South African Arms Deal
   HOME

TheInfoList



OR:

The Strategic Defence Package, popularly known as the Arms Deal, was a major defence procurement programme undertaken to re-equip the South African armed forces for the post-
apartheid Apartheid ( , especially South African English:  , ; , ) was a system of institutionalised racial segregation that existed in South Africa and South West Africa (now Namibia) from 1948 to the early 1990s. It was characterised by an ...
era. It is commonly associated with the large-scale corruption that is alleged to have taken place during and after the procurement process. Some critics have said that the Arms Deal was a defining moment or turning point for the
African National Congress The African National Congress (ANC) is a political party in South Africa. It originated as a liberation movement known for its opposition to apartheid and has governed the country since 1994, when the 1994 South African general election, fir ...
(ANC) government, less than five years into its tenure. Following decades of sanctions and a major review of its functions and strategy, the Department of Defence sought to modernise its defence equipment and prepare to participate in a broader range of peace-keeping, defensive, and possibly offensive operations outside South Africa's borders. In 1998,
Parliament In modern politics and history, a parliament is a legislative body of government. Generally, a modern parliament has three functions: Representation (politics), representing the Election#Suffrage, electorate, making laws, and overseeing ...
and the cabinet of President
Nelson Mandela Nelson Rolihlahla Mandela ( , ; born Rolihlahla Mandela; 18 July 1918 – 5 December 2013) was a South African Internal resistance to apartheid, anti-apartheid activist and politician who served as the first president of South Africa f ...
, both dominated by the ANC, approved a Defence Review Report which entailed large scale procurement of defence equipment. In December 1999, the government signed contracts with European countries for the procurement of
corvette A corvette is a small warship. It is traditionally the smallest class of vessel considered to be a proper (or " rated") warship. The warship class above the corvette is that of the frigate, while the class below was historically that of the sloo ...
s, submarines,
trainer aircraft A trainer is a class of aircraft designed specifically to facilitate flight training of pilots and aircrews. The use of a dedicated trainer aircraft with additional safety features—such as tandem flight controls, forgiving flight characteristic ...
,
fighter aircraft Fighter aircraft (early on also ''pursuit aircraft'') are military aircraft designed primarily for air-to-air combat. In military conflict, the role of fighter aircraft is to establish air supremacy, air superiority of the battlespace. Domina ...
, and helicopters worth about R30 billion, primarily for the use of the
South African Navy The South African Navy (SA Navy) is the naval warfare branch of the South African National Defence Force. The Navy is primarily engaged in maintaining a conventional military deterrent, participating in counter-piracy operations, fishery prote ...
and
South African Air Force The South African Air Force (SAAF) is the air warfare branch of South African National Defence Force, with its headquarters in Pretoria. The South African Air Force was established on 1 February 1920. The Air Force saw service in World War II a ...
. Because of the financing arrangements and exchange rate fluctuations, the true cost of the contracts – only finally paid off in October 2020 – is estimated at far more, although the government's total expenditure on the package has never been disclosed. From the outset, the Arms Deal was criticised on multiple fronts. Some critics questioned the justifiability of the scale and cost of the package, while others questioned the strategic usefulness or prudence of specific contracts under the package. Most public attention, however, was focused on allegations that improper procurement processes had been followed. Each of the five major programmes of the package ultimately became subject to such allegations, which often extended to allegations of
profiteering Profiteering is a pejorative term for the act of making a profit by methods considered unethical. Overview Business owners may be accused of profiteering when they raise prices during an emergency ( especially a war). The term is also applied to ...
by ANC politicians, including through fraud, corruption, bribery, racketeering and/or money laundering. At least three former cabinet ministers –
Joe Modise Johannes "Joe" Modise (23 May 192926 November 2001) was a South African political figure. He helped to found uMkhonto we Sizwe, the military wing of the African National Congress, and was its longest serving Commander in Chief, deputised at diff ...
,
Siphiwe Nyanda General Siphiwe Nyanda (born 1950) is a former List of South African military chiefs, South African military commander and politician. He was a member of uMkhonto we Sizwe and served as List of South African military chiefs#Chief of the SADF, ...
, and Stella Sigcau – and two former Presidents –
Thabo Mbeki Thabo Mvuyelwa Mbeki (; born 18 June 1942) is a South African politician who served as the 2nd democratic president of South Africa from 14 June 1999 to 24 September 2008, when he resigned at the request of his party, the African National Cong ...
and
Jacob Zuma Jacob Gedleyihlekisa Zuma (; born 12 April 1942) is a South African politician who served as the fourth president of South Africa from 2009 to 2018. He is also referred to by his initials JZ and clan names Nxamalala and Msholozi. Zuma was a for ...
– have been accused of improperly benefiting from the contracts. Few of the allegations have been proven or prosecuted, and most were dismissed by the Seriti Commission, a judicial inquiry which ran from 2011 to 2016 and whose findings were overturned in 2019. The only individuals convicted on charges relating to the deal were former ANC Chief Whip Tony Yengeni and Zuma's financial advisor Schabir Shaik, although a criminal case is ongoing against Zuma and one of the Arms Deal subcontractors,
Thales Thales of Miletus ( ; ; ) was an Ancient Greek philosophy, Ancient Greek Pre-Socratic philosophy, pre-Socratic Philosophy, philosopher from Miletus in Ionia, Asia Minor. Thales was one of the Seven Sages of Greece, Seven Sages, founding figure ...
.


