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Arms corruption scandal erupts in South Africa http://www.wsws.org/articles/2001/mar2001/arms-m20_prn.shtml

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Arms corruption scandal erupts in South AfricaBy Barbara Slaughter20 March 2001

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A series of major corruption scandals have rocked the South African government in the past fewmonths. High-ranking members of the ANC government are accused of taking "kick-backs" and offunnelling lucrative contracts to companies in which they or their families have a personal interest.

The issue goes deeper than personal corruption. Since Nelson Mandela was swept to power in 1994, theSouth African government has been based on a compromise between the old white ruling elite, whoneeded to open up the country to international investment, and an aspiring layer of black businessmenwho hoped to enrich themselves in the process. This rotten compromise was most graphically embodiedin the "Truth and Reconciliation Commission", which provided an apology for all the crimes of theapartheid regime.

This settlement is now coming under strain, as conflicts within the ruling echelons of the ANC andbetween the party, business leaders and the judiciary are fought out through claims and counter-claimsof government nepotism and corruption.

The allegations centre on a massive arms deal, announced in 1998, to re-equip the South Africanmilitary forces. The first phase of the deal involved the purchase of patrol corvettes, light helicopters,submarines, Hawk jet trainers and light fighter aircraft, from manufacturers in France, Britain, Italy,Germany and Sweden. Within one year, the cost of the deal had skyrocketed from R29.9bn to R43bn(US5.5bn)— an increase of more than 42 percent.

Government ministers justified the massive expenditure by insisting that it would generate 65,000 newjobs in South Africa. They claimed that local firms, including the state arms manufacturer Denel wouldbenefit from billions of rand of investment in new technology. Critics claim to have exposed financiallinks between the subcontractors and members of the government and the military.

Chippie Shaik is the Chief Director of Procurement in the South African Defence Department. Hisbrother Shabir is a director of Thomson CSF, the French arms manufacturer, which was awarded acontract to supply management technology for four corvette patrol vessels for the South African Navy.Shabir Shaik is also the director of African Defence Systems (ADS), a Thomson CSF subsidiary,which is involved in the same deal. ADS employs Chippie Shaik's wife, Zarina.

Shabir Shaik's "black empowerment" company, Nkobi Holdings, is also a shareholder in ADS. Aninformant told the Mail and Guardian how Nkobi Holdings planned its bid for a share of the armspackage as early a 1996, and how they boasted about using ANC contacts to secure governmentcontracts.

Richard Young of CCII, a rival South African arms firm, is threatening to sue for damages of betweenR100 to R200m. He claims that CCII was the navy's preferred supplier, but they lost the deal toThomson CSF because of Shabir Shaik's close relations with the government.


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Likewise, American company Quantam International Services Limited claims it concluded an agreementwith the state arms agency Armscor for the purchase of redundant transport aircraft and spares fromSouth African Air Force. Quantam says that four days before they were due to finalise the deal, theywere told that the planes were no longer for sale—on the orders of former Minister of Defence JoeModise. It emerged that Modise and Ron Haywood, the current chairman of Armscor, were seeking toput together their own deal to purchase and refit the planes. A claim for R2bn damages is being madeagainst Armscor.

Two other allegations concern the supply of MiG fighter aircraft engines from Russia and a R1.5bngovernment oil contract, which is under investigation, after serious irregularities were found.

Rumours of financial impropriety began circulating about 18 months ago. Two opposition parties, thePan Africanist Congress (PAC) and the Democratic Alliance (DA), spearheaded the campaign.

The PAC is a small Black Nationalist party, which polled just one percent of the vote in the 1994election. It was formed in 1959, after splitting from the ANC because of its opposition to the growinginfluence of the South African Communist Party (SACP) within the ANC. The PAC had some successin the 1960s, but their membership declined as the ANC was able to use the influence of the SACP toenhance its "left-wing" credentials and thus consolidate its support among the African masses.

