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In 1999, under former president Thabo Mbeki, arms procurement contracts were entered into with companies from France, Italy, Sweden, Germany and Britain. The process quickly became flawed as various ANC politicians, including former parliamentary chief whip Tony Yengeni, were involved in bribes to award contracts to international companies. Former president Jacob Zuma was implicated as having received kickbacks through his former financial advisor, Schabir Shaik. Zuma is facing 783 charges of fraud, corruption, racketeering and money laundering while Yengeni and Sheik were convicted and served five months and four years of their jail terms, respectively. Activist Terry Crawford-Browne has written extensively on corruption and is pursuing legal action to bring the people involved in the arms deal to book. Here, he writes an open letter on the arms deal and its relevance to the corruption plaguing the nation in 2020. – Bernice Maune.
By Terry Crawford-Browne*
President Cyril Ramaphosa and the ANC’s National Executive Committee over this past weekend have finally committed the ANC and the government to deal rigorously with corruption. More than 20 years have lapsed since 1999 when ANC whistleblowers working with the late Winnie Madikizela-Mandela attempted to expose the corruption unleashed on South Africa via the arms deal scandal. The whistleblowers revealed to me then that the arms deal was just the tip of an iceberg which also involved:
“Oil deals, the taxi recapitalization process, toll roads, drivers’ licences, Cell C, the Coega harbour development, diamond and drug smuggling, weapons trafficking and money laundering. The common denominator was kickbacks to the ANC in return for political protection.”
South Africa now faces the disastrous economic consequences of the arms deal and subsequent “state capture” scandals
The ANC’s 1999 election campaign was funded by arms companies, some of the donations from Saab being facilitated by a [then] trade unionist who is now the prime minister of Sweden. The German company Ferrostaal was another donor to the ANC. Former presidents Mbeki and Zuma were both ignominiously removed from office because they accepted arms deal bribes from Germany and France. Arms companies are experts at bribing politicians to do the “dirty work” and then walking away from the consequences.
It is estimated that 40 to 45% of global corruption can be traced back to the arms trade. The rationale for the arms deal was the economic absurdity that R30bn spent on armaments would magically generate R110bn in offset benefits and create 65 000 jobs. It was a criminal and fraudulent confidence trick deliberately played by European arms companies and their governments at enormous cost to the people of South Africa. As predicted, the offsets were simply instruments to pay bribes – euphemistically described in Germany as “useful business expenses”.
The Cabinet ministerial committee – comprising Thabo Mbeki, Joe Modise, Alec Erwin, Trevor Manuel and Stella Sigcau – was repeatedly warned that the arms deal was a reckless proposition, but those warnings were irrationally overruled because of the purported generosity of the offset benefits. The 20-year Barclays Bank foreign loan agreement to finance the BAE/Saab fighter aircraft contracts that were signed by Manuel (and still not fully repaid) is a textbook example of so-called “third world debt entrapment”. Manuel has belatedly acknowledged that the past three decades have been wasted: he as Finance Minister for much of the period bears major responsibility for that reality.
The arms deal researcher, Paul Holden, a few weeks ago filed a complaint with the Judicial Conduct Committee. The Seriti Commission was a total farce and a disgrace to South Africa’s judicial system. Per below, I have yesterday written to the Committee in support of Holden’s complaint.
South Africa now faces the disastrous economic consequences of the arms deal and subsequent “state capture” scandals. President Ramaphosa and the NEC declare that they are now committed to remedial action to recover monies that have been looted. If their new resolve to expose and oppose corruption is to have any credibility, South Africa must start with the arms deal. Attached are my affidavit plus six annexures that I have provided to the Judicial Conduct Committee.
Office of the Chief Justice: Complaints Desk
14th Floor, Edura House
41 Fox Street
Complaint against Judge Willie Seriti and Judge Hendrik Mmolli Thekiso Musi
In terms of section 14 of the Judicial Services Act 9 of 1994, I wish to add my support to the complaint dated 23 July 2020 by Paul Holden of Shadow World Investigations and Open Secrets against Judges Seriti and Musi. You will recall that I was the applicant in the public interest in case CCT 103/2010 that led to the appointment in October 2011 of the Arms Procurement Commission (Seriti Commission) by former President Jacob Zuma. Holden sets out in detail the failures of the Commission, but also that various documents relevant (indeed crucial) to the issues were systematically blocked by Judge Seriti. These included, inter alia, the Debevoise & Plimpton (D&P) report regarding Ferrostaal and the German Submarine Consortium and the International Offers Negotiating Team (IONT) and Financial Working Group papers. You will of course also know that the report of the Commission was set aside in August 2019 in a landmark judgment of the North Gauteng High Court as a result of the application brought by Corruption Watch and Right2Know.
