REVEALED: Armscor's R1.4bn bills from arms deal companies

2016-07-31 09:02

Johannesburg - Companies implicated in alleged corruption, fraud and other transgressions during South Africa's infamous arms deal have submitted invoices worth more than R1.4bn to Armscor in the last two years alone.

This, critics say, shows it's "business as usual" for the companies and their subsidiaries who were accused of having played dirty in the run-up to the South African government awarding a series of contracts for new weapons worth R30bn in 1999. This was when most of the contracts were awarded.

News24 recently obtained data from state-owned weapons procurement agency Armscor's procurement system. Hackers claiming affiliation to the international "hacktivist" group Anonymous breached its server and dumped a large tranche of the company's data on the dark web. It shows paid and outstanding invoices the company received between April 2014 and May this year.

Five of the international arms suppliers who were accused of corruption and bribery in the arms deal, along with some of their local and foreign subsidiaries, sent Armscor invoices totaling more than R1.4bn in the two-year period.

BAE, Thales top the list

BAE Land Systems South Africa and BAE Systems Operations Limited invoiced Armscor R436m and R241m between April 2014 and May 2016, according to the data.

British arms giant BAE Systems, which was accused of having paid "commissions" to South African "agents" and "consultants" linked to the ruling ANC, and which subsequently paid a penalty to corruption authorities in the UK, sold its stake in BAE Land Systems to Denel in 2015.

BAE Systems and Swedish manufacturing giant Saab secured the contract to supply South Africa with 50 Hawk and Gripen fighter and trainer jets. In 2008, the Scorpions, which have since been disbanded, obtained a court order to search local commercial properties linked to BAE after the British Serious Fraud Office discovered evidence of dubious payments the company made. These included R280m paid to Fana Hlongwane, former defence minister Joe Modise's special adviser during the arms deal.

According to the Armscor data, Saab Grintek Defense, a local Saab subsidiary, submitted invoices for R257m to Armscor during the period in question.

Several subsidiaries of French manufacturer Thales, whose South African subsidiary Thint won the R2.6bn contract to provide combat suites for South Africa's new navy frigates, submitted invoices to Armscor in the last two years totaling just over R400m.

The subsidiaries are Thales Avionics SA (R205m), Thales South Africa Systems (R143m), Thales Air Defense Ltd (R34.7m) and Thales Optronics Ltd (R18.7m).

In 2005 Schabir Shaik, President Jacob Zuma's former financial adviser, was found guilty on charges of corruption and fraud that related to payments made to Zuma by Thales subsidiary Thompson-CSF. Shaik had been the facilitator of the payments from Thomson-CSF to Zuma and was sentenced to fifteen years in prison.

In 2014, the Sunday Times revealed claims made in documents compiled by former Thales lawyer and "fixer" Ajay Sooklal. They included that Zuma asked for a R500 000 a year bribe from Thales, and that the company had paid for flights, hotel rooms and expensive clothes for Zuma.

Two other companies implicated in alleged arms deal corruption involving ANC NEC member Tony Yengeni, ThyssenKrupp and the European Aeronautic Defense and Space Company (EADS), were still doing business with Armscor, the dataset shows.

ThyssenKrupp Marine Systems GmbH sent Armscor invoices for just under R70m between April 2014 and May 2016. EADS's invoices to Armscor in the same period came to R5.2m.

Yengeni, the only high-profile politician that ever served jail time for his role in the arms deal, was found to have received a luxury 4x4 vehicle at a significant discount from DaimlerChrysler Aerospace, which was later absorbed by EADS.

In 2013, the Mail & Guardian revealed that German investigators, who had been probing ThyssenKrupp's role in the arms deal, discovered an agreement signed by Yengeni and a ThyssenKrupp employee. It detailed a promised payment of R6m to Yengeni if ThyssenKrupp were to secure the contract to provide new corvettes to the South African navy.

Arms deal critics Andrew Feinstein and Hennie van Vuuren both say the recent Seriti Commission of Inquiry into the arms deal was a whitewash which would see the above-mentioned companies continue doing business with Armscor. The commission released its findings in April. It found no evidence that the transactions were tainted with corruption.

"There is no legal basis to compel Armscor not to award contracts to these companies," said Van Vuuren. He maintains it is "ethically highly problematic" that, for the companies, it is "business as usual" in South Africa.

Armscor, suppliers respond

Armscor spokesperson Lulu Mzili claimed the figures taken from Armscor's own procurement systems were incorrect.

"I can confirm that the information provided below is inaccurate. Armscor pays all invoices against valid contracts, and adheres to corporate governance on all its procurement and appointment of suppliers."

She did not indicate in what way the data was inaccurate.

"We strongly condemn the illegal access of stakeholders' information and in accordance with our previous response, divulging information on any of our suppliers will undermine the integrity of Armscor's confidential responsibility towards our suppliers," she said.

Only two of the companies involved replied to News24's queries.

"The question should go to Armscor," said Dirk Erat, spokesperson for Airbus Defense and Space, which now owns EADS.

ThyssenKrupp spokesperson Torben Beckmann said Armscor had contracted ThyssenKrupp Marine Systems for "service assignments such as the overhaul of a submarine operated by the South African Navy."

Beckmann maintains ThyssenKrupp enforces a policy of zero tolerance for corrupt practices.

"Compliance is an integral part of the change process and corporate governance at ThyssenKrupp. With its compliance commitment, ThyssenKrupp has given a clear undertaking to comply with the law, in particular anti-corruption and antitrust laws, throughout the world," he said.

"This also applies - with no ifs or buts - to our shipbuilding operations, ThyssenKrupp Marine Systems."

"Regarding the allegation that bribes were paid in the 1990's in connection with the award of frigate or submarine contracts in South Africa, different government authorities have repeatedly investigated this topic. These investigations were closed without results," Beckmann said.

Read more on:    armscor

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