Saab admits secret arms-deal payments

In a disclosure likely to re-ignite controversy about the long-running arms-deal scandal, Swedish multinational Saab has disclosed that R24-million paid to defence consultant Fana Hlongwane was hidden from Saab by its partner in the deal, BAE Systems.

Hlongwane, an adviser to Defence Minister Joe Modise at the time the deals were negotiated, has received so-called “commission” payments of more than R200-million from entities controlled by BAE.

Until now, Saab, which bid to supply its Gripen fighter jet to South Africa in a joint venture with BAE, has denied knowledge of payments to Hlongwane, but Swedish media disclosures of a contract between Hlongwane Consulting and a company called Sanip prompted Saab to re-open its investigation.

Sanip, jointly controlled by BAE and Saab, was the vehicle for managing the industrial participation—or offset—obligations generated by the South African deal.

The Hlongwane contract purported to reward him for consultancy services in meeting those offset obligations.

On Thursday, Saab confirmed that the contract with Hlongwane was concluded without its knowledge, in spite of the company being in a joint venture.

“Our review revealed that about R24-million was paid from BAE Systems to Sanip. These payments were transferred to the South African consultant shortly thereafter.

“These transactions have never been entered into the accounts,” said Saab’s president and chief executive, Håkan Buskhe.

“A person employed by BAE Systems has, without Saab’s knowledge, signed transactions as well as signing the audited and apparently inaccurate financial statement for 2003.”

The company denied there was a basis for the claim that the payments constituted a bribe, but said: “We are still highly critical — that the company’s bank account was utilised as a payment tool.”

The covert nature of the contract and the payments casts new doubt on national director of public prosecutions Menzi Simelane’s decision to halt the investigation of Hlongwane.

Saab said all investigation material had been handed over to Sweden’s chief -prosecutor, Gunnar Stetler, at the national Anti-Corruption Unit. Stetler is in the process of deciding whether to re-open a criminal investigation of the deal in Sweden.

In March 2010 Simelane ordered the Asset Forfeiture Unit to abandon its bid to freeze Hlongwane’s assets, mostly held in offshore accounts.
The unit had obtained an interim order and was preparing to make a  case to seize the assets as the proceeds of crime.

Simelane invited representations from Hlongwane’s attorneys and  thereafter accepted that the consultancy agreements presented to him were above board, in spite of the fact that there was no evidence of  legitimate services provided to account for the enormous sums paid. The revelation that BAE hid at least one agreement from its Swedish  partner casts further doubt on Simelane’s decision.

The M&G Centre for Investigative Journalism, supported by M&G Media and the Open Society Foundation for South Africa, produced this story. All views are the centre’s.

Stefaans Brümmer

Stefaans Brümmer

Stefaans is an old hand at investigations. A politics and journalism graduate, he cut his reporting teeth at the Cape Argus in the tumultuous early 1990s; then joined the Mail & Guardian as democracy dawned in April 1994. For the next 16 years (a late-1990s diversion into television and freelancing apart), the M&G was his journalistic home and launch pad for award-winning investigations focusing on the nexus between politics and money. Stefaans has co-authored exposés including Oilgate, the Selebi affair, Chancellor House and significant breaks in the arms deal scandal. Stefaans and Sam Sole co-founded amaBhungane in 2010. He divides his time between the demands of media bureaucracy (which he detests), coaching members of the amaBhungane team, and his first love, digging for dung.
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