COMMISSION OF INQUIRY INTO ALLEGATIONS OF FRAUD, CORRUPTION, IMPROPRIETY OR IRREGULARITY IN THE STRATEGIC DEFENCE PROCUREMENT PACKAGE

(The Seriti Commission of Inquiry into the ARMS DEAL)

Supplementary Submission by

Terry Crawford-Browne

Introduction:

1.1 I made my submission to the Commission on June 12, 2012. To summarise, three of the six provisions of the Commission's terms of reference concern offsets. I contend that offsets fail the provisions of section 217 (1) of the Constitution. It is indisputable that the rationale for the arms deal was that R30 billion spent on armaments would generate R110 billion in offsets to create 65 000 jobs, and that this rationale had the full support of the Cabinet. My submission is supported by a legal opinion by Advocate Geoff Budlender SC (Exhibit TCB1) to argue that the offsets, and thus the arms deal, were unconstitutional and illegal right from inception.

1.2 Six months have now elapsed since I made that submission. On October 29, 2012, by letter to the chairperson of the Commission, I drew attention to sections 2 and 237 of the Constitution which require "all constitutional obligations must be performed diligently and without delay."

1.3 I acknowledge receipt of the Commission's letter dated November 23, 2012 that I will be required to attend the sitting of the Commission in March 2013 in Pretoria. Accordingly, I request a ruling by the Commission and/or a referral to the Constitutional Court before the hearings in March whether offsets violate section 217 (1) of the Constitution.

1.4 The Commission had earlier issued a press statement that, inter alia, declared that it was extremely disappointed to have recently only seven submissions. Evidently, the State is not amongst the seven respondents.

1.5 I also acknowledge that the Commission on November 24, 2012 released the names of witnesses to be called, and that they are:

David Maynier, Patricia de Lille, Major General Hans Meiring, Colonel Johan du Plooy, Paul Hoffman, Terry Crawford-Browne, Dr Richard Young, Gavin Woods, Andrew Woods, Andrew Feinstein, Paul Holden, Raenette Taljaard and Fana Hlongwane.

1.6 I draw the Commission's attention to an apparent error in naming Andrew Woods. Such a person is unknown in the arms deal saga, and would seem to have been a combination of Gavin Woods and Andrew Feinstein.

1.7 May I respectfully suggest that there are some glaring omissions from that list, including John Bredenkamp, Janet Charter (widow of Richard Charter), Thabo Mbeki, Alec Erwin and Trevor Manuel?

1.8 Hlongwane's name stands out because he is amongst those persons named in 160 pages of affidavits that detailed how and why BAE paid bribes of £115 million to secure its arms deal contracts with South Africa. However, why is Hlongwane being singled out and is seemingly being "scapegoated," since Bredenkamp and the late Richard Charter were also beneficiaries of these bribes and were BAE's agents in Southern Africa?

1.9 Alternatively, why is BAE again seemingly receiving preferential treatment in not being called to testify? Or representatives of Saab and the German Frigate and Submarine Consortia? May I respectfully remind the Commission of the precedent of the Lesotho Highlands Water Scheme case that bribers and bribees are equally guilty, and that contracting companies that use bribes should be internationally blacklisted?

1.10 The Commission regrettably forfeited an opportunity to interrogate and expose the involvements of successive British governments (including Prime Minister David Cameron's administration), banks, arms companies and other "overworld" syndicates involved in the arms deal when it rejected my request that Tony Blair should be subpoenaed when he was in South Africa in August 2012. The peculiar reason given was that it was "premature."

1.11 Blair is also deeply implicated in the deliberate destabilisation of countries in the Middle East as well as the Democratic Republic of Congo. It is widely believed internationally that he should be brought to the International Criminal Court for trial as a war criminal.

The rationale for the Strategic Defence Procurement Packages:

2.1 The first term of reference for the Commission requires it to investigate the rationale for the arms deal. It is therefore logical and essential that the three surviving cabinet ministers - namely then Deputy President Thabo Mbeki, then Minister of Trade and Industry, Alec Erwin and then Minister of Finance, Trevor Manuel -- who comprised the Cabinet sub-committee that decided on the acquisitions must be the first witnesses to testify at the public hearings.

2.2 Mbeki: In paragraph 7.5 of my submission, I quoted Mbeki's biographer, Mark Gevisser who wrote:

If the arms deal has become the poisoned well of post-apartheid South African politics, then it was Thabo Mbeki himself who initially contaminated the water, even if it was done with the best of intentions. He championed the deal from the onset, with an ardour quite remarkable in one so sceptical of military expansion during his own time as a freedom fighter. And as the allegations multiplied, he became increasingly strident in his defence of it.

2.3 Erwin:  Armscor combined with the Department of Trade and Industry (DTI) in 1997 to establish the requirement that all government foreign procurements over US$10 million must include offset provisions. Given that offsets remain a DTI requirement for government procurements, Erwin must explain to the Commission how and why offsets were instituted in 1997, and why offset contracts linked to the arms deal could not be investigated even by the Auditor General, or Parliamentarians, because of "commercial confidentiality" clauses imposed by the British government.

