NEWS ANALYSIS
“I strained my ears during the commission to hear of anybody who had evidence against me, but there was nobody.” This is how arms deal kingpin Fana Hlongwane began his evidence at the arms deal commission of inquiry on Thursday morning.
The former adviser to democratic South Africa’s first defence minister, the late Joe Modise, continued in that vein at the inquiry, reaching its zenith with his allegation that he was being targeted because he was black.
Hlongwane also alleged that the 1999 arms deal, which cost an estimated R70-billion, was opposed by people who either had economic interests in winning the enormous tenders, or were the result of the “obstinate refusal by some sectors of our society to accept democratic outcomes”.
Hlongwane was fingered during several investigations undertaken by the former Scorpions, Britain’s Serious Fraud Office, the Hawks as well as authorities in Liechtenstein where Hlongwane allegedly held offshore accounts.
Middleman or consultant?
A United States state department investigation into BAE Systems found: “In February 1998, respondent [BAE] engaged Uniglobe Aktiengesellschaft, a trust company in Vaduz, Liechtenstein, to create Red Diamond Trading Ltd, an offshore company, located in the British Virgin Islands … Although not a subsidiary of respondent, Uniglobe structured Red Diamond in a manner in which Red Diamond could not act without respondent’s written agreement …
“The purpose of Red Diamond was to facilitate payments to third-party brokers hired by the respondent … There were approximately 350 covert agreements with 299 brokers. Red Diamond operated with intent to circumvent the normal payments reviews.”
BAE has always maintained that payments to its consultants were legitimate while its only errors were of an accounting nature.
Allegations levelled against Hlongwane include the charge that he was a middleman, or a conduit, for bribes paid to politicians to influence the outcome of the bidding process, a charge he vehemently denied on Thursday.
Hlongwane said he served as an adviser to Modise, as an independent contractor from 1994 to 1998, when he became a director at arms manufacturer Denel. In 2003, he went on to become a consultant for a winning bidder of the arms deal, BAE Systems. He apparently earned some R200-million in consultancy fees.
But it is the R65-million in consultancy fees that he allegedly earned before BAE employed him that sat at the heart of the allegations against Hlongwane.
None of these allegations were specifically put to him on Thursday. Instead, he was asked to respond to general allegations that he was guilty of, or knew of, wrongdoing. Hlongwane replied that he was not involved in any decisions made in the awarding of tenders.
Asked what he thought of allegations that his consultancy fees, received from BAE, were actually bribes, Hlongwane said: “Those are opinions.”
He insisted that these types of consultancy fees were standard throughout the defence industry and flighted his own theories about why he was investigated.
“What is it that I’ve done that I have to come and testify? It’s international practice,” Hlongwane said.
Political games
He said the commission should tell him if it was because he was black that he was being “singled out because of what is standard practice among consultants”.
He asked the commission not to “give in to the temptation to reduce the class and race narrative in this”.
Hlongwane said those opposing the arms deal were not happy with the outcome of the 1994 elections, when the ANC won power in South Africa’s first democratic polls, and that those people were feeding the media a narrative designed to discredit the incoming administration.
Hlongwane submitted an addendum to his witness statement to the commission which sought to discredit a search warrant, obtained against him in 2008.
The warrant was obtained by Gary Murphy, chief investigator on the South African arms deal by Britain’s Serious Fraud Office. On Thursday, Hlongwane claimed to have received a second copy of the affidavit, which motivated the need for a search warrant and apparently contained discrepancies when compared with the first one. Hlongwane said this was proof that the affidavit was fraudulent.
The warrant preceded raids on Hlongwane’s home in 2008 – raids he was allegedly tipped off about.
Nevertheless, it is believed authorities seized several damning documents.
Hlongwane blamed the alleged “manipulation” of the search warrant on “rogue elements” in the justice system, and a “lunatic fringe within law enforcement agencies”.
Hlongwane, the commission’s final witness, was not cross-examined as there were no applications to do so. Cross-examining has become increasingly infrequent at the commission since key anti-arms deal campaigners pulled out of the commission, leaving only state lawyers to ask follow up questions.