Today the PAC attacks ANC policies from the standpoint of a defence of the interests of the black pettybourgeoisie who have not benefited from power in the same way as their more successful counterpartsin the ANC. It does this in the name of "the poor" and "the small business community" and advocateseconomic growth through "a lot of hard work and commitment". It opposes government corruption inorder "to make savings which can allow us to look after the informal and small business communitywhich has sadly been neglected by our present rulers for too long."

The DA, led by Tony Leon, is a free market pro-business alliance. It was formed last year between theDemocratic Party, which was the parliamentary opposition under apartheid, and the New National Party(NNP), the successor to the racist National Party that ruled apartheid South Africa for 46 years.

The corruption allegations were first raised by PAC MP Patricia de Lille, using documents providedanonymously by ANC MPs. These alleged that bribes were paid to senior ANC members and contractswere awarded to their relatives.

According to the news website WOZA, de Lille's file included allegations of attempts by formermembers of the ANC's armed wing, Umkhonto weSizwe — some of them senior ANC members andgovernment officials — to enrich themselves through subcontracts and tax offset-packages related to thearms acquisition programme.

De Lille handed a 10-page dossier to the head of the government Special Investigation Unit (SIU),Judge Willem Heath, a member of the judiciary under the apartheid regime.

Heath had conducted an earlier inquiry into corruption in the Eastern Cape, when he was supported bythe ANC leadership for rooting out corruption among the local party bosses that was threateninggovernment support in the area. This time things were to be different because the allegations ofcorruption involve the highest echelons of the party.

The Public Accounts Committee of the South African parliament recommended that Heath's unit alongwith three other agencies, the Directorate of Public Prosecutions, the Auditor General and theInvestigative Directorate of Serious Economic Offences (Idseo) should carry out an inquiry.

Mbeki and the government, however, are completely opposed to any scrutiny of the arms deal. Behindthe scenes, ANC officials made desperate attempts to stymie any investigation. The Sunday Timesreported that Tony Yengeni, (a former chairman of the parliamentary joint committee on defence), tried


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to persuade ANC members of the committee to quash the inquiry, saying it was not in the interests ofthe party and the government.

Andrew Feinstein, an ANC MP who had supported the call for an inquiry, was sacked from hisposition as co-chairman of the parliamentary public accounts watchdog committee.

On January 12 four senior government ministers called a press conference to deny that there was anyevidence of corruption. They accused the public accounts committee of incompetence and of failing tounderstand its own documents.

Five days later, President Mbeki appeared on television to announce that he would not allow the SIU toinvestigate the deal and demanded that Heath hand over whatever evidence of graft he had to the justiceministry. Mbeki said the government could not allow an organ of the executive to "run out of control...Itis also clear that we cannot allow the situation to continue where an organ appointed by and accountableto the executive refuses to accept the authority of the executive."

He continued, "This situation of ungovernability will not be allowed to continue.

“Further, the Constitutional Court has directed that we act without undue delay to replace Judge Heathwith somebody else who is not a judge. This directive of the Constitutional Court will be carried out assoon as parliament reconvenes at the beginning of February."

Heath refused to hand over the documents, saying it would be irregular to give such information togovernment officials, some of whom may be implicated in the alleged arms deal. To do so would"jeopardise the investigation, lead to victimisation of whistle-blowers and threaten the lives of potentialwitnesses", Heath said.

The ANC has announced that the their chief whip, Tony Yengeni, would "sit in" on the investigationmeetings even though he is listed among the suspects

Heath has claimed his telephone is being "bugged" and has said that any day he expects apartheid-erastyle state raids on his office. PAC MP Patricia de Lille, who first raised the allegations, claims she hasreceived death threats.

The ANC's response to the corruption allegations has deepened public suspicion about the governmentinvolvement in the scandal. Sections of South Africa's ruling elite are worried that Mbeki's mishandlingof the situation will lead to an escalation of the crisis.

