/ 12 November 2015

Lies, public money and a redone DC-9 in Swaziland

Swazi King Mswati III.
Swazi King Mswati III.

Court documents indicate that Swazi Prime Minister Barnabas Dlamini concealed the full truth when he announced King Mswati III’s personal jet was a “magnificent gift” from anonymous “development partners and friends of the Kingdom of Swaziland”.

The documents, tabled in the Canadian courts, reveal that the McDonnell Douglas DC-9 was bought at least in part by Inchatsavane, a company of which Mswati is the sole owner.

They also make it clear that Inchatsavane initially purchased the plane for $11.45-million in May 2010 – two years before Dlamini’s announcement on April 26 2012.

The company then sold the jet, allegedly after defaulting on payments on a $6-million luxury conversion, but repurchased it before it was unveiled to the Swazi public.

The court papers allege that Mswati’s company part-paid for the jet, but that Kuwait and others contributed.

“The donors of this magnificent gift have elected to remain anonymous.”

At the April 2012 media conference to announce the acquisition, Dlamini was reported in the local media as saying: “His majesty’s government has the honour to announce to the nation that his majesty King Mswati?III … today received a gift of a DC-9 aircraft from development partners and friends of the Kingdom of Swaziland, to be for their majesties’ travels abroad for engagements of national interest.

“The donors of this magnificent gift have elected to remain anonymous. On behalf of his majesty the king, her majesty the indlovukazi [queen mother], the government of Swaziland and the entire Swazi nation, we thank all these donors most sincerely for this kind gesture.”

But papers tabled by Inchatsavane in the Ontario Superior Court in February this year, in an action brought by Singapore businessman Shan Rethenam, contradict Dlamini’s version.

The king’s company states: “Inchatsavane purchased the aircraft on May 12 2010. It sold the aircraft … to Millers Capital Investments on December 30 2010.

“Inchatsavane remained interested in the aircraft and kept in touch with its owners over the next year. On April 20 2012 Inchatsavane purchased the aircraft back.”

The repurchase took place six days before Dlamini’s media conference.

“When a person presents someone with a gift, he or she does not disclose the cost involved.”

The papers reveal that the DC-9 cost roughly $22.45-million. In addition to the initial purchase and the luxury conversion, this included $9.5-million for the repurchase.

At the 2012 media conference Dlamini stonewalled a question about the cost of the plane, saying: “When a person presents someone with a gift, he or she does not disclose the cost involved.”

AmaBhungane made repeated attempts to contact the prime minister to ask why he had misrepresented the transaction and whether his purpose was to conceal Mswati’s extravagance. On two occasions, he answered the phone, but he said he couldn’t speak because he was in a Cabinet meeting.

Further evidence of the secrecy surrounding the aircraft purchase comes from a record of the Standard Bank’s payment for the plane to the escrow agent acting for Millers, which amaBhungane has also seen.

This describes the aircraft as “special artefacts N87SG”.

“N87SG” was the plane’s registration number at the time.

“Aircraft washing”

As  amaBhungane reported in May 2012, elaborate efforts were also made to conceal the DC-9’s origins by “aircraft washing” – channelling the purchase through an opaque maze of offshore companies.

Inchatsavane’s court application was in response to the grounding of the aircraft following a court application by Rethenam, Mswati’s former business partner.

Rethenam’s company, SG Air Leasing, sold the king the plane’s airframe and engines in 2010, but he alleges that Mswati paid only $1.5-million of the $11.45-million purchase price. He says he was told Kuwait paid the balance.

He is now claiming millions of dollars for unpaid bills relating to the aircraft’s modification and other expenses.

According to Rethenam’s court documents, Inchavatsane sold the plane to Millers in December 2010 to pay debts owed to the Canadian company doing the conversion, Goderich Aircraft, and avert the sale of the DC-9.

But he adds that “at all material times it was the intent and understanding of the parties that Inchatsavane would be the repurchaser. The aircraft was repaired exclusively on instructions of Inchatsavane or its agents”.

Rethenam says he “knows HMK [his majesty the king] personally. We have done business together in the past.”

Rethenam, who claims that Mswati deliberately sabotaged an iron mine in which he had an interest, has become the scourge of the Swazi monarch and his government.