Background


Strategic review

After the end of
apartheid Apartheid ( , especially South African English:  , ; , ) was a system of institutionalised racial segregation that existed in South Africa and South West Africa (now Namibia) from 1948 to the early 1990s. It was characterised by an ...
in 1994, the
South African National Defence Force The South African National Defence Force (SANDF) comprises the armed forces of South Africa. The Chief of the SANDF is appointed by the President of South Africa from one of the armed services. They are in turn accountable to the Minister of ...
(SANDF) replaced the apartheid-era
South African Defence Force The South African Defence Force (SADF) (Afrikaans: ''Suid-Afrikaanse Weermag'') comprised the armed forces of South Africa from 1957 until 1994. Shortly before the state reconstituted itself as a republic in 1961, the former Union Defence Fo ...
(SADF). Much of the country's defence equipment would reportedly face block obsolescence before the end of the decade, and, in previous years, the
South African Navy The South African Navy (SA Navy) is the naval warfare branch of the South African National Defence Force. The Navy is primarily engaged in maintaining a conventional military deterrent, participating in counter-piracy operations, fishery prote ...
had reportedly already lost a significant portion of its conventional capacities. Sanctions, and eventually a
United Nations The United Nations (UN) is the Earth, global intergovernmental organization established by the signing of the Charter of the United Nations, UN Charter on 26 June 1945 with the stated purpose of maintaining international peace and internationa ...
arms embargo, applied on exports to South Africa had meant that the apartheid government relied heavily on the domestic arms industry, primarily through the state-owned Armscor. However, with the end of the
Cold War The Cold War was a period of global Geopolitics, geopolitical rivalry between the United States (US) and the Soviet Union (USSR) and their respective allies, the capitalist Western Bloc and communist Eastern Bloc, which lasted from 1947 unt ...
and of various regional conflicts, the defence budget fell substantially after 1989, forcing reductions to capital expenditure on defence. After 1994, major defence acquisitions were treated not as merely technical decisions but as political and economic decisions, subject to Cabinet and parliamentary approval as well as to approval by three separate bodies within the Department of Defence. The first post-apartheid Minister of Defence,
Joe Modise Johannes "Joe" Modise (23 May 192926 November 2001) was a South African political figure. He helped to found uMkhonto we Sizwe, the military wing of the African National Congress, and was its longest serving Commander in Chief, deputised at diff ...
, requested parliamentary approval for the acquisition of Spanish
corvette A corvette is a small warship. It is traditionally the smallest class of vessel considered to be a proper (or " rated") warship. The warship class above the corvette is that of the frigate, while the class below was historically that of the sloo ...
s as early as 1994, but this was refused pending a threat assessment and strategic review of the country's broad military arrangements. Accordingly, the
Ministry of Defence A ministry of defence or defense (see American and British English spelling differences#-ce.2C -se, spelling differences), also known as a department of defence or defense, is the part of a government responsible for matters of defence and Mi ...
initiated a consultative process to establish the future outlook of SANDF. This process of public participation – also subject to the approval of
Parliament In modern politics and history, a parliament is a legislative body of government. Generally, a modern parliament has three functions: Representation (politics), representing the Election#Suffrage, electorate, making laws, and overseeing ...
and Cabinet – culminated in a White Paper on Defence in 1996, a Defence Review Report in 1998, and a White Paper on Defence-Related Industries in 1999. The 1996 White Paper and 1998 Defence Review agreed, in line with the
Constitution A constitution is the aggregate of fundamental principles or established precedents that constitute the legal basis of a polity, organization or other type of entity, and commonly determines how that entity is to be governed. When these pri ...
, that SANDF's primary function was to defend the territorial integrity and people of South Africa – in contrast to the posture of SADF, which towards the end of apartheid had been involved in internal political conflicts. Both reports also agreed that SANDF should adopt a "strategic defensive posture." However, whereas the 1996 White Paper emphasised a wide definition of "security," acknowledging that South African security was not primarily a matter of military strength and that there were no immediate military threats to the country, the 1998 Defence Review also included a commitment to enhance the ability of SANDF to mount offensive operations using conventional forces if required. Thus, of the four options devised, Parliament and the Cabinet approved the approach which would reduce SANDF's manpower but increase its capital intensity, entailing a major programme of defence procurement to update SANDF's ageing equipment. The Defence Review was approved with the caveat that all procurement would require separate parliamentary approval, but that condition was ultimately not met – in December 1999, the final Strategic Defence Package was merely presented to Parliament.


Procurement process

In announcing its plans for defence procurement, the government emphasised the extent of the offset offers that it had received from multiple foreign suppliers from an early phase, presenting offsets as an opportunity to spur investment, industrialisation, job creation (the final package was expected to create 61,629 jobs), and economic growth. However, the
Congress of South African Trade Unions The Congress of South African Trade Unions (COSATU or Cosatu) is a trade union federation in South Africa. It was founded in 1985 and is the largest of the country's three main trade union federations, with 21 affiliated trade unions.One Union ...
expressed concern. According to journalist R. W. Johnson, the deal was also opposed, primarily on financial grounds, by Ministers
Trevor Manuel Trevor Andrew Manuel (born 31 January 1956) is a retired South African politician and former anti-apartheid activist who served in the cabinet of South Africa between 1994 and 2014. He was the South African Department of Finance, Minister of ...
,
Joe Slovo Yossel Mashel "Joe" Slovo (23 May 1926 – 6 January 1995) was a South African politician and Internal resistance to apartheid, anti-apartheid activist. A Marxist-Leninist, he was a long-time leader and theorist in the South African Com ...
, and
Jay Naidoo Jayaseelan Naidoo (born 1954) is a South African politician and businessman who served as the founding general secretary of the Congress of South African Trade Unions (COSATU) from 1985 to 1993. He then served as Minister responsible for the Reco ...
, while Deputy President
Thabo Mbeki Thabo Mvuyelwa Mbeki (; born 18 June 1942) is a South African politician who served as the 2nd democratic president of South Africa from 14 June 1999 to 24 September 2008, when he resigned at the request of his party, the African National Cong ...
, who has been described as a "champion" of the deal, supported Modise in favour of it. The basis for the process of deciding between bids was an evaluation by four committees (technical, finance merit, defence industrial participation, and national industrial participation), who scored each out of 300. Those evaluations were then forwarded across a series of other bodies, primarily within the defence establishment and of increasing seniority, each of which made recommendations to the next level, ultimately culminating in a set of recommendations to Cabinet. On 18 November 1998, the Cabinet approved the department's recommendations of preferred suppliers for the armaments packages, at an estimated cost of roughly R29.77 billion. This was not a final decision to procure at the estimated cost, but a decision to proceed with negotiations with those suppliers. On 15 September 1999, the Cabinet approved the acquisition of the final packages, and contracts were signed with the relevant companies on 3 December 1999.


Final package


Procurement

The cabinet announced that the total cost of the package was R29.992 billion, and it comprised: The costs cited in the table above, which were announced by the Cabinet at the time of the signature of the contracts, exclude finance charges, escalation clauses, and foreign exchange fluctuations. Thus the R29.992 billion figure should not be taken as representative of the actual cost of the contracts over the term of their payment. The actual cost has been estimated at R90 billion by 2008, and at R142.864 billion by the time the package was paid off in 2020 (in 2020 prices). The government has not disclosed the total amount that it spent on the package. In July 2016, News24 reported on invoices it claimed had been sent to Armscor by the arms companies and leaked by
Anonymous Anonymous may refer to: * Anonymity, the state of an individual's identity, or personally identifiable information, being publicly unknown ** Anonymous work, a work of art or literature that has an unnamed or unknown creator or author * Anonym ...
; however, Armscor said that the leaked figures were inaccurate. On the other hand, the contracts also purportedly entailed offsets of R100 billion. Four
Super Lynx The Westland Lynx is a British multi-purpose twin-engined military helicopter designed and built by Westland Helicopters at its factory in Yeovil. Originally intended as a utility craft for both civil and naval usage, military interest led to ...
300, supplied by the United Kingdom, had also been on the 1998 list of preferred programmes, but fell out of the final package. However, the department separately purchased them in 2003. This contract can be seen as an indirect result of the original package – by purchasing the corvettes, the government effectively committed to purchase maritime helicopters in the future. The Super Lynx were deployed on the new German corvettes from 2008.


Financing

The defence companies who supplied the equipment were paid between 2000 and 2014, while the South African government (through the National Treasury as debtor) continued paying off related loans until October 2020. The major financiers of the package, some of whose loans were underwritten by their governments, were the following international banks (with amounts provided by Manuel, who was the
Minister of Finance A ministry of finance is a ministry or other government agency in charge of government finance, fiscal policy, and financial regulation. It is headed by a finance minister, an executive or cabinet position . A ministry of finance's portfolio ...
at the time):


Strategic criticisms

The Arms Deal was subject to criticism on several different fronts. Although the majority of the ensuing controversy centred on corruption allegations and concerns that fair procurement processes had not been followed , the deal was also criticised from an early stage on grounds relating to its cost and underlying strategy. For example, critics point to the Affordability Report published by the Treasury in August 1999, which found that the Arms Deal presented a sizeable economic risk. They say that the scale of the acquisitions was hard to justify, given that South Africa did not face any direct military threats. Even when the need for such a large-scale defence acquisitions package is acknowledged, some have questioned whether the right equipment and the right suppliers were selected. For example, the decision to acquire submarines and fighter aircraft appeared imprudent to those who believed that SANDF's primary role would be to conduct peace-keeping operations and police support operations, neither of which would require additional conventional military capabilities. The most immediate maritime threats were those of smuggling and illegal fishing from foreign trawlers, making the acquisition of four modern German submarines appear ill-judged. Similarly, the southern African airspace was generally entirely peaceful, and the Air Force already possessed highly capable
Cheetahs The cheetah (''Acinonyx jubatus'') is a large cat and the fastest land animal. It has a tawny to creamy white or pale buff fur that is marked with evenly spaced, solid black spots. The head is small and rounded, with a short snout and blac ...
. The
BAE Hawk The BAE Systems Hawk is a British single-engine, subsonic, jet-powered advanced trainer aircraft. Its aluminum alloy fuselage is of conventional string-frame construction. It was first known as the Hawker Siddeley Hawk, and subsequently produc ...
trainer aircraft also cost twice as much as the Italian alternative, which was preferred by the Air Force itself. Although the Seriti Commission found otherwise, it has also been claimed that the offsets included in the final contracts failed to materialise or brought less benefit than promised.