Several religious leaders have met with Mbeki to advise caution. Afterwards the South African Councilof Churches issued a statement expressing their concern that "the nation is becoming divided on thecrucial issue of corruption...Whether unfounded or not, the public perception exists that a cover-up isbeing shaped, that our democratic institutions are being undermined, that mischievous and misleadingforces may be at work and that correct procedures could have been flaunted."

Although the president's advisors continue to insist that there has been no wrongdoing, DefenceMinister Mosiuoa Lekota has conceded that ANC MPs have accused fellow parliamentarians of takingbribes to influence the arms deal. He said that it was "not impossible" that senior politicians tookkickbacks.

Corruption in the shape of "kickbacks" is a regular feature of bourgeois political life all over the world,especially in connection with the arms industry. According to a recent article in the Mail and Guardian,corruption was regarded as a legitimate business expense by the French government. Since 1977, whenthe oil crisis placed French export companies in an uncompetitive position, the French government hasauthorised the use of bribery in the form of “commissions”, provided they were paid to foreign civilservants. All that is required is for the French company to report its payments to the French Ministry of


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Finance, who maintain a list of the handouts.

All other imperialist governments have their own methods of achieving the same ends. Today, however,the major corporations and the Western powers are demanding that all governments in the lessdeveloped countries reigned in long-established practices of nepotism and kickbacks. The call for“transparency” raised by the IMF and World Bank is a euphemism for total subordination by localruling elites to the dictates of global capital. This is why the IMF and World Bank are taking up the hueand cry against corruption all over Africa.

The issue is being taken up with such enthusiasm by the South African media, and fuelled byinformation leaked from unnamed sources within the ANC itself, precisely because criticism of Mbekifrom within the South African business community is growing.

The ANC government is seen as having failed to fully carry out the dictates of the IMF and the WorldBank. This could be detrimental to South African capitalism, which they are pledged to defend.

Over the past year, the economic situation in South Africa has deteriorated, with a reduction in foreigninvestment and a fall in the value of the rand. The government's failure to press ahead with therestructuring of the economy is causing foreign investors some concern.

The South African "independent think tank" Business Map recently cited Mbeki as an obstacle to foreign direct investment. It said, "The defensive political style of Mbeki has been a key factor incompounding negative investor perceptions." Undoubtedly the corruption scandal is being used by theseforces to destabilise the government and whip it into line.

The party also faces growing political opposition from within the working class. With unemployment atalmost 40 percent, workers can see the "fat-cats" in and around the ANC enriching themselves, whiletheir own living standard is worse than it was under apartheid. The government is spending billions ofrand re-equipping the South African armed forces, whilst claiming it lacks the resources to provide basicnecessities like clean water and electricity for millions of ordinary families.

There is acute awareness, especially among the ranks of Cosatu, the trade union wing of the ANC, ofthe growing disaffection in the working class, and concern that the government may lose control of thesituation. They too may be involved in leaking material to the media in order to reinforce their ownposition in the party. All of this has given rise to a raging crisis within the ANC. The current corruption"revelations" from within the party are a manifestation of this power struggle.

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BBC News | AFRICA | SA arms deal scandal widens http://news.bbc.co.uk/2/hi/africa/1266950.stm

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Sunday, 8 April, 2001, 11:29 GMT 12:29 UK

SA arms deal scandal widens

The $5bn arms deal is the biggest in SA history

By Greg Barrow in Johannesburg

New corruption allegations have emerged in South Africa as investigations continue into a multi-billion dollar arms deal with European weapons manufacturers.

One of the successful bidders, the European Aeronautical Defence and Space Company, has faxed a letter to South African national newspapers admitting that it helped to secure luxury cars for around 30 South African officials.

The company, which is partly owned by the Mercedes Benz manufacturer, Daimler Chrysler, says it rendered assistance in acquiring the vehicles for what it called VIPs in the diplomatic, political and defence sectors.

Investigations so far have suggested that the cars were not given to the officials as gifts, but were sold at reduced prices.

ANC denial

These are by far the most serious allegations of corruption to have emerged since South Africa sealed the deal with European weapons manufacturers almost two years ago.