In addition to grounding the DC-9 in Canada in February, he obtained a temporary freezing order on Mswati’s assets in the Eastern Caribbean Supreme Court in the British Virgin Islands on September 8 this year. These include any property to the value of $7.9-million he claims Mswati owes him.

The Swazis have responded by denying that the king, whose wealth has been estimated at $200-million, has any assets outside Swaziland.

In the court papers, Rethenam says he “knows HMK [his majesty the king] personally. We have done business together in the past. I usually meet HMK at his various palaces in the kingdom of Swaziland and have also spent time with [him] in Malaysia, South Africa and Dubai.”

He says that, after the delivery of the aircraft in April 2012, his relationship with Mswati strengthened.

But it soured dramatically over SG Iron, an iron-mining operation at Ngwenya in Swaziland in which Mswati was made a 25% shareholder.

“Their intention appears to have been to avoid repaying the receivable.”

Rethenam alleges on April 6 2012 – days before the repurchase of the DC-9 – Mswati demanded that the SG Iron board approve a $10-million “advanced dividend” that was entered in the company’s books as a “receivable” or loan.

He argues that the board could not refuse the demand because “that would have resulted in the inability to continue doing business in the kingdom”.

In 2014, Rethenam alleges Mswati told him that he could not repay the debt and “requested whether I could assist in having the receivable retired from SG Iron’s books and records”.

He says that, when attempts to arrange a repayment fell through, Mswati used “the power of an absolute monarch” by engineering the collapse of SG Iron through his personal secretary Sihle Dlamini, a member of the company’s board.

“Their intention appears to have been to avoid repaying the receivable,” Rethenam says.

“His majesty’s appointee went as far [as] to prevent the sale of iron ore despite vessels arriving at the port to load the cargo, which had effects of starving the company of cash.

“HMK, through his appointee, then used the artificial cash crisis as a pretext to request that SG Iron be placed under judicial management and liquidation.

“Swaziland’s judiciary then placed SG Iron into provisional liquidation. HMK then sent his army to effectively expropriate the mine.”

Seven hundred mine employees are said to have lost their jobs.

Rethenam states that the “expropriation” of SG Iron has given rise to a $141-million claim that is the subject of international arbitration proceedings against Swaziland.

This is not the first time there’s been trouble over buying a jet. In 2002 the Swazi Parliament stopped the purchase of a jet after an outcry about the price.

The  Mail & Guardian recently reported that the Swazi government is now buying Mswati a second plane, amid signs that he seeks to upgrade to a larger aircraft.

Prime Minister Dlamini recently told the International Monetary Fund that Swaziland is facing a fiscal crisis because of plunging customs receipts.

‘False promises’ from the Swazi head that wears a crown

The court papers of King Mswati’s former business partner, Shan Rethenam, could be read as a cautionary tale about the perils of doing business with an absolute monarch.

They contain numerous allegations of money or loans requested by Mswati that he failed to repay and that the Singapore businessman is now claiming.

Rethenam claims Mswati:

  • Paid $1.5-million of the $11.45-million required for the airframe and engines of his personal jet. Rethenam was told Kuwait had picked up the balance;
  • Gave instructions to Rethenam’s company SG Air Leasing to fund cost overruns on the refurbishment of the jet to the tune of $3.3-million;
  • Asked Rethenam to do what he could to meet the refurbisher’s further payment demands and get the plane released. Rethenam says he forked out $140 000 for this purpose;
  • Used another jet while the DC-9 was being converted, which Rethenam leased for $700 000;
  • Complained that the jet was “inconvenient” because it only had one toilet. Rethenam then leased another jet for $1.4-million. He is claiming repayment of all the leasing expenses.
  • Asked for a $1.5-million loan to buy “certain artworks” from Metropolitan Fine Arts and Antiques, a New York art dealer, which Rethenam is now also claiming;
  • Demanded a $10-million loan from SG Iron, the Swazi iron-mining operation in which Rethenam had a stake. He then allegedly said he could not repay the loan and asked it to be written off; and
  • Demanded a personal benefit of 50 United States cents per tonne of iron ore exported by SG Iron, amounting to $700 000 up to December 2013.

Rethenam says he understood that the demands, made directly or through Mswati’s representatives, came with the implied threat that noncompliance would jeopardise the mining operation. – AmaBhungane reporter

  • This article was based on a joint investigation by amaBhungane and GroundUp

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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.