Corruption probes


De Lille dossier

Opposition parties, civil society, and independent government watchdogs were alert for potential corruption in the Arms Deal from its initiation. In November 1998, soon after the Defence Review was finalised, the Auditor-General identified the Strategic Defence Package as high-risk and sought permission to perform a special review of the procurement process, outside the regular auditing process. Then, in 1999, the Chief Whip of the
Pan Africanist Congress The Pan Africanist Congress of Azania, often shortened to the Pan Africanist Congress (PAC), is a South African pan-Africanist national liberation movement that is now a political party. It was founded by an Africanist group, led by Robert So ...
, Patricia De Lille, addressed Parliament with allegations of corruption during the Arms Deal. The document from which she read became infamous as the "De Lille dossier," and contained allegations against Tony Yengeni, Schabir Shaik,
Thabo Mbeki Thabo Mvuyelwa Mbeki (; born 18 June 1942) is a South African politician who served as the 2nd democratic president of South Africa from 14 June 1999 to 24 September 2008, when he resigned at the request of his party, the African National Cong ...
, and
Jacob Zuma Jacob Gedleyihlekisa Zuma (; born 12 April 1942) is a South African politician who served as the fourth president of South Africa from 2009 to 2018. He is also referred to by his initials JZ and clan names Nxamalala and Msholozi. Zuma was a for ...
, amongst others. De Lille became a leader in calls for an independent inquiry into the Arms Deal, which she said should be chaired former judge Willem Heath of the Special Investigating Unit. She also laid criminal charges against South Africans who had allegedly received discounted vehicles from Daimler-Benz Aerospace . In 2012, she handed the original dossier over to the Seriti Commission, with the caveat that she would not reveal her sources. Another Arms Deal activist, Terry Crawford-Browne, later alleged that the dossier had been compiled by ANC intelligence operatives working with whistleblowers inside the party, including
Winnie Madikizela-Mandela Winnie Nomzamo Madikizela-Mandela (born Nomzamo Winifred Zanyiwe Madikizela; 26 September 1936 – 2 April 2018), also known as Winnie Mandela, was a South African politician and anti-apartheid activist, second wife of Nelson Mandela. During ...
.


2001 joint investigation

In September 2000, the Auditor-General reported to Parliament's Standing Committee on Public Accounts (SCOPA) about various potential irregularities in the decision-making process uncovered during its special review. In response, SCOPA recommended that a comprehensive investigation of the package should be undertaken by four investigating bodies: the Auditor-General, the Public Protector, the
Scorpions Scorpions are predatory arachnids of the Order (biology), order Scorpiones. They have eight legs and are easily recognized by a pair of Chela (organ), grasping pincers and a narrow, segmented tail, often carried in a characteristic forward cur ...
unit under the National Director of Public Prosecutions, and the Special Investigating Unit. The full Parliament endorsed the recommendation and three of the bodies were appointed, though, controversially, President
Thabo Mbeki Thabo Mvuyelwa Mbeki (; born 18 June 1942) is a South African politician who served as the 2nd democratic president of South Africa from 14 June 1999 to 24 September 2008, when he resigned at the request of his party, the African National Cong ...
declined to appoint the Special Investigating Unit, whose scope was determined by presidential proclamation. The three bodies conducted a joint investigation, coordinated by the Auditor-General. There were concerns that the ANC was intentionally trying to "dampen" the investigation. In August 2001,
Andrew Feinstein Andrew Josef Feinstein (born 16 March 1964) is a South African former politician, activist, filmmaker, campaigner and author, now based in London, who specialises in the investigation of the arms trade and the corruption that accompanies it. He ...
, an ANC member of SCOPA, resigned in protest against the handling of the investigation by the government and by the ANC parliamentary caucus. Gavin Woods resigned as SCOPA Chairperson the following year, due to what he said was interference in SCOPA's work by ANC politicians. The joint report of the investigation was submitted to Parliament in November 2001, and its overall conclusion was largely exculpatory:
Whilst there may have been individuals and institutions who used or attempted to use their positions improperly... to obtain undue benefits in relation to these packages, up until now no evidence has emerged, to suggest that these activities affected the selection of the successful contractors/bidders, which may render the contracts questionable. As matters stand, there are presently no grounds to suggest that the Government's contracting position is flawed.
The ''
Guardian Guardian usually refers to: * Legal guardian, a person with the authority and duty to care for the interests of another * ''The Guardian'', a British daily newspaper (The) Guardian(s) may also refer to: Places * Guardian, West Virginia, Unit ...
'' called the report "heavily sanitised," Feinstein said that it was "weak and incomplete" and "watered down," and other critics considered it "a
whitewash Whitewash, calcimine, kalsomine, calsomine, asbestis or lime paint is a type of paint made from slaked lime ( calcium hydroxide, Ca(OH)2) or chalk (calcium carbonate, CaCO3), sometimes known as "whiting". Various other additives are sometimes ...
." It declined to publicly disclose findings "of a criminal and sensitive nature," but noted that the investigators had heard some allegations of corruption and conflict of interest which "appeared to have substance and are currently being pursued." These investigations presumably led to the only two convictions ever secured in relation to the Arms Deal, those of Yengeni (convicted in 2003) and Schabir Shaik (convicted in 2005), both of whom were being investigated by the Scorpions at the time of the report's publication.


Seriti Commission

There were occasional renewed calls for investigations after further revelations or allegations were revealed in the press in subsequent years. In October 2011, President
Jacob Zuma Jacob Gedleyihlekisa Zuma (; born 12 April 1942) is a South African politician who served as the fourth president of South Africa from 2009 to 2018. He is also referred to by his initials JZ and clan names Nxamalala and Msholozi. Zuma was a for ...
, Mbeki's successor, appointed a judicial commission of inquiry to investigate the Arms Deal, chaired by Willie Seriti and also including Willem van der Merwe and Francis Legodi. Van der Merwe resigned shortly afterwards for personal reasons and was replaced by Hendrick Musi. Formally named the Commission of Inquiry into Allegations of Fraud, Corruption, Impropriety or Irregularity in the Strategic Defence Procurement Package, it was better known as the Arms Deal Commission or the Seriti Commission. Under its terms of reference, the inquiry looked into: * The rationale for the package; * Whether the equipment acquired under the package was utilised; * Whether the anticipated job opportunities and offsets had materialised; * Whether any persons improperly influenced the award of the contracts, and, if so, whether there was a basis to pursue legal proceedings or recovery of state losses; and * Whether any contract was "tainted by any fraud or corruption capable of proof, such as to justify its cancellation."