Opponents of the arms deal have long

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accused the governing African National Congress of accepting bribes and have demanded an independent inquiry into allegations of corruption.

The ANC has consistently denied any charges of wrongdoing, but it has resisted attempts to bring in an independent judicial investigator to examine the deal.

The scandal surrounding the supply of luxury cars has enveloped senior officials within the ANC.

Even the party's chief whip, Tony Yengeni, has been accused of accepting a bribe. He has now being investigated by a team appointed by the government.

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At this stage it seems to us that there might very well be some criminal prosecutions

Prosecutor BulelaniNgcuka

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Thursday, 5 April, 2001, 20:36 GMT 21:36 UK

SA arms deal under investigation

The arms deal included the shipment of helicopters

South African officials have confirmed for the first time that they are investigating allegations of fraud and corruption in the country's biggest post-apartheid arms deal.

Public prosecutors are looking into the award of a $5.35bn arms contract to companies in Britain, Germany, Italy, Sweden and France, as well as South Africa itself.

Officials said they are investigating at least 24 individuals and 68 statutory bodies.

The director of public prosecutions, Bulelani Ngcuka, said that criminal prosecutions could take place.

"This may well end up in court," he said.

Critical link

The investigation is the biggest into corruption allegations in the post-apartheid period.

Bank account and other records have been seized and are being examined.

Auditor GeneralShauket Fakie said 30 full-time officers were probing allegations of conflict of interest, bribery and process violations in the


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purchase of helicopters, fighters, submarines and ships.

Mr Fakie said a critical issue was to establish a link between gifts received and the allocation of contracts.

The BBC's southern Africa correspondent Alan Little says the highest profile allegation to have been made public concerns the acquisition of a luxury car by the parliamentary head of the ruling African National Congress, Tony Yengeni.

Scandal

Mr Ngcuka confirmed that this was part of the investigation. Public prosecutors hope to publish a substantive report by the end of July.

Our correspondent says it is a scandal that overshadows all South African public life and threatens to engulf senior members of President Thabo Mbeki's government.

Under the 1999 deal, military equipment including submarines, helicopters and jet aircraft were purchased from a range ofEuropean manufacturers.

Some of the manufacturing was subcontracted to the South African defence industry.

Opposition politicians and the media have exposed links between the subcontractors and members of the South African Government and military.

The governing African National Congress insisted it was the European arms manufacturers and not the South African Government, which chose the subcontractors.

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Prsident Mbeki's leadership has come under criticism



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Mungo Soggot,South Africanjournalist"It is not entirely clear what the hearings will be focusing on"

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Monday, 11 June, 2001, 13:52 GMT 14:52 UK

South Africa arms inquiry under way

Gripen advanced fighters are part of the arms deal

Public hearings have opened in South Africa into a $6bn arms deal, which has been at the centre of allegations of fraud and corruption at high levels in the government in Pretoria.

The case at Pretoria High Court was due top start two weeks ago, but was immediately adjourned at the request of the Defence Ministry, which said it needed more time to prepare.

The government hasbeen accused of a cover-up - something it denies.

Correspondents say it has become one of the most highly charged issues facing President Thabo Mbeki's administration and has provided ammunition for wider criticism of his leadership.

The court, which has now adjourned until Tuesday, rejected an application for live television and radio broadcasts of the proceedings saying cameras would be an invasion of the privacy of the witnesses.


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The hearing, to be presided over by a three-man panel, is expected to last two months and will dig deep into the financial and procedural details of the deal, South Africa's biggest arms transaction in seven years.

Only one of the accused has been publicly named so far - chief whip of the governing African National Congress Tony Yengeni, who played an important role in the committee awarding the contract.

'Whitewash'

Signed in 1999, the deal involves companies from Germany, Italy, Sweden, Britain, France and South Africa. Amongst the firms supplying weapons are Saab, BAE Systems and Thomson-CSF.

As part of the agreement, South Africa is supposed to receive inward investment of $13bn which the government says will create 65,000 jobs.

