Arms deal – ‘BAE paid Hlongwane R100m’

2011-06-24 07:04

The Democratic Alliance (DA) yesterday opened a new front in the battle to have the arms deal investigation reopened, revealing documents purportedly showing that UK arms giant BAE Systems paid R100 million to defence “consultant” Fana Hlongwane, Business Day reports this morning.

In the most significant development in unravelling the arms deal in recent months, DA MP David Maynier released details of contracts between a front company, South African National Industrial Participation, and Hlongwane Consulting, Fana Hlongwane and Ngwane Aerospace – of which Hlongwane was the sole director.

According to the report Maynier said the papers amounted to prima facie evidence of bribery or corruption and raised serious questions.

This came a week after the chairperson of Saab in Sweden, Hakan Buskhe, said an internal company probe found R24 million had been paid to a South African consultant – reportedly Hlongwane, an adviser to former defence minister Joe Modise.

Saab and BAE were partners in supplying Gripen jet fighters to SA.

The newspaper said that Maynier dealt with each document at a briefing yesterday, starting with a consultancy agreement between South African National Industrial Participation and Hlongwane Consulting signed on September 10 2003.

According to the report, the agreement specified that the consultant was required “to take all reasonable and necessary steps to ensure that the company (BAE) is granted or is able to claim national industrial participation (NIP) credits from the South African government as a result of its involvement in any NIP project; and to carry out any other associated tasks relating to the marketing and implementation of NIP projects as may be reasonably required by the company.”

Companies awarded contracts to supply arms had to agree to significant investment in South Africa, called the National Industrial Participation Programme.

Business Day quoted Maynier saying “the total value of the contract, over the five-year period commencing on August 1 2003, would have been R98 million.

The fees and bonus payments in the agreement were structured as follows: a payment of R8.175 million on or about August 1 2003; a fee of R1.875 million every quarter commencing on or about September 2 2003; a bonus of R22.5 million upon the successful completion of ‘milestone 1’ and a bonus of R30 million upon the successful completion of ‘milestone 3’.”

The milestones were stages in BAE’s national industrial participation obligations.

Among the questions Maynier said the documents raised were:

» Did Hlongwane Consulting actually have the skills, knowledge and expertise in project identification, development, marketing and implementation for the National Industrial Participation Programme?

» Was there evidence that services were actually provided by Hlongwane Consulting in return for the enormous fees and bonuses that were payable in terms of the various agreements?

» Was there evidence of any “forward payments” by Hlongwane Consulting to individuals or institutions involved in the process of decision-making?

» Was there evidence that Hlongwane Consulting complied with all the tax laws and regulations?

The newspaper said BAE Systems in London responded yesterday: “These and other matters were fully reviewed by the Serious Fraud Office and formed part of the overall resolution that the company reached with the office in February last year.”

Maynier has sent copies of the documents to Hawks boss General Anwa Dramat and Parliament’s public accounts committee. 

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