Millions of rand paid to shadowy Tunisian fixer
The Mail & Guardian can reveal the first evidence suggestive of bribery in the R26-billion Gautrain contract: more than a quarter of a billion rand in “commission” paid to a shadowy Tunisian fixer. The money came from Canadian multinational Bombardier Transportation, the lead partner in the Bombela consortium that won the tender in 2005 to build and operate the Gauteng rapid-rail system. Although there is no specific evidence of onward flow to politicians and officials, the Bombardier payment is remarkably similar to the billion rand in commissions — which investigators regard in part as intended bribes — splurged by Britain’s BAE Systems during the controversial arms deal. Similarities in the Bombardier and BAE payments include like-worded agency contracts, very large offshore payments in case the tender is won and even a related cast of characters. The Tunisian who received the Bombardier commission is Youssef Zarrouk, an international arms and projects fixer who was influential in the notoriously corrupt regime of Ben Ali, the first president toppled in the Arab Spring last year. In a call from Tunisia this week, Zarrouk confirmed receiving millions of dollars from Bombardier as its “agent”, but both he and Bombardier denied bribery. Bombardier insisted it followed best practice in such agreements and Zarrouk said: “No, no, no, no, these people of Bombardier, they don’t want corruption.” The M&G has obtained an early version of the “representative agreement” between Bombardier and Zarrouk’s Tunis-based All Trade Company. It envisaged a success fee of 6% of the contract value. Based on Bombardier’s reported $900-million (now R7.65-billion) share of the Gautrain contract, this would have given Zarrouk a commission of $54-million. But Zarrouk said that Bombardier had subsequently whittled down the amount. He claimed not to remember the final figure. Another source with knowledge of the situation, who asked not to be identified because of the sensitivity of the matter, said that the final figure was now $35-million (about R300-million). Arms deal echo At the time of the 2002 to 2005 Bombardier campaign to win the Gautrain contract, Zarrouk was close to Jean-Marc Pizano, a Frenchman with a long history in South African arms projects through his local company Advanced Technologies & Engineering (ATE). The latter upgraded Mirages for the apartheid regime, helped to introduce arms deal fall guy Schabir Shaik to the arms trade in the mid-90s and got its own slice of the arms deal pie by producing navigation and weapons systems for BAE Systems. Pizano became a significant player in the Gautrain campaign, tasking staff at ATE to help. Zarrouk claimed to have paid him an $8-million share of his commission, but Pizano told the M&G: “That is an absolute lie. I would be glad if that was the case, but it is a lie. I have not heard from him in the past three or four years, which is good … He took a lot of money, I suppose, but I never received a cent for my involvement in good faith.” One of Pizano’s partners in ATE was Richard Charter, a key local agent for BAE during its campaign for arms-deal tenders. An affidavit from Britain’s Serious Fraud Office, previously reported on by the M&G, details how BAE paid an offshore company of Charter’s more than £26-million, including $4-million in December 1999 as the contract between BAE and the South African government for the sale of military jets was signed. Charter died in a 2003 kayaking incident on the Orange River that is yet to be fully explained. The version of the representative agreement between Bombardier and Zarrouk’s All Trade Company obtained by the M&G is remarkably similar to the commission agreements used by BAE in its arms deal campaign. They are vague pro-forma contracts referring to “products” to be marketed in “territories” with a set percentage payable on successful conclusion of a deal. Details of territories and products are specified in addendums. Both contain strict anti-bribery clauses. Although these may help to shield companies like BAE and Bombardier by placing the legal onus on the agent, the question arises whether the payment of success fees of such magnitude are not incentives to bribe. Historically, this has often been the case. Court claim The first hint that large sums of money might have changed hands to secure the Gautrain tender for Bombela came when connected businessman Peter-Paul Ngwenya filed summons against Bombardier in the South Gauteng High Court last year. In the particulars of his claim, Ngwenya described himself as “an influential individual in political circles, having been a former Robben Island prisoner”. He claimed that, in late 2003, he had entered into an oral agreement with Bombardier — the latter “represented by Jean-Marc Pizano and/or Richard Charter and/or Yousef Zarrouk” — under which he would join the company’s lobbying effort in exchange for a $7-million (R60-million now) success fee should it win the Gautrain tender. He demanded $6.55-million, claiming he had received only $450 000. In responding papers, Bombardier claimed that the matter should have been referred to