The department of trade and industry approved almost R4-million in grant finance to a local company that supplied mass surveillance technology to Muammar Gaddafi’s Libyan dictatorship, which was allegedly used to spy on Libyan citizens.
In a letter to Trade and Industry Minister Rob Davies last week, prominent London-based charity Privacy International expressed concern about the funding connections between the department and South African firm VASTech.
The annual report of the department’s support programme for industrial innovation shows that R1.3-million was granted to VASTech’s Zebra E128 software system in 2005. Responding to amaBhungane’s questions, the department confirmed that this project was completed in 2008.
In addition, a R2.6-million grant to VASTech was approved for a software program called Next in January 2010. The department said this project is ongoing.
In 2011, an investigation by the Wall Street Journal alleged that VASTech’s Zebra systems were being used by the Libyan government to tap and log all international phone calls going in and out of Libya.
The newspaper’s reporter visited Libya’s spy centre and the international phone exchange where calls leave and enter the country.
An informant told the journalist that a separate group of Gaddafi’s security agents staffed a room equipped with VASTech devices, which captured between roughly 30-million and 40-million minutes of cellphone and landline conversations a month and archived them.
The department is adamant that, when the two VASTech grants were approved, it did not know that any of the technology would be used for nefarious activities.
“The awarding of the grants to VASTech was determined by the proposals it submitted to the panel which adjudicated this process,” said departmental spokesperson Sidwell Medupe on Wednesday.
“When the panel, which consisted of employees from the trade and industry department, the IDC [Industrial Development Corporation] and other industry employees, approved the funding, it knew that it would be for mass surveillance.
“However, according to the submission made, we were led to believe that the Zebra software would be for the monitoring of borders and stadiums, among other things.”
Privacy International also asked why development finance had gone to an established company with international contracts and a turnover of tens of millions of rands. According to media reports, the company’s turnover in 2005-2006 was R30-million.
In its letter to Davies, Privacy International asked:
• Whether VASTech had revealed its capacity for mass surveillance in its grant application and, if so, whether such capability was “deemed appropriate for public funding”;
• For confirmation that the department undertook human rights due diligence procedures before making the grant; and
• Whether the department was aware of the advertisements for Zebra as having a capability for mass surveillance.
It also asked whether there were any financial or personnel links between VASTech and the South African government.
In emailed answers to questions this week, VASTech spokesperson Nico de Wet confirmed that the company had received funding from the department. He did not answer questions about the size of the grant or whether the government is still funding its activities.
De Wet said that VASTech’s operations are not linked in any way to the South African state. “We are a privately owned company and, as such, we operate totally independently from the government,” he said.
Privacy International has also sent an inquiry to the National Conventional Arms Control Inspectorate, seeking clarity on how VASTech was allowed to export its Zebra systems to Libya “without the necessary authorisation”.
Section 13 of the National Conventional Arms Control Act requires would-be exporters of “control items” to obtain a permit from the National Conventional Arms Control Committee.
Whether VASTech’s Zebra technology is a “control item” as defined in the Act is unclear. VASTech vehemently denies any infractions.
“We ensure that we do comply with all the relevant legislation, including the National Conventional Arms Control Act,” said De Wet.
“VASTech produces products for government law enforcement agencies. These products have the primary goal of reducing cross-border crimes such as child pornography, human trafficking, drug smuggling, weapon smuggling, money laundering, corruption and terrorist activities.
“We compete internationally and openly against several suppliers of similar systems. We supply only legal governments not subjected to international sanctions. Should their status change, we hold the right to withdraw our supplies and support unilaterally.”
Confirming its receipt of the complaint against VASTech, the inspectorate said it is committed to ensuring compliance with the legislation and will investigate.
Privacy International also referred in its complaint to the Wassenaar Arrangement on the Arms Trade Treaty, which seeks transparency and greater responsibility on arms sales, and to which South Africa is a signatory. It includes another control list that refers to electronic equipment specifically designed for military use.
In response to amaBhungane’s questions about its grants to VASTech, the department said that all its incentive schemes are overseen by an adjudication panel, “which ensures that all approved applications meet the relevant criteria”.
Due diligence is conducted by experts on all projects presented to the panel to determine the viability of the applicant’s business, the product’s innovativeness and whether it will be produced in South Africa.
The department also said the fact that it had granted funding to VASTech in 2005 did not mean the company would be granted automatic funding if it applied again.
“When the panel granted funding for the Next [software] project in 2010, it applied its mind and made sure that the company met all costing criteria. This was not a decision that was taken lightly,” said Medupe.
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