Findings

The inquiry ran until 2016 and cost R137 million. Several employees of the commission, including commissioner Lekgodi, resigned before or during the hearings, with some speaking publicly in protest of the commission's approach to its task; and the commission declined to admit several pieces of evidence which critics said were key. The report of the inquiry was released in April 2016 and was widely criticised as a whitewash. It found that: * The Arms Deal package had been necessary to enable SANDF to fulfil its constitutional mandate and international obligations; * All the equipment acquired under the package was "adequately utilised"; * The package created or "retained" at least 63,352 "direct and indirect" jobs, exceeding the projected estimate; * The anticipated offsets had "substantially materialised," and adequate arrangements were in place to pursue outstanding offset obligations; * There was no evidence to "suggest that any undue or improper influence played any role" in the appointment of the contractors; and * There was no evidence to corroborate the "various allegations of fraud, corruption or malfeasance" in the Arms Deal. The commission called accusations of fraud, corruption and malfeasance "wild allegations with no factual basis." It found no evidence that large payments to politically connected consultants were for bribes or for any purpose other than consultancy services, and it found no reason to discredit the evidence given by implicated officials who denied corruption allegations against them. It made no recommendations for further investigations or criminal charges.


Court challenges

In August 2019, the North Gauteng High Court set aside the commission's findings, on the basis that it had omitted to admit, interrogate and pursue relevant evidence and thus had failed to comprehensively investigate the matters set out in its terms of reference. The ruling was a result of a review application by Corruption Watch and Right2Know, which was unopposed after the President and three ministers withdrew their opposition to the challenge before the hearings began. In 2021, a complaint by activist groups about the conduct at the commission of its two members, Seriti and Musi, was referred to the Judicial Conduct Committee (JCC) of the Judicial Service Commission (JSC). Ahead of the JCC hearings, Seriti and Musi submitted a court application to halt the process, challenging the
constitutionality In constitutional law, constitutionality is said to be the condition of acting in accordance with an applicable constitution; "Webster On Line" the status of a law, a procedure, or an act's accordance with the laws or set forth in the applic ...
of the provision of the JSC Act which allows misconduct proceedings against retired judges, such as themselves. In November 2021, more than two years after the initial judgement, they applied to appeal the High Court's decision to overturn the commission's findings, saying that the judgement was being "used as a whip to harass us."


Specific allegations

Corruption Watch alleges that there were four common types of corrupt practice related to the Arms Deal: bribery, especially through consultancy contracts; gift-giving; share transactions which allowed politicians or politically connected businessmen to benefit from the contracts; and
revolving door A revolving door typically consists of three or four doors that hang on a central shaft and rotate around a vertical axis within a cylindrical enclosure. To use a revolving door, a person enters the enclosure between two of the doors and then m ...
corruption, whereby government officials involved in the deal were later employed by the contractors. Although there have been very many public allegations about specific cases or relationships involving some such corruption, they have most frequently been limited to media reports – they have very rarely been corroborated by an official investigation or inquiry or tested in a criminal trial.


Daimler-Benz


Tony Yengeni

In October 2001, the
Scorpions Scorpions are predatory arachnids of the Order (biology), order Scorpiones. They have eight legs and are easily recognized by a pair of Chela (organ), grasping pincers and a narrow, segmented tail, often carried in a characteristic forward cur ...
charged ANC
Chief Whip The Chief Whip is a political leader whose task is to enforce the whipping system, which aims to ensure that legislators who are members of a political party attend and vote on legislation as the party leadership prescribes. United Kingdom I ...
Tony Yengeni with corruption (and later also with fraud), after having investigated him for several months. He was accused of having received a 47% discount on a
Mercedes-Benz Mercedes-Benz (), commonly referred to simply as Mercedes and occasionally as Benz, is a German automotive brand that was founded in 1926. Mercedes-Benz AG (a subsidiary of the Mercedes-Benz Group, established in 2019) is based in Stuttgart, ...
from the South African branch of Daimler-Benz Aerospace, later merged into European Aeronautic Defence and Space (EADS), in exchange for offering to lobby for the awarding of contracts to Daimler-Benz for helicopters, fighter aircraft, and other products. This allegedly occurred in 1998, while Yengeni chaired Parliament's joint standing committee on defence, and a company in which EADS had a 33% stake ultimately won the contract to supply radar technology for the corvettes. Even before the charges against Yengeni were laid, EADS admitted that, through price discounts and other "assistance," it had delivered luxury cars to about thirty government officials while bidding for the Arms Deal contracts: it also supplied cars to Yengeni's wife, Lumka, and to Mandla Msomi, the chairperson of Parliament's public enterprises committee. The regional EADS head, Michael Woerfel, was charged for having facilitated the deal with Yengeni. After years of insisting on his innocence, in February 2003 Yengeni pleaded guilty to fraud in a
plea bargain A plea bargain, also known as a plea agreement or plea deal, is a legal arrangement in criminal law where the defendant agrees to plead guilty or no contest to a charge in exchange for concessions from the prosecutor. These concessions can include a ...
under which he was acquitted of corruption. The charges against Woerfel were dropped, and Yengeni was sentenced to five years' imprisonment but released on a presidential
pardon A pardon is a government decision to allow a person to be relieved of some or all of the legal consequences resulting from a criminal conviction. A pardon may be granted before or after conviction for the crime, depending on the laws of the j ...
after serving only four months. Some viewed Yengeni as a scapegoat.