Opinion on the hearings remains divided, with supporters describing the inquiry as a genuine effort to provide background.

But critics dismiss it as a whitewash that could undermine and prejudice the three separate criminal investigations already under way.

The government of President Thabo Mbeki has been accused of attempting a cover-up - among others by ruling out using the country's most effective investigation unit in the probes which have been set up.

The government says the armed forces urgently need modernisation, but opponents say the country cannot afford it, and the money would be better spent elsewhere.


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The government says the military needs modernising



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Monday, 28 May, 2001, 12:43 GMT 13:43 UK

Technicalities hold up SA arms inquiry

The deal has aroused criticism of President Mbeki

Public hearings in South Africa into a controversial $6bn arms deal have been postponed - after getting bogged down in legal argument as they got underway on Monday.

The two-week delay was agreed after the Ministry of Defence requested more time to prepare its evidence and local broadcasters asked for permission to televise the proceedings.

The hearings areintended to look into allegations of fraud and corruption surrounding the deal which was signed a year and a half ago.

The BBC's Nick Childs says opinion on these hearings remains divided - supporters describe the inquiry as a genuine effort to provide background and critics dismiss it as a whitewash that could undermine and prejudice the three separate criminal investigations already underway.

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The deal involved companies from Germany, Italy, Sweden, Britain, France and South Africa. Amongst the firms supplying weapons are Saab, BAE Systems and Thomson-CSF.

As part of the agreement, South Africa is supposed to receive inward investment of $13bn which the government says will create 65,000 jobs.

But opponents have accused senior officials of the governing African National Congress of corruption.

One of the charges centres on the alleged supply of luxury cars to senior officials. Among those in the spotlight is the ANC's chief whip, Tony Yengeni.

'Cover-up'

The government of President Thabo Mbeki has been accused of attempting a cover-up - among others by ruling out using the country's most effective investigation unit in the probes which have been set up.

And our correspondent says the government has appeared increasingly on the defensive.

The deal has become one of the most highly charged issues facing Mr Mbeki's administration and has provided ammunition for wider criticism of his leadership.

The ANC has consistently denied the allegations.

The government says the armed forces urgently need modernisation, but opponents say the country cannot afford it, and the money would be better spent elsewhere.

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BBC News | AFRICA | The rise and fall of Tony Yengeni http://news.bbc.co.uk/2/hi/africa/1577682.stm

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What kind of man uses a wet bag repeatedlyand listens to those cries and moans and takes each of thosepeople close to their deaths?

Tony Yengeni

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Wednesday, 3 October, 2001, 18:31 GMT 19:31 UK

The rise and fall of Tony Yengeni

Yengeni is known as a sharp dresser

By Carolyn Dempster in Johannesburg

Tony Sithembiso Yengeni has come a long way since his early years as a popularanti-apartheid struggle activist and street fighter.

The corpulent chief whip of the ruling African National Congress is well-known in parliamentand political circles for his smart dressing. Hesports designer suits from Cape Town's most exclusive boutiques, and his expensive tastesare reflected in his lifestyle.

It was not always so.Born in Cape Town in 1954, Tony Yengeni grew up to become a supporter of the blackconsciousness movement under the leadership of Steve Biko before joining theoutlawed ANC in 1976.

In the wake of the Soweto student uprisingand the subsequent government crackdown onanti-apartheid organisations, Mr Yengeni went into temporary exile as a member of theANC's armed wing, Umkhonto we Sizwe.

Arrested

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Luxury cars are now known as "Yengenis"

He went for military training in ANC camps inBotswana, Zambia and Angola before studying for a social science diploma inMoscow.

Upon his return to Southern Africa, he became the regional secretary for the SouthAfrican Council of Trade Unions, based in Lesotho.

He was appointed bythe ANC as leader of its armed wing in the Western Cape, but almost as soon as hereturned to the Cape he was arrested by the National Party government in 1987and spent four years in prison while awaiting trial for terrorism.

