Hoenings, the top Thyssen executive involved in the South African bid, investigators discovered photocopies of three cheques for R500 000 each to the ANC, the Nelson Mandela Children’s Fund and the Foundation for Community Development. The latter is a Mozambican charity founded by Graça Machel, Nelson Mandela’s wife.

Independent Democrats leader Patricia de Lille last month revealed the existence of these payments, saying Thyssen had made them in January 1999. This was during contract negotiations after the German consortium was named preferred bidder.

None of these entities has admitted receiving the money. It now appears these amounts might have been paid by Georgiadis, although with Thyssen’s knowledge. The German document states: ”The accused Hoenings received these photocopies from the accused Georgiadis and was asked to keep them confidential.”

Hoenings was the Thyssen official who, in 1995, revealed that Mbeki had intervened to restore the German bid after Armscor had excluded the company from a shortlist drawn up during an earlier round of bidding for the corvette-supply contract. That process was aborted in favour of the later Strategic Defence Procurement Programme, which issued new tenders for jets, helicopters and submarines, as well as corvettes.

Thyssen and Shaik

It was also Hoenings who allegedly met Shamin ”Chippy” Shaik, then head of procurement at the department of defence, in July 1998. According to Der Spiegel, Hoenings — although he was not named by the publication — recorded in a memo that Shaik had asked for a payment of $3-million.

The German request now confirms that a lobby agreement for $3-million — the second amount it calls ”bribe money” — was signed with a London company, Merian Limited, represented by accountant Ian Pierce, the go-between allegedly nominated by Shaik in his meeting with Hoenings.

The request states that the money was paid to ”a South African official acting on behalf of Armscor” — erroneously identified in the document as Schabir and not Shamin Shaik — ”in order to motivate him in violation of his duties to support the delivery contract for the corvettes”.

Shaik has previously denied any wrongdoing.

Raids sought

The German request seeks South African assistance in carrying out ”search and confiscation warrants” issued by a Düsseldorf judge in June this year, with raids also being sought in Switzerland, the United Kingdom, Jersey and Monaco.

Raids are sought on several entities in South Africa (which are known to the M&G) to obtain information about the ”flow of bribe payments” and ”agreements between the participants”.

The German request has not been acted on yet.

The Foreign Affairs Department passed it on to the department of justice, which has to allocate it to either the police service or the Scorpions to pursue. Justice and Constitutional Development Department spokesperson Zolile Nqayi said this week the request was still with his department, which was ”in touch with the Germans and — awaiting further information from them that we requested”.

Telltale tax

The German document reveals how Thyssen’s alleged desire to deduct commission payments from tax as ”business expenses” first alerted the authorities.

The German Income Tax Act outlawed such deductions after the end of 1998, if the payments constitute an illegal act.

Thyssen, the request alleges, ”falsely declared that these payments had been made for the bid — as early as 1998 and that in the end they did not know who was the recipient of these monies”.

The who’s who of ThyssenKrupp

A who’s who within multinational ThyssenKrupp is named in the German prosecutor’s office investigation of the sale of four corvettes to South Africa, write Stefaans Brümmer and Sam Sole.

The German request for legal assistance names nine German citizens as ”accused persons”.

At the top of the list of suspects is Jürgen Koopmann, who was described in 1997, when a German delegation presented a comprehensive arms package proposal to South Africa, as managing director of the Thyssen shipbuilding consortium.

In 1995, during an earlier acquisition process for corvettes only, Koopmann was quoted as complaining that Armscor had stuck to a shortlist excluding Germany, despite two assurances from Thabo Mbeki, then deputy president, that Germany was still in the race.

Accused alongside Koopmann are Christoph Hoenings and Ulrich Scheel, both of Thyssen subsidiary Thyssen Rheinstahl Technik, and both signatories to the corvette contract.

Hoenings, like Koopmann, told the media in 1995 that Mbeki had declared the bids for the corvettes still ”open”, even after Armscor had composed a shortlist excluding the German bid.

That process was eventually aborted and Germany won the corvette and submarine contracts after a new, comprehensive acquisition process was launched.

Also on the list are Sven Moeller, ThyssenKrupp representative in South Africa; Dr Hans-Erich Forster, who resigned as a member of ThyssenKrupp’s supervisory board in 2002; Herbert von Nitzsch, who served as chief executive of ThyssenKrupp’s Blohm + Voss shipyard subsidiary between 1996 and 2003; Klaus-Joachim Müller, a ThyssenKrupp executive, and Klaus Bauernsachs, a Blohm + Voss manager.

Although he is not named as an ”accused person”, Monaco-based businessman Rolf Wegener is also implicated.

The German request says that for the payment of suspected ”bribe monies” Thyssen arranged ”commission agreements”, including with an ”RW”, apparently Wegener — who is no stranger to controversy, or arms deals.

When a Thyssen subsidiary concluded a sale of ”Fuchs” wheeled tanks to Saudi Arabia in 1991, the company set off DM220-million of ”necessary expenses” — often a euphemism for commission payments — against taxes.

A portion of that money went via a Panamanian postbox company that investigators linked to Wegener.

Wegener’s explanation was that he was an ”export consultant” for Thyssen after all.

The Saudi deal generated tremendous controversy in Germany, because of allegations that a portion of the commissions was channelled as kickbacks to fund the Christian Democratic Union of then chancellor Helmut Kohl.

A spokesperson for ThyssenKrupp Marine Systems this week commented: ”Since the investigations are ongoing, we cannot make public comments on the matter. ThyssenKrupp is keenly interested in obtaining full clarification of the matter and to this end has formed a task force that is investigating the allegations with the help of external experts.

”We are cooperating fully with the investigating public prosecution office. However, on the basis of the internal investigations carried out, ThyssenKrupp is confident that the suspicion of illegal commission payments will not be confirmed in the further course of the public prosecution office’s investigations.”