BAE Systems

British company
BAE Systems BAE Systems plc is a British Multinational corporation, multinational Aerospace industry, aerospace, military technology, military and information security company, based in London. It is the largest manufacturer in Britain as of 2017. It is ...
received the largest contracts in the Arms Deal, having been contracted to supply
Hawk Hawks are birds of prey of the family Accipitridae. They are very widely distributed and are found on all continents, except Antarctica. The subfamily Accipitrinae includes goshawks, sparrowhawks, sharp-shinned hawks, and others. This ...
aircraft and with
Saab Saab or SAAB may refer to: Brands and enterprises * Saab AB, a Swedish aircraft, aerospace and defence company, still known as SAAB, and together with subsidiaries as Saab Group ** Datasaab, a former computer company, started as spin off from Saab ...
to jointly supply Gripen aircraft. From January 2007, South African authorities provided assistance to Britain's Serious Fraud Office (SFO), which since 2005 had been investigating BAE's involvement in corruption worldwide. The SFO found that BAE had paid £115 million (or R1.2 billion) in commissions to several advisors (through at least eight different entities, primarily with offshore bank accounts) to help secure the Arms Deal contracts. The SFO viewed the "commissions" as suspected bribes, although BAE denied that it paid bribes. The SFO's evidence was used by South African authorities to intensify their own investigations, and, in November 2008, not long before the unit was dissolved, the Scorpions raided properties belonging to BAE South Africa and to multiple BAE consultants. Businessmen Fana Hlongwane and John Bredenkamp were the two major beneficiaries of the advisory contracts. Hlongwane was a former
Umkhonto weSizwe uMkhonto weSizwe (; abbreviated MK; ) was the paramilitary wing of the African National Congress (ANC), founded by Nelson Mandela in the wake of the Sharpeville massacre. Its mission was to fight against the South African government to brin ...
commander, an advisor to Modise at the time of the Arms Deal, and a
Denel Denel SOC Ltd is a South African state-owned aerospace and military technology conglomerate established in 1992. It was created when the manufacturing subsidiaries of Armscor were split off in order for Armscor to become the procurement agency ...
director from 1999. BAE ultimately paid Hlongwane over R100 million through various means, according to the SFO for corrupt ends. The Scorpions agreed that there was "at the very least a reasonable suspicion that Fana Hlongwane may have used some of the huge sums of money he received, either directly or through the various entities which he controlled, to induce and/or reward... assistance" of officials involved in the evaluation of the Arms Deal bids. The payments to Hlongwane included quarterly retainers from BAE and from Sanip (a South African subsidiary of Saab, which in turn was majority-owned by BAE until 2005); and a large bonus from Sanip contingent upon the government making certain decisions in relation to the contracts. The contracts particularly related to assistance in respect of BAE and SAAB's offset obligations. In 2011, a Swedish documentary found evidence that SANIP was unable to prove that Hlongwane had done any "meaningful work" under his contract with Sanip, which the ''
Daily Maverick ''Daily Maverick'' is an independent, South African, English language, online news publication and weekly print newspaper, with offices in the country's two most populous cities: Cape Town (the site of its headquarters) and Johannesburg. ...
'' said suggested that the advisory contract was "merely a cover" for the payments. Similarly, Kayswell Services, which was 60% owned by Bredenkamp, entered into consultancy agreements with BAE as early as 1994. Kayswell was ultimately paid about R400 million, but BAE was allegedly unable to prove that Kayswell had actually completed any work for it. A former regional managing director of BAE admitted to the SFO that Bredenkamp had been paid for his political connections, including his access to Chief of Acquisitions Chippy Shaik. Another beneficiary of the consultancy contracts was Basil Hersov, former FNB and Anglovaal chairperson and a member of the President's economic advisory panel, whose company FTNSA Consulting had allegedly received £5.5 million (R77 million). Hersov later said that it had been less than that amount, and that it had been properly disclosed to the South African authorities. BAE reached an overall settlement with the SFO in February 2010. During the same period, it also settled with the United States
Department of Justice A justice ministry, ministry of justice, or department of justice, is a ministry or other government agency in charge of the administration of justice. The ministry or department is often headed by a minister of justice (minister for justice in a ...
and
Department of State The United States Department of State (DOS), or simply the State Department, is an executive department of the U.S. federal government responsible for the country's foreign policy and relations. Equivalent to the ministry of foreign affairs ...
. All three settlements were broad, relating to BAE's activities in a number of countries other than South Africa, and none involved admitting to bribery or corruption, although BAE did admit that it had used commissions to "ensure BAE was favoured in foreign government decisions regarding the sale of defence articles."


Joe Modise

Defence Minister
Joe Modise Johannes "Joe" Modise (23 May 192926 November 2001) was a South African political figure. He helped to found uMkhonto we Sizwe, the military wing of the African National Congress, and was its longest serving Commander in Chief, deputised at diff ...
has also been implicated in corruption relating to the BAE contracts, in ways more direct than his relationship with Hlongwane. In 2003, the ''Guardian'' published allegations by an ANC politician who claimed that Defence Minister Modise was bribed £500,000, and that money was also paid to the ANC for its 1999 election campaign. BAE denied that it had paid bribes. It was also alleged that
Aermacchi Aermacchi was an Italian aircraft manufacturer. Formerly known as Aeronautica Macchi, the company was founded in 1912 by Giulio Macchi at Varese in north-western Lombardy as Nieuport-Macchi, to build Nieuport monoplanes under licence for the It ...
, an Italian bidder for the aircraft contracts, had been told that it had to subcontract a front company owned by associates of Modise in order to win the tender. The ''Guardian'' said that there was evidence that Modise had intervened to prevent Aermacchi from being selected, and the 2001 joint investigation found that Modise had instructed that cost should not be the only criterion considered when choosing a supplier for the lift aircraft, which ultimately went to BAE at a much higher price than that offered by Aermacchi. Pierre Steyn has since said that he resigned as Secretary of Defence in 1998 over the deal, feeling that Modise had made up his mind in advance as to the outcome of the tender process. The ''Guardian'' also said that the offsets promised under the BAE contract would have benefitted Conlog, a company in which Modise owned shares, although BAE ultimately did not invest in Conlog. This was described as a blatant undeclared conflict of interest. The joint investigation noted this and said that, although it had not found yet found any evidence of impropriety, "such a situation seems extremely undesirable as it creates negative public perception." Modise died before the investigation could be completed, in the same month that the report of the joint investigation was released, and it was not pursued further.


Siphiwe Nyanda

In 2010,
amaBhungane AmaBhungane Centre for Investigative Journalism is an investigative journalism organisation focusing primarily on exposing political corruption in South Africa and neighbouring countries. They say that their name means “dung beetles” in is ...
reported that
Siphiwe Nyanda General Siphiwe Nyanda (born 1950) is a former List of South African military chiefs, South African military commander and politician. He was a member of uMkhonto we Sizwe and served as List of South African military chiefs#Chief of the SADF, ...
, the SANDF Chief between 1998 and mid-2005, had received a R4.36-million loan from Ngwane Aerospace, the company through which Hlongwane received the Sanip consultancy fees between July 2004 and August 2006. The loan, granted in 2005, was primarily for the purchase of a new house in Bryanston. Nyanda and Hlongwane had a relationship dating back to the apartheid era. Both parties denied that the loan constituted a bribe or was otherwise illicit. In 2020, the ''Daily Maverick'' said that the loan had been written off in 2009 "with evidence that there was little to no attempt at repayment." In response, Nyanda granted the newspaper access to private documents which showed that he had repaid the loan. However, the documents gave rise to two new revelations. First, the documents reportedly showed that Nyanda had agreed to loans from Hlongwane's companies before his retirement from SANDF. Second, they reportedly showed that from 2007 Nyanda had paid off the Ngwane Aerospace loan with his salary from Ngwane Defence Group, which was founded in 2006 and was also part-owned by Hlongwane. Nyanda had been appointed chief executive officer at Ngwane Defence after his retirement from SANDF, and he asked the company to transfer his salary directly to Ngwane Aerospace for repayment of the bond. It has been suggested that the loan arrangement exhibited "bad judgement" or a conflict of interest on Nyanda's part. The ''Daily Maverick'' argued that the conflict of interest was particularly pertinent because the BAE Hawks and Gripens were purchased by the government in three tranches, and Hlongwane's commission agreement granted him a substantial bonus if the third tranche was approved in 2004 – a decision over which the ''Daily Maverick'' claimed Nyanda "would have had direct and material influence."


Chippy Shaik

In 2011, '' City Press'' reported that SANIP had made a loan of R750 000 to Professor Viktor Verijenko of the
University of KwaZulu-Natal The University of KwaZulu-Natal (UKZN; , ) is a public research university with five campuses in the province of KwaZulu-Natal in South Africa. It was formed on 1 January 2004 after the merger between the University of Natal and the University ...
, who had been Shaik's PhD supervisor. Shaik was stripped of his PhD in 2008 when the university discovered that he had plagiarised other academics, including Verijenko. Verijenko received the loan, through his company Veriytech, on extremely favourable terms – it was unsecured, rand-denominated, interest-free, and without fixed repayment terms – and, according to SANIP financial records, it was later written off in full. There was no evidence that the payment was directly related to Shaik's doctorate, but journalists noted that it had been made at the same time that the doctorate was awarded.