arbitration in London under the terms of a “settlement and release agreement” signed by itself, Ngwenya and Zarrouk in an earlier attempt to resolve the dispute. Bombardier attached a largely blacked-out copy of the agreement, obscuring all detail of the underlying facts. The matter is heading for court next month, when Bombardier wants proceedings to be stayed in favour of the London arbitration, which would be held behind closed doors. Ngwenya has filed an opposing affidavit insisting the matter should be heard in open court. Bombardier, he claimed, “appears to believe that its conduct may have been improper and seeks to shield this from the South African courts, the South African authorities and citizens”. Dealing with the background to the dispute, he accuses Bombardier of having been “very reluctant” to record its relationship in writing and of interposing Zarrouk, “a Tunisian … who had no ties or contact with South Africa into the relationship as the apparent paymaster”. Connectivity It appears to be common cause, however, that Ngwenya was contracted by Zarrouk, whether or not it was at the latter’s behest or, as claimed by Ngwenya, at Bombardier’s. Zarrouk this week confirmed having paid Ngwenya, without giving an amount. “I paid Mr Ngwenya what I must pay him.” Whereas Pizano’s attractiveness to the Bombardier campaign may have been his experience in obtaining military and aviation tenders internationally, Ngwenya’s may have had more to do with his local connectivity. Ngwenya knew Gauteng politicians who served on the “political committee” that had to ratify the tender decision and was close to Jeff Radebe, then the national transport minister, with whom he was detained for anti-apartheid activity and later jailed on Robben Island. The M&G has obtained a memorandum sent by Pizano to Bombardier in November 2004, two months before Bombela and the competing Gauliwe consortium were to submit their “best and final offers” to the Gauteng government evaluation team. In it, Pizano expressed concern at the tight deadline, “the overriding fact that our price is much higher than the competition” and whether “our black [empowerment] partners are as credible as those of the competition”. He proposed a plan of action, including reviewing technical and financial aspects of Bombela’s bid and “an assessment of our BEE position under the responsibility of PP [Ngwenya]”. He also proposed “lateral actions”, which included “to widen our support base within the government and start to lobby with the minister of transport … [Ngweya] to organise a briefing to the minister of transport and possibly a meeting”. Asked this week whether he had in fact used his influence with Radebe, who is now justice and constitutional development minister, Ngwenya said: “I never did that. In fact, if I could [influence him] I would call him now and say ‘give me a good judge [in the suit against Bombardier]’.” Radebe, through his director general, Nonkululeko Sindane, said he wished to “state very categorically that Mr Ngwenya never approached or lobbied him in any manner or form” on the transaction. He also denied knowing of or meeting Zarrouk and emphasised that the Gautrain was a provincial project brought to the national government only “very late in the process” for information and alignment with other transport systems. “The minister was never involved whatsoever in any project procurement process.” ‘Highest ethical standards’ Bombardier, although stopping short of confirming it had paid Zarrouk, defended its approach this week. “Bombardier does not condone making any payments to win contracts. Bombardier maintains and will continue to maintain the highest standards of ethical behaviour in all of our dealings worldwide. We have a strict code of conduct. We follow local and international laws and regulations in every country in which we operate,” it said. “The selection and retention of any such representative is done in accordance with international standards and regulations and follows a rigorous process, including due diligence that complies with all local and international laws and regulations.” Jack van der Merwe, chief executive of the Gautrain Management Agency that oversees Bombela’s carrying out of the Gautrain contract on behalf of the Gauteng provincial government, said he was unaware of the agreement between Bombardier and Zarrouk, but that he would take it up. “The concession agreement between the Gauteng provincial government and the Bombela Concession Company is very specific on bribery and corruption. Based on this, I have referred the copy of the ‘representative agreement’ to Bombardier for explanation and to indicate what the status of this ‘representative agreement’ is and if any payments have in fact taken place. Based on its response and any additional information that the M&G has, a decision will be taken on the way forward,” Van der Merwe said. Pizano said he was unaware of any bribes potentially paid from Zarrouk’s commission. * Got a tip-off for us about this story? Email [email protected] 
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 ours. See our funding sources here: www.amabhungane.co.za/page/sponsors.