Attached are my affidavit plus six exhibits marked TCB1 to TCB6 wherein I set out my involvement in the arms deal issues arising from my appointment in 1996 by Archbishop Njongonkulu Ndungane to represent the Anglican Church during the 1996-1998 parliamentary Defence Review.
TCB1: My written submission to the APC in June 2012 was premised upon the legal opinion of Advocate Geoff Budlender SC that arms deal offsets failed the requirement of section 217 (1) regarding government procurements, and that accordingly the arms deal was both unconstitutional and illegal. Budlender’s legal opinion also notes that the legal principle holds that a fraudster should not financially benefit from his fraud and that the internationally recognized remedy is to return the goods and recover the monies. There is, of course, no prescription for fraud.
TCB2: Having in November 2001 filed case 9987/2001 in the Cape High Court to set aside the loan agreements that gave effect to the arms deal supply agreements, I then in 2002 received from London the 255 pages of the loan agreements in respect of the BAE Hawk and BAE/Saab Gripen fighter aircraft. I then filed these documents as part of discovery case 5129/2002, and the documents were verified in court as authentic by counsel for the Minister of Finance, Advocate Michael Kuper SC. I append relevant pages of the main 20-year Barclays Bank loan agreement, which is signed on page 47 by Trevor Manuel for and on behalf of the Republic of South Africa. So sensitive are the representative, covenant and default clauses (21-23), which Kuper himself described as “catastrophic for South Africa,” that he sought to have the agreements suppressed. The judges, however, made no such order.
TCB3: Instead, the Cape High Court in March 2003 awarded me discovery with ten days of the IONT and Financial Working group papers. There was no proviso of “privilege” or confidentiality, but Ms Maria Ramos, as Director-General of the Treasury and the Minister, refused to comply with the discovery order despite two court applications against them of contempt.
TCB4: In terms of the subpoena served upon me in 2013 to testify at the APC, I demanded sight of these documents but again was repeatedly blocked from examining them. Pages 25 and 26 of the APC report reveal that the APC and/or National Treasury falsely claimed that the Cape High Court had recognized that the documents were “privileged.”
TCB5: Three articles in the Swedish newspaper Expressen published in June 2015 revealed the extent of Saab’s complicity in bribery payments for the BAE/Saab Gripen contracts.
TCB6: The full D&P report on Ferrostaal covered numerous countries. The pages relevant to South Africa are appended. These detail not only the deliberate failures to meet the offset obligations, but also the roles Tony Georgiadis and Tony Ellingford as “bagmen” because of their access to decision-makers. Former President Mbeki admitted under cross-examination during the Seriti Commission that Georgiadis had been a donor to the ANC. In fact, the spark that led Mbeki’s removal from the Presidency in 2008 was a report by the Sunday Times that Ferrostaal had paid him a bribe of R30 million, of which he gave R2 million to [then] Deputy President Jacob Zuma and R28 million to the ANC.
I estimate that the IONT and Financial Working Group papers held by National Treasury amount to about 17,000 pages. They were distilled into the 57-page affordability study that in 1999 warned the Cabinet’s ministerial committee that the arms deal was a reckless proposition that could lead the government (and country) into mounting fiscal, economic and financial difficulties.
Unfortunately, those warnings were ignored. Mr Holden has recently estimated that the rand equivalency costs of the arms deal over the years has escalated from the publicly declared R30 billion in 1999 to about R142 billion currently. Predictably, the offset “benefits” never materialized, albeit BAE/Saab was obligated to deliver US$8.7 billion (now R150 billion at present exchange rates). Similarly, the German Frigate and German Submarine Consortia dismally failed to meet their offset obligations of Euros 6 billion.
May I respectfully suggest to enable remedial actions that the IONT and Financial Working Group papers should now urgently be released by National Treasury to economic researchers including Holden, and that the public should be appraised of how the culture of corruption unleashed by the arms deal has led South Africa to its present economic and financial crises? I am of course available to assist with any queries that may arise, and look forward to your responses.
- Terry Crawford-Browne is the country coordinator for South Africa for World Beyond War.
Seriti. Judicial Conduct Committee. Affidavit
Seriti. Judicial Conduct Committee. Exhibit TCB1
Seriti. Judicial Conduct Committee. Exhibit TCB2
Seriti. Judicial Conduct Committee. Exhibit TCB3
Seriti. Judicial Conduct Committee. Exhibit TCB4
Seriti. Judicial Conduct Committee. Exhibit TCB5
Seriti. Judicial Conduct Committee. Exhibit TCB6
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