/ 21 September 2008

Swedes join arms probe

Amid demands for a judicial inquiry into the arms deal, the Mail & Guardian has learned that a new front has opened up in the international investigation of the South African transaction.

Christer van der Kwast, director of the Anti-Corruption Unit of the Swedish Prosecution Authority, told the M&G he opened an investigation into the sale of Saab Gripen fighters to South Africa ”about three months ago”.

Van der Kwast said the United Kingdom’s Serious Fraud Office (SFO) was conducting the main investigation. The SFO is investigating allegations that UK-based defence giant BAE-Systems paid bribes to secure the South African contract.

The UK firm owns a 20,5% share of Sweden’s Saab, which builds the Gripen. BAE led the drive to sell Gripens, as well as its own Hawk jet-trainers, to South Africa.

Media investigations have put BAE at the centre of an elaborate web of international corporate and legal fronts used to pay commissions to covert agents in arms deals, including the South African deal. The SFO has been investigating allegations that some of the commission payments amounted to bribes.

The M&G has previously reported allegations that late defence minister Joe Modise’s special adviser, Fana Hlongwane, received huge payments from BAE. This emerged from a 2007 SFO request to South Africa for legal assistance, which the M&G has seen.

It stated: ”Documents disclosed by BAE have revealed that Hlongwane entered into a general consultancy agreement with BAE in 2002 on a retainer of £1-million [R14-million] per annum. In 2005 there was an agreement to pay $8-million [R55-million] as a settlement figure to Hlongwane in relation to work done on the Gripen project.” Hlongwane has not explained why he should have been rewarded by BAE.

Van der Kwast said the SFO probe had reached the stage where he had to conduct interviews and inquiries to see what Saab executives knew of BAE’s activities. ”I have taken actions,” he said, though he declined to say whether documents had been seized or executives interviewed. But he told Swedish television: ”The work is very difficult, since [this is] big money. The possible beneficiaries are senior representatives of the government or sit in other high posts. They wish, of course, no transparency.”

Some South African officials indeed appear to be pursuing a ”no transparency” approach. The M&G has established that justice department director general Menzi Simelane and prosecutions boss Mokotedi Mpshe met the SFO about a month ago.

A source privy to a report on the meeting said Simelane in effect attempted to discourage the SFO from continuing its South African probe.

While the SFO investigation into BAE’s Saudi contracts was shut down by the UK government after the Saudis threatened to end intelligence co-operation, the SFO emphasised that other probes would continue.

But it appears that Simelane believed the entire SFO investigation had stopped. At a press conference on August 6 he was asked about allegations of foot-dragging in response to attempts by the SFO to obtain local assistance. He responded: ”As you may know publicly, the Serious Fraud Office terminated the investigation — on that basis is there [still] a request for mutual legal assistance?”

The M&G understands that at the meeting with the SFO Simelane took the same approach. He declined to answer questions this week, referring queries to Mpshe. Mpshe had not responded at the time of going to press. SFO spokesperson David Jones said only that ”the investigation into the BAE contract with South Africa is continuing”.