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Wed Sep 24 00:27:56 SAST 2014

Iran helicopter deal stink grows

ROB ROSE, STEPHAN HOFSTATTER and MZILIKAZI WA AFRIKA | 05 August, 2012 09:5314 Comments
Kgalema Motlanthe and his partner, Gugu Mtshali. File photo
Image by: ESA ALEXANDER

AN audit report has slammed high-ranking government officials for "placing South Africa at risk" of breaking United Nations sanctions when they issued letters of support to a company trying to sell helicopters to Iran.

Deputy President Kgalema Motlanthe's romantic partner Gugu Mtshali and her close associates stand accused of peddling political support for the Iran deal - in return for a promised R104-million.

The Grant Thornton report, commissioned by the Department of Trade and Industry, is the first independent proof that officials delivered on their side of a deal to solicit political support for the company, 360 Aviation.

It found that officials of the Department of Trade and Industry (DTI) were guilty of "gross negligence" by providing a government support letter to 360 Aviation for a R2-billion helicopter deal with Iran.

"The officials failed to protect the interest of South Africa at large ... thereby placing South Africa at risk of engaging in sanctions-busting deals with Iran," the report said.

The Sunday Times first exposed that 360 Aviation MD Barry Oberholzer was promised "government support" in return for a payment of R104-million at a secret meeting at a Johannesburg restaurant in February 2011 attended by Mtshali, her business associate Joe Mboweni, and former De Beers executive Raisaka Masebelanga.

A recording of the meeting, obtained by the Sunday Times, reveals Masebelanga negotiating R10-million for a departmental endorsement letter, and another R94-million in shares for continued government support for the deal - saying "there is nothing for mahala".

In the recording, mysterious North West businessman Joe Mboweni says he works "on instructions from mama", understood to be Mtshali, and adds that he is "obviously" interested in discussing the profit share. Mboweni adds: "When you are a politician you are not just political, you must also look at the commercial side."

Two months later, 360 Aviation obtained the support letter from DTI acting deputy director-general Riaan le Roux through the lobbying efforts of former Land Bank executive Herman Moeketsi, a cousin and business partner of Masebelanga. Moeketsi is known to be close to Motlanthe.

Oberholzer told the Sunday Times the company believed it was being asked for a "bribe... in exchange for [government] support", and that Motlanthe's partner had been brought on board to lend political clout to efforts to clinch the deal, including a planned trip to Iran she was to undertake.

An e-mail Moeketsi sent to Oberholzer a week later, with the subject "Iran trip" and containing copies of the passports of Mtshali, Moeketsi and Masebelanga, appears to confirm this. Also attached was a "commission agreement" that specifies Moeketsi and Masebelanga would be paid a R10-million fee "to obtain a support letter from the South African government".

When the Sunday Times broke the story, Moeketsi and Masebelanga denied they had acted improperly. Mtshali said she never attended a "formal meeting" with 360 Aviation, but would not comment on the recording. She said she was "firmly of the view" that she had done nothing wrong. Mboweni could not be reached for comment.

In the end, no money changed hands because the deal never went through. But this cloud continues to hang over Motlanthe in the lead-up to the ANC's elective conference in Mangaung.

The deputy president asked public protector Thuli Madonsela to probe the claims in February. Motlanthe will get a "provisional report for his comments before the end of next week," Madonsela's spokes-woman told the Sunday Times this week.

This week's Grant Thornton report, obtained through a Promotion of Access to Information request by DA MP David Maynier, found major irregularities in how the DTI letters were issued.

The report recommends disciplinary action against Le Roux. DTI spokesman Sidwell Medupe confirmed this week the report had been submitted to the public protector but did not say why no action had been taken against Le Roux.

Maynier said the report highlighted the need for "a policy review on the whole question of 'letters of support' " which, he said, made the DTI vulnerable to corruption.

When interviewed as part of the probe, Le Roux said that "in hindsight, [he] would not have issued the letter, or would have followed a different process".

The report also confirmed Moeketsi personally lobbied DTI officials, including Le Roux. Moeketsi could not be reached for comment this week.

While Le Roux told the Sunday Times in February that the letters were only given after a thorough due diligence, Grant Thornton said this "can be viewed as a misrepresentation".

Le Roux denied receiving any bribes.

He told the Sunday Times this week: "The letter was signed based on the collection of background information and the fact that two such letters were signed [in earlier years] by the former deputy director-general of Trade Investment SA, Mr Iqbal Sharma".

Sharma this week told the Sunday Times that, "had sanctions been in place [at the time, in 2008 ], I certainly would not have issued any letter, as that would be sanctions-busting".

investigations@sundaytimes.co.za

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