Stella Sigcau

In 2013, the ''
Sunday Times ''The Sunday Times'' is a British Sunday newspaper whose circulation makes it the largest in Britain's quality press market category. It was founded in 1821 as ''The New Observer''. It is published by Times Newspapers Ltd, a subsidiary of N ...
'' reported that Stella Sigcau, who was
Minister of Public Enterprises The minister of public enterprises was a Minister (government), minister in the Cabinet of South Africa, cabinet of the national government of South Africa. Whomever held the position was the political head of the Department of Public Enterprise ...
during the Arms Deal negotiations, was allegedly bribed by BAE in exchange for her support for the BAE bids. Based on encrypted faxes and information from former BAE employees, it claimed that BAE had supported Sigcau's daughter while she was living in London, including with accommodation, furnishings, and help with professional networking. In a 1998 fax leaked to the ''Times'', the former regional head of BAE wrote:
e fact we have got Hawk on to the final list is very much due to our friends in the country rather than the quality of our ITP nvitation to prequalifyresponse. One friend who has, and remains, absolutely critical to our ultimate success for both Hawk and Gripen is Minister Stella Sigcau.


Saab

As mentioned above, Saab was contracted alongside BAE Systems to provide the fighter aircraft, and its South African subsidiary Sanip had signed consultancy agreements with Hlongwane. In 2011, when the Sanip agreements were receiving public attention, Saab chief executive officer Håkan Buskhe announced that Saab had investigated and had found that Sanip had paid about R24 million to Hlognwane, after the same amount was transferred to Sanip by BAE. Yet he distanced Saab from the payments, saying that the transactions were never entered into the Sanip accounts and had occurred without Saab's knowledge. Instead, a BAE employee had signed the contracts and had apparently approved inaccurate financial statements concealing them. However, according to the ''Daily Maverick'', it later emerged that Saab had also contracted directly with Hlongwane. Between October 2003 and October 2004, Saab allegedly paid Hlongwane Consulting €18,000 per month for advice on political, economic, and security policy.


Numsa

In July 1999, the South African National Civics Organisation (SANCO) and the influential National Union of Metalworkers of South Africa (Numsa) – then the largest affiliate of the
Congress of South African Trade Unions The Congress of South African Trade Unions (COSATU or Cosatu) is a trade union federation in South Africa. It was founded in 1985 and is the largest of the country's three main trade union federations, with 21 affiliated trade unions.One Union ...
– jointly announced their support for Saab's bid for the fighter aircraft contract. The announcement referred to "reciprocal agreements" by which Saab and two Swedish trade unions, including IF Metall, would support Numsa in establishing an industrial training school. The De Lille dossier alleged that this initiative was a cover for or means of laundering R30 million or more in Arms Deal-related bribes and payments, and that allegation was revived in 2012 by a Swedish TV4 programme, which focused on the involvement of
Stefan Löfven Kjell Stefan Löfven (; officially Löfvén; born 21 July 1957) is a Swedish politician who has served as the President of European Socialists since October 2022. He previously served as Prime Minister of Sweden from October 2014 to November 20 ...
, who later became Prime Minister of Sweden. Löfven was the head of Metall's international section in 1999 and reportedly was a good friend of Moses Mayekiso, who was an ANC member, the head of SANCO, and a former head of Numsa, where he retained significant influence. Following an internal investigation, Numsa had decided to distance itself from Arms Deal-related projects, but had continued to receive assistance from Metall. Saab later provided Sanco with a R2.5-million loan, which may have been written off without payment. Saab, Metall, Numsa, and Mayekiso all denied that there had been any irregularities in any arrangement among them.


Thyssen

ThyssenKrupp ThyssenKrupp AG (, ; stylized as thyssenkrupp) is a German industrial engineering and steel production multinational conglomerate. It resulted from the 1999 merger of Thyssen AG and Krupp and has its operational headquarters in Duisburg and E ...
is an engineering conglomerate which led the German Frigate Consortium, the winner of the contract, valued at R6.9 billion, to supply four corvettes. Between 2006 and 2008, Thyssen was under investigation by German prosecuting authorities for possible corruption related to the Arms Deal. In 2007, ''
Der Spiegel (, , stylized in all caps) is a German weekly news magazine published in Hamburg. With a weekly circulation of about 724,000 copies in 2022, it is one of the largest such publications in Europe. It was founded in 1947 by John Seymour Chaloner ...
'' reported that there was evidence suggesting that Thyssen had paid bribes to South Africans while bidding for the contract. It had listed $25 million in its balance sheet as "useful expenditures" related to the contract, which ''Der Spiegel'' said had been a common way of accounting for foreign bribe payments before such payments became illegal in Germany in 1999. About $22 million allegedly went through a company registered in Liberia to Tony Georgiadis, a Greek businessman, who was apparently hired by Thyssen as a lobbyist and who had links to politicians including Mbeki and Bulelani Ngcuka.
Blohm + Voss Blohm is a surname. Notable people with the surname include: * Hans Blohm C.M. (born 1927), photographer and author * Hermann Blohm (1848–1930), German businessman and co-founder of German company Blohm+Voss * Irma Blohm (1909–1997), German pol ...
, another of the three companies in the consortium, was implicated through the possible involvement of one of its former managers. However, the German investigation was dropped without any charges being laid, reportedly after a tax settlement was reached. In November 2007,
Patricia de Lille Patricia de Lille (née Lindt; born 17 February 1951) is a South African politician who is the current Minister of Tourism and leader of the political party Good. She served as Minister of Public Works and Infrastructure from 2019 to 2023. S ...
alleged in Parliament that in January 1999 Thyssen had paid R500,000 each to the ANC (through a Swiss bank account), to the
Nelson Mandela Children's Fund The Nelson Mandela Children's Fund (NMCF) is a charitable organisation founded by Nelson Mandela, based in South Africa. Its mission is to help individuals from birth to age 22.Graça Machel Graça Machel (; ; born 17 October 1945) is a Mozambique, Mozambican politician and humanitarian. Machel is an international advocate for women's and children's rights and was made an honorary Dame Commander of the Order of the British Empire ...
. The allegations were based on photocopies of three such cheques discovered in a German raid at the house of a Thyssen executive. They were denied by the Fund and by Terror Lekota, who had succeeded Modise as Defence Minister in 1999. In 2008, the ''
Mail & Guardian The ''Mail & Guardian'', formerly the ''Weekly Mail'', is a South African weekly newspaper and website, published by M&G Media in Johannesburg, South Africa. It focuses on political analysis, investigative reporting, Southern African news, loca ...
'' reported that it had seen confidential documents showing that R500,000 payments had indeed been made in 1999 to the ANC, to the Nelson Mandela Children's Fund, and to the Foundation for Community Development, not directly from Thyssen but rather from Georgiadis. According to the documents, the payments were charitable donations by Georgiadis and were not intended to influence the Arms Deal in any way.