During his detention, Yengeni was tortured by former anti-terrorist squad policeman Jeffrey Benzien, whosubsequently boasted to South Africa's Truthand Reconciliation Commission that he had perfected his "wetbag" interrogatory torturemethod, guaranteed to produce results in under 30 minutes.

It was one of the most mesmerising moments of the Truth Commission hearingswhen Mr Benzien re-enacted this method, using his former victim, Tony Yengeni, for the benefit of the Commissioners and the public.

Furious

The "wetbag" method consisted of placing awet canvas bag over the head of thedetainee's head and then tightening the bag at their throat, threatening to suffocate them time and again until they confessed.

In his cross-questioning of Mr Benzien, Mr Yengeni asked: "What kind of man uses awet bag repeatedly and listens to those cries and moans and takes each of those peopleclose to their deaths - what kind of human being is that?"

Mr Benzien's mild response was: "I have

the page.


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Whatever happens there will be blood on the floor

Tony Yengeni

asked myself that question. I haveapproached psychiatrists to have myself evaluated".

Not all of Mr Benzien's victims lived to tell the tale, or interrogate the man who hadtortured and humiliated them.

Mr Yengeni was publicly furious when historturer was granted amnesty by the Truth Commission.

Indemnity

Mr Yengeni was never successfully prosecuted by the apartheid state and was finally granted indemnity as part of the political transition process in 1991.

On his release from prison he became general secretary of the ANC in the Western Cape,and briefly engaged in the race to lead the party in the region before it was decided thatthe ANC's interests would be better served bya mixed-race or "coloured" leader, as the coloured population forms the majority in theprovince. He dropped out of the race.

Tony Yengeni cultivated a militant leadership style, joining other ANCpopulists like Winnie Madikizela Mandela and ANC youth leader Peter Mokaba to whip up support for the ANC in thelead-up to the 1994 elections.

He was characterised as one of the ANC'syoung lions and after the elections wasrewarded for his dedication and hard work with the influential position as chair ofparliament's Joint Standing Committee for Defence - the body which plays a key role indecisions relating to South Africa's arms purchases.

'Fat cat'

He was also subsequently appointed theANC's chief whip in parliament, a role he hasrelished, and has carried out diligently.

When Tony Yengeni first started driving


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Yengeni is being charged with

around Cape Town in 1998 in his state-of-the-art dark greenMercedes Benz ML320 4x4 with its tinted windows and plush beige upholstery, therewas the usual ribald comment in the mediaabout "fat cats on the gravy train".

Then rumours started circulating in parliament that Mr Yengeni had received the car as agift.

It was not until opposition member of parliament Patricia de Lille raised queriesabout kick-backs and corruption linked to the government's controversial R43 billion ($5billion) arms procurement deal in late 1999, that Mr Yengeni's name was mentioned forthe first time.

Full-page advert

In March, South Africa's Sunday Times newspaper exposed how Tony Yengeni hadreceived a generous discount on his Mercedes Benz from an arms manufacturing companywhich had benefited directly from the arms deal.

He initially refused to testify to parliament's Ethics Committee which requires members todisclose all assets, saying he was not legally obliged to do so.

He called the Sunday Times articles "hogwash" and told a press conference thathe was not going to be subjected to a "witchunt" by the media. "Whatever happensthere will be blood on the floor" he threatened, resorting to the language of the struggle.

In a curious about-turn, in July this year, Yengeni took out a full-pageadvertisement in every South African Sunday newspaper, except the SundayTimes.

This was estimated to have cost the chief whip R250 000. In it,Mr Yengeni defends his


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corruption, fraud, perjury and forgery

vehicle purchase, calling the unjustified attacks on him "racist"and "McCarthyist".

But South Africa's townships, a luxury 4 wheel drive or a Mercedes is now referred toas a "Yengeni".

Now it is not the South African media that Tony Yengeni will be answering to, but SouthAfrica's Commercial Criminal court on charges of corruption, fraud, statutory perjury andforgery.

His case resumes on January 25 2002.




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