Spies plunder R1bn slush fund

2014-10-19 19:31
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Johannesburg - Hundreds of millions of rands were sunk into a slush fund intended to improve South Africa’s intelligence capabilities – but much of the money was spent on luxury cars, properties and farms for spies and their families instead, City Press reports.

The Principal Agent Network, a covert project set up in 2007 to strengthen the National Intelligence Agency’s (NIA) capacity to collect intelligence, is said to have gobbled up more than R1bn in the three years it was in existence.

City Press has seen a top-secret report compiled by the State Security Agency (SSA) which revealed that:

- The project, initiated when the SSA was still the NIA, bought at least 293 cars, many of them Mercedes-Benzes and BMWs;

- More than R20m was spent just on “warehousing” the cars in Gauteng and the Western Cape. The warehouses were allegedly owned and controlled by relatives of SSA staff who worked on the project;

- “Safe houses” and farms were bought around the country and some were registered in agents’ names;

- A Cape Town car dealer was paid R13m to “handle” agents and investigate corruption in the city administration. He never produced any information of value – but he did buy himself a stake in a BMW dealership; and

- A former NIA official resigned and formed a company that was contracted to supply surveillance services and equipment to the project. This company was paid R58m in just two years. It allegedly manufactured false documentation.

The report was compiled after a forensic audit into the project, which was established by then intelligence director-general Manala Manzini and deputy director-general Arthur Fraser. The alleged misspending happened between 2007 and 2010.

Manzini left the SSA in October 2009 and Fraser followed suit a few months later. They are now partners in a consultancy.

Inspector General of Intelligence Faith Radebe has conducted her own investigation into the matter and has handed her final report to State Security Minister David Mahlobo.

Mahlobo confirmed he had just received the report from Radebe and would take the “necessary and appropriate action” on the basis of the findings.

His spokesperson, Brian Dube, said Mahlobo was unable to comment on the merits of the investigation but said the minister was “concerned by the unlawful disclosure and possession of classified information that is flawed and inaccurate to unauthorised persons and or parties”.

Dube said this undermined “integrity, objectivity and fairness, and violates the rights of individuals”.

The SSA has for the past three years attempted to recover some of the assets, while others were written off. About R80 million is still unaccounted for, City Press has been told.

The SSA referred the matter to the Hawks and the National Prosecuting Authority (NPA). City Press understands the NPA was ready to charge 12 senior officials with fraud and corruption when it was ordered to stop because the SSA’s investigation was “ongoing” and dealt with matters of state security.

Manzini and Fraser responded to detailed questions from City Press, saying: “We are aware of an investigation conducted against us by the inspector-general to which we have cooperated fully.”

They said they were unable to comment until the investigation had been “concluded and we are informed of its outcome”.

Inside the Principal Agent Network

When the network was launched in 2007, more than 70 intelligence officials were assigned to the project.

Many of them, in turn, appointed family members, friends and contacts as informants and agents.

The state’s formal vetting process in appointing agents was not followed.

Because of this, several convicted criminals found their way into the project.

Intelligence sources labelled it “a parallel intelligence organisation” with its own funds, operatives, infrastructure and intelligence analysis capacity.

The computer system was installed in Fraser’s house. But SSA insiders say the intelligence and information generated was never fed into the NIA/SSA’s formal analysis and management structures, where information is traditionally evaluated.

The network was shut down in 2010 because, sources said, it “ran out of money”.

Missing money

Then state security minister Siyabonga Cwele was in 2010 presented with a 156-page executive summary of the forensic investigation into the network.

In November that year, Cwele ordered the matter to be referred to the Hawks for further investigation and to the NPA for prosecution.

He also briefed then justice minister Jeff Radebe and his police counterpart Nathi Mthethwa.

The Asset Forfeiture Unit attended some of these meetings so it could prepare to seize properties, cars and other assets.

But the seizures and prosecution did not materialise. Sources said Cwele told officials the SSA was conducting further investigations and the matter concerned “state security”.

Still under investigation

The wastage and possible criminality in the network project was recently raised in Parliament’s Joint Standing Committee on Intelligence.

Dirk Stubbe, the DA’s spokesperson on intelligence, confirmed the discussion and said he was told the investigation was “ongoing”.

Former intelligence minister Ronnie Kasrils, under whose auspices the project was initiated, said investigators interviewed him three years ago.

He said he couldn’t really help because he left government in 2008.

He branded the revelations “horrendous”.

“For too long the security and intelligence agencies have been able to operate as in the bad old days of apartheid.

“I have often warned of this rot and the threat to our democracy, constitution and law,” said Kasrils.

City Press asked Cwele if he was complicit in stopping the prosecutions of implicated officials.

His spokesperson, Siya Qoza, said as Cwele was now the minister of telecommunications and postal services, he was “unable to comment on matters that relate to other ministries or departments”.

Read more on:    corruption  |  fraud

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