Chippy Shaik

''Der Spiegel'' alleged that internal memos appeared to show that Chippy Shaik had requested and received a $3-million payment from Thyssen as a fee for the success of its bid. The payment was allegedly made in 2000 to a front company in London. As Chief of Acquisitions at the Department of Defence, Shaik had managed the Special Defence Account from which the package was funded, controlled all policy and planning on defence acquisition matters, and chaired or served on several of the Arms Deal procurement committees. A few months after the ''Der Spiegel'' revelations, the
National Prosecuting Authority The National Prosecuting Authority (NPA) is the agency of the South African Government responsible for state prosecutions. Under Section 179 of the South African Constitution and the National Prosecuting Authority Act of 1998, which establi ...
(NPA) announced that it would not pursue charges against Shaik. By then, he had emigrated, saying that South Africa had been ungrateful for his "back-breaking work" and that the allegations were a part of an "ongoing campaign" against him and his family. In 2010, the ''Sunday Times'' released parts of a memo written by a Thyssen executive in August 1998. The memo records Shaik telling Thyssen representatives that the German Frigate Consortium's bid
was pulled into first place in spite of the Spanish offer being 20% cheaper. The Spanish offset was according to him also valued higher than ours. In this respect it had, according to him, been no simple exercise to get us into first place.


Thabo Mbeki

Thabo Mbeki Thabo Mvuyelwa Mbeki (; born 18 June 1942) is a South African politician who served as the 2nd democratic president of South Africa from 14 June 1999 to 24 September 2008, when he resigned at the request of his party, the African National Cong ...
, who was president from June 1999 and Deputy President before then, was "alleged to have helped 'turn' the tender in ThyssenKrupp's favour." This allegation originated from the De Lille dossier, which claimed that Thyssen had not originally been shortlisted as a supplier in 1995, but had been added to the list after Mbeki, while Deputy President, visited Germany. De Lille found this timing "suspicious" and meritorious of further investigation.


Joe Modise

While Modise was Defence Minister, ThyssenKrupp subcontracted South African logistics coordinator Futuristic Business Solutions, at a price of R1.2 million, allegedly to influence procurement decisions. This was controversial because it later emerged that two of the company's directors were member of Modise's extended family, implying a conflict of interest. Those were Lambert Moloi – an
Umkhonto weSizwe uMkhonto weSizwe (; abbreviated MK; ) was the paramilitary wing of the African National Congress (ANC), founded by Nelson Mandela in the wake of the Sharpeville massacre. Its mission was to fight against the South African government to brin ...
stalwart, a former SANDF lieutenant-general, a
Denel Denel SOC Ltd is a South African state-owned aerospace and military technology conglomerate established in 1992. It was created when the manufacturing subsidiaries of Armscor were split off in order for Armscor to become the procurement agency ...
director, and Modise's brother-in-law – and Moloi's son-in-law.


Tony Yengeni

In 2013, amaBhungane reported that, according to German detectives, Yengeni had signed a R6-million bribe agreement with Thyssen in September 1995, while he was chairperson of the joint standing committee on defence and prior to the conclusion of the Defence Review. The detectives claimed to have found a copy of the agreement during a 2006 raid of ThyssenKrupp's
Düsseldorf Düsseldorf is the capital city of North Rhine-Westphalia, the most populous state of Germany. It is the second-largest city in the state after Cologne and the List of cities in Germany with more than 100,000 inhabitants, seventh-largest city ...
headquarters, as part of the investigation into the Arms Deal payments. No charges were brought in Germany – probably in part because the agreement had been signed before foreign bribery became illegal in German law – or in South Africa. Yengeni did not respond to the allegations, but he complained to the Press Ombudsman that the amaBhungane article had been unfair and defamatory. His complaint was dismissed in its substantive aspects.


Thomson/Thales

French arms company
Thales Thales of Miletus ( ; ; ) was an Ancient Greek philosophy, Ancient Greek Pre-Socratic philosophy, pre-Socratic Philosophy, philosopher from Miletus in Ionia, Asia Minor. Thales was one of the Seven Sages of Greece, Seven Sages, founding figure ...
, previously known as
Thomson-CSF Thomson-CSF was a French company that specialized in the development and manufacture of electronics with a heavy focus upon the aerospace and defence sectors of the market. Thomson-CSF was formed in 1968 following the merger of Thomson-Hous ...
, received a R2.6-billion contract to supply the combat suites for the new German corvettes. This contract has become the most highly litigated element of the Arms Deal, owing primarily to the involvement of former President
Jacob Zuma Jacob Gedleyihlekisa Zuma (; born 12 April 1942) is a South African politician who served as the fourth president of South Africa from 2009 to 2018. He is also referred to by his initials JZ and clan names Nxamalala and Msholozi. Zuma was a for ...
through his relationship to his "close friend" and financial advisor, Schabir Shaik, whose company Nkobi Holdings was Thales's
black economic empowerment Black Economic Empowerment (BEE) is a policy of the South African government which aims to facilitate broader participation in the economy by black people. A form of affirmative action, it is intended especially to redress the inequalities cr ...
partner in the bid and who made several million rands' worth of corrupt payments to Zuma over several years. The South African subsidiary of Thales, formerly known as Thint, was co-accused in Shaik's corruption trial, although those charges were dropped. A former Thales employee, Ajay Sooklal, has implicated former French president
Jacques Chirac Jacques René Chirac (, ; ; 29 November 193226 September 2019) was a French politician who served as President of France from 1995 to 2007. He was previously Prime Minister of France from 1974 to 1976 and 1986 to 1988, as well as Mayor of Pari ...
in attempts to shield Thales from prosecution. However, the company is currently co-accused in a criminal case against Zuma, charged with one count of
racketeering Racketeering is a type of organized crime in which the perpetrators set up a coercion, coercive, fraud, fraudulent, extortionary, or otherwise illegal coordinated scheme or operation (a "racket") to repeatedly or consistently collect a profit. ...
, two counts of corruption, and one count of money laundering. The state alleges that, through Shaik, Thales paid Zuma for political support in securing the Arms Deal contract and for protection against investigation. Thales has challenged the charges multiple times in various courts, arguing that it had a legitimate business relationship with Shaik and that it was unaware of his payments to Zuma. In January 2021, the Pietermaritzburg High Court declined to set aside the charges, finding that there was "reasonable and probable cause to believe" that Thales had been party to "a pattern of racketeering" with Shaik.


Schabir Shaik

Shaik had substantial interests in Nkobi Investments, which owned shares in Thomson-CSF and Thomson-CSF holdings (a South African-registered joint venture with Thomson). He also had interests in Altech Defence Systems (ADS, later renamed African Defence Systems), which Thomson-CSF acquired between April 1998 and February 1999. In the period in which the Arms Deal contracts were being evaluated and negotiated, Shaik held directorships at Thomson-CSF and Thomson-CSF Holdings, as well as at Nkobi Holdings, Nkobi Investments, and ADS. He was thus highly invested in the Arms Deal tenders, for which both ADS and Thomson were bidders – Thomson for the corvettes as well as their combat suites, and ADS for subcontracts under the corvette, submarine, and helicopter programmes. Both Thomson and ADS were ultimately awarded subcontracts. In June 2005, Shaik was sentenced to 15 years' imprisonment on two counts of corruption and one count of fraud in relation to the Arms Deal, though he was released on medical parole in 2009. The fraud charge was for misrepresenting the financial records of one of his companies. Both corruption charges related to undue payments which Shaik had made to Zuma. Between 1995 and 2002, Shaik paid Zuma a total of R1.28 million, either directly or through his companies, in the knowledge that Zuma would be unable to pay him back. The court found that this suggested that the payments had been made in anticipation of some business-related benefit that Zuma could deliver through his political office and connections. Separately, Shaik also facilitated a pre-arranged annual payment of R500,000 from Thales to Zuma, through Shaik's business accounts, starting in 2000. The court concluded that the annual payments were intended to purchase Zuma's assistance in protecting Thales from investigation and improving its profile for future government tenders.


