SA still trapped in coils of arms deal

South Africa continues to be plagued by the arms deal controversy - despite the best efforts of authorities in a number of countries to get to the bottom of the shady deals involving weapons brokers.

In 2010, the UK's Serious Fraud Office agreed to a plea bargain with BAE, a major contractor in SA's arms deal, in which the company admitted to accounting irregularities over its controversial sale of radars to Tanzania in the late '90s. At the same time, US authorities fined BAE $400-million in return for the company's admission it had failed to disclose material information relating to the payment of "commissions".

In neither case was BAE forced to admit to crimes of corruption or bribery - although that is what was suspected by investigators.

In SA, the investigation into the arms deal has been officially closed. General Anwa Dramat announced in 2010 that the two remaining investigations - one into bribes from Germany to Chippy Shaik regarding the corvette contract and another into BAE's agent system in SA- had been brought to an end.

Recent disclosures have suggested that Dramat may have relied on documents drawn up by a Major-General Hans Meiring.

The officer was leading the investigation from the offices of the Hawks following the controversial disbanding of the Scorpions. In his contradictory and error-filled memo, Meiring said there was no "prima facie evidence against any person" implicated in the German and British investigative legs.

Earlier in 2010, before Dramat's announcement, Menzi Simelane, the controversial director of public prosecutions, decided not to renew the freeze on the assets of Fana Hlongwane - a political adviser to Joe Modise, the minister of defence when the weapons sale was being negotiated.

But a paper trail led the UK's Serious Fraud Office to a R100-million payment made to Hlongwane by BAE and its offshore entities. The arms dealer could provide little evidence of services provided by Hlongwane.

Despite strong pressure by the Asset Forfeiture Unit and the National Prosecuting Authority to continue to freeze the assets, Simelane, after representations from Hlongwane, decided it should be lifted. "The weight of evidence strongly shows that there is no criminality," a statement from his office claimed.

It is hard not to be sceptical of Meiring's and Simelane's findings. Throughout the arms deal, numerous statements from official bodies have absolved all parties of corruption. The 2001 Joint Investigation Report famously found that there was "no evidence of wrong-doing" in the entire arms deal and that the "government's contracting position" was not flawed.

And yet convictions for fraud and corruption flowing from the arms deal were swiftly secured against Tony Yengeni and Schabir Shaik - while allegations against President Jacob Zuma were not tested in court on the basis of a problematic statement by yet another official: Mokotedi Mpshe, who was then the acting national director of public prosecutions.

The simple truth is that the allegations of corruption have not been dispelled.

A cursory glance at BAE's plea bargains with the US departments of state and justice in 2010 and 2011, shows that the company confirmed many of the allegations against it.

BAE admitted, in the 2010 agreement, that it had paid £135-million and $14-million to "advise rs" worldwide to further its various business deals, including those in SA.

More importantly, BAE conceded it had "made payments to certain advisers through offshore shell companies even though in certain situations there was a high probability that part of the payments would be used in order to ensure that BAE was favoured in the foreign government decisions regarding the sales of defense articles".

The May 2011 plea bargain went even further. BAE admitted it had established an offshore shell company - Red Diamond - to "conceal" the relationship between BAE and its "advisers" and "brokers"; that it had established 350 "covert" agreements with advisers around the world; and that it had made over 1000 payments to these advisers between 1995 and 2007.

In fact, BAE said it "and its representative, Red Diamond, made payments to brokers involved in securing the sale to SA".

In addition, about two weeks ago, Saab - the Swedish company that makes the Gripen fighter - admitted that millions had been paid to Hlongwane via the company Sanip.

Saab established Sanip to oversee it and BAE's offset obligations in terms of the arms deal.

Saab claimed that the payments and the consultancy agreements that underpinned them were made in secret by a BAE employee working at Saab who failed to reflect the cash flows in the company books. And just which BAE employee signed the agreements? One Bernard Collier, who left Sanip and BAE to take up a comfortable position at Ivema, a defence contractor mostly owned by Hlongwane. Swedish anti-corruption prosecutor Gunnar Stetler has confirmed that he is considering instituting an official investigation into the relationship between Sanip, Saab and Hlongwane. Documents in our possession show that Stetler has contacted SA authorities for information in this regard, although it should be noted that, on previous occasions, such requests have frequently been stonewalled by SA officials.

South Africans don't lack evidence that the arms deal was corrupt. There are thousands of newspaper reports and near-monthly discoveries; investigations abroad, and plenty of documentary evidence. In fact, the SA authorities have more than 4 million pages of documents seized in investigating BAE alone.

No, the obstacle is not a lack of evidence. It is a lack of political will. A failure to institute a new investigation into the arms deal will simply send the message that those with political connections have a better chance of escaping the law than the rest of us.

It is only when we are all truly equal before the law, including in relation to the arms deal, that we will begin to lift the dark shadow of corruption that hangs over our beloved country.

Feinstein's book on the global arms trade, The Shadow World, is to be published by Farrar, Strauss & Giroux, Penguin and Jonathan Ball in November 2011. He is a former ANC MP. Holden's follow-up book on the arms deal, The Devil in the Detail, written with Hennie Van Vuuren, is to be published by Jonathan Ball in September