Chippy Shaik

The 2001 joint investigation found that Chippy Shaik, brother of Schabir and the Department of Defence's Chief of Acquisitions, had had a conflict of interest arising from Schabir's commercial interest in the outcome of the Arms Deal procurement. Although Chippy had declared his conflict of interest in December 1998 and committed to recuse himself, he had in practice failed to recuse himself properly and had continued to participate in the process that ultimately led to Schabir-owned companies being awarded contracts. The investigators also noted that the contracts with Thomson and ADS were evaluated by the department at the same time that Schabir was negotiating the purchase of ADS by Thomson. While indicting Schabir, the NPA claimed that Chippy had exerted pressure on Thomson to partner with Schabir. Richard Young, whose company was a losing bidder, alleged that Chippy had had an improper influence on the selection of the combat suite contracts, though Chippy denies this.


Jacob Zuma

In late 2002, the NPA announced that the Scorpions were investigating Zuma, then Deputy President, for corruption related to the Arms Deal. In August 2003, National Director of Public Prosecutions Bulelani Ngcuka told the media that the NPA had a "prima facie case of corruption" against Zuma but had decided not to prosecute on the basis that the case was probably not winnable. However, Shaik's trial heavily implicated Zuma, given that the key aspect of the state's case was that there had been a "generalised pattern of corrupt behaviour" between Zuma and Shaik, and Mbeki fired Zuma as Deputy President in June 2005, shortly after Shaik's conviction. Zuma was charged with corruption, fraud, and racketeering in 2006 and in 2007, but both times the case was struck off the court roll, first because of repeated delays by the NPA and then on a legal technicality. In 2009, the Supreme Court of Appeal overturned the dismissal of the 2007 charges, reopening the possibility of prosecution, but the acting National Director of Public Prosecutions, Mokotedi Mpshe, decided not to pursue charges. Zuma was elected president shortly afterwards. Opposition party the Democratic Alliance applied to have the NPA's decision reviewed. In 2016, while Zuma was president, the High Court ruled that the decision in 2009 to withdraw the charges had been irrational, and that the NPA should reconsider. The ruling was supported by the Supreme Court of Appeal in 2017. The month after Zuma resigned from the presidency, in March 2018, the NPA formally reinstated the charges against him. He is charged with one count of racketeering, one count of money laundering, two counts of corruption, and twelve counts of fraud, in relation to 783 payments made to him by Shaik with money received partly or entirely from Thales. Zuma pleaded not guilty in May 2021, and the case is ongoing.


Ferrostaal

MAN Ferrostaal, leader of the German Submarine Consortium which won the submarine contract during the Arms Deal, initially maintained that it had not been party to any Arms Deal misconduct but later hired Debevoise & Plimpton to conduct an internal audit. The report, which was leaked in 2011, found that Ferrostaal had paid $40 million (about R300 million) to gain "political access" to support its bid for the contract. It also found that this political access had had a "decisive influence" on the bid's success. The two main contacts were allegedly Tony Georgiadis (who received about $20 million, through a commission agreement signed in October 1998) and Tony Ellingford (who also received about $20 million between 2000 and 2003); and they allegedly introduced Ferrostaal representatives to senior politicians including Mbeki and Modise.


Chippy Shaik

The Debevoise & Plimpton report also highlighted concerns about Ferrostaal's "close business connections" with Chippy Shaik, both during and after his tenure at the Department of Defence – indeed, in 2004, Shaik entered into a joint mining venture with Ferrostaal. The audit report said that care had not been taken to ensure propriety in this relationship, and flagged the fact that Shaik had bought shares from Ferrostaal at a significant loss to the latter. It also said that in 2008, when questioned about its relationship with Shaik, Ferrostaal had "made the inaccurate statement" that it had ended its relationship with Shaik's company upon learning Shaik's involvement. AmaBhungane reported that Shaik also appeared to have been involved in the local subsidiary which Ferrostaal set up in order to meet its close to €3-billion in offset obligations under the Arms Deal contract.


Thabo Mbeki

The De Lille dossier alleged that, like Thyssen, Ferrostaal had not been a shortlisted supplier in 1995 but had been added after Mbeki visited Germany. In 2008, the ''Sunday Times'' reported, based on a confidential study by consulting group Control Risks, that Ferrostaal had allegedly paid Mbeki R30 million in bribes, and that Mbeki had given R2 million of that amount to
Jacob Zuma Jacob Gedleyihlekisa Zuma (; born 12 April 1942) is a South African politician who served as the fourth president of South Africa from 2009 to 2018. He is also referred to by his initials JZ and clan names Nxamalala and Msholozi. Zuma was a for ...
and donated the rest to the ANC. Mbeki denied the claims, including in a 2003 government press statement.


Agusta

In 2011, academics Paul Holden and Hennie van Vuuren published ''The Devil in the Detail: How the Arms Deal Changed Everything'', which alleged that there had been corruption in the helicopter contract with Italian arms company
Agusta Agusta was an Italian helicopter manufacturer. It was based in Samarate, Northern Italy. The company was founded by Count Giovanni Agusta in 1923, who flew his first aeroplane in 1907. The MV Agusta motorcycle manufacturer began as an offshoot ...
. They claimed that Agusta offered "inducements... to connected political individuals" to manipulate figures in order to ensure that Agusta emerged as the preferred bidder. The allegations related to Agusta's relationship with Futuristic Business Solutions, which Agusta gave an estimated R750 million in subcontracts. An American competitor for the contract,
Bell A bell /ˈbɛl/ () is a directly struck idiophone percussion instrument. Most bells have the shape of a hollow cup that when struck vibrates in a single strong strike tone, with its sides forming an efficient resonator. The strike may be m ...
, which offered a lower price and more modern product than Agusta, claimed that it had been pressured to subcontract Futuristic Business Solutions – the same allegation made by losing bidder Aermacchi in respect of the aircraft contracts. Futuristic Business Solutions was the same Modise-linked firm which had been contracted by Thyssen, the winner of the corvette contract.


References


Further reading

* Crawford-Browne, Terry (2011). ''Eye on the Money''. Penguin Random House South Africa. . * Crawford-Browne, Terry (2012). ''Eye on the Diamonds''. Penguin Random House South Africa. . * Holden, Paul; Van Vuuren, Hennie (2011). ''The Devil in the Detail: How The Arms Deal Changed Everything''. Jonathan Ball Publishers. . * Holden, Paul (2012). ''The Arms Deal in Your Pocket''. Jonathan Ball Publishers. . *Sylvester, Justin; Seegers, Annette (2008). "South Africa's Strategic Arms Package: a critical analysis". ''Scientia Militaria: South African Journal of Military Studies''. 36 (1).
ISSN An International Standard Serial Number (ISSN) is an eight-digit to uniquely identify a periodical publication (periodical), such as a magazine. The ISSN is especially helpful in distinguishing between serials with the same title. ISSNs a ...
2224–0020. * Taljaard, Raenette (2012). ''Up in Arms: Pursuing Accountability for the Arms Deal in Parliament''. Jacana Media. .


External links


The Arms Deal Virtual Press Office
{{Political history of South Africa Political history of South Africa Corruption in South Africa Military history of South Africa Political scandals in South Africa Military acquisition Weapons trade 1999 in South Africa 1999 in international relations