2.4 Manuel:  Manuel's role in the Cabinet's arms deal sub-committee was responsibility for the affordability and financing of the acquisitions. The arms deal affordability study presented to the Cabinet in August 1999 warned the ministers that the negative economic consequences of the acquisitions could "lead the government into mounting fiscal, economic and financial difficulties." The study noted that instead of job creation, the negative consequences would include job losses. It noted extreme foreign exchange risks, and also that offsets could not be guaranteed. The affordability study team proposed that the BAE/Saab Gripen acquisitions, which constituted almost half of the arms deal, should be deferred or preferably cancelled.

2.5 As Exhibit TCB2 to my submission, I appended relevant pages of the BAE/Barclays Bank/Export Credit Guarantee Department loan agreements for the BAE Hawk and BAE/Saab Gripen fighter aircraft that were signed by Manuel in 2000, and which give effect to the BAE supply agreements. Those loan agreements extend until 2019, and cover approximately half, by value, of the arms deal costs.

2.6 The agreements have been verified in the Cape High Court by Manuel's legal counsel Advocate Michael Kuper SC as authentic. Kuper described their default clauses as "potentially catastrophic for South Africa," an assessment with which I concur. In violation of section 71 the Public Finance Management Act, these agreements have never been referred to Parliament for requisite authority by resolution of the National Assembly. The 255 pages of these agreements are in my possession, and are available for the Commission's scrutiny.

2.7 Mbeki, Erwin and Manuel must inform the Commission and the South African nation what motivated the arms deal acquisitions in the first place. Their explanations must include:

• What pressures were exerted against our government by European governments and their respective arms companies to buy the armaments?
• Why did Mbeki, Erwin and Manuel ignore numerous warnings of corruption, and why did they then systematically block meaningful investigations?

Are the arms deal acquisitions underutilised or not utilised at all?

3.1 This is the second issue for the Commission to investigate under its terms of reference. Since making my submission six months ago, Patricia de Lille and I have been fully vindicated for our roles in exposing the arms deal scandal back in 1999. No less than Admiral Alan Green, the SANDF's head of strategy, confirmed in Parliament on November 28, 2012 that all four frigates and three submarines aircraft are functionally useless. Similarly, Green confirmed that the Air Force has insufficient funds even to keep the BAE Hawk and BAE/Saab Gripen fighter aircraft in the air (see report).

3.2 It is public knowledge that the three submarines are on the hard in Simon's Town for repairs after various serious mishaps. Evidently the wrong engines were fitted into the frigates, and will have to be replaced at huge expense. As the Auditor General reported to Parliament in September 2000, no consideration was given to the personnel requirements for the arms deal. There are insufficient pilots to fly the aircraft, mechanics to maintain them, or even the money to fuel them.

3.3 I respectfully suggest to the Commission that Admiral Green should be a witness to confirm his report to parliamentary portfolio committee on defence plus related issues of the emergencies facing the SANDF as a result of the arms deal acquisitions.

3.4 The Sunday Times report dated December 9, 2012 entitled "SANDF on sick parade" is appended as Exhibit TCB3. I was informed in 2001 by officials of the German Consulate in Cape Town of their assessments that South Africa lacked the capacity and expertise to maintain the submarines and frigates. They predicted, rightly as it transpired, that these extremely expensive vessels would consequently be fit only for scrap within five years after delivery.

3.5 Unashamed of the acquisition chaos and arms deal corruption they inflicted on South Africa, Ron Haywood (former chairman of Armscor), Helmut-Romer Heitman (correspondent for Janes' Defence Weekly and arms industry lobbyist) and Tony Yengeni (former chair of the Standing Committee on Defence and ANC Chief Whip in Parliament) are still lobbying in Defence Review 2012 for additional purchases of warships and warplanes.

Justice Delayed Is Justice Denied:

4.1 More than thirteen years have elapsed since Archbishop Njongonkulu Ndungane in August 1999 first called for an independent investigation into the arms deal. In his statement, Archbishop Ndungane specifically noted that offsets are economically nonsensical. The Archbishop's concerns were cavalierly dismissed by President Thabo Mbeki. The "De Lille Dossier" was released a few weeks later, in September 1999, and sparked the arms deal saga.

4.2 Following the report by the Auditor General expressing his concerns about the arms deal, the Standing Committee on Public Accounts (Scopa), held public hearings in October 2000. The Auditor General's concerns specifically included the offsets. I made a written submission to Scopa on September 28, 2000, entitled "The Betrayal Of The Struggle Against Apartheid," which I now append as Exhibit TCB4.

4.3 The emphasis of my submission was that offsets are an invitation to corruption, and are a scam promoted by the armaments industry to fleece taxpayers in both supplier and recipient countries. That reality has been subsequently proven in South Africa, as is now admitted by both Armscor and DTI.

4.2 The 2001 Joint Investigation Team (JIT) report, which resulted from the De Lille Dossier and the uproar that ensured, proved a whitewash. It purportedly exonerated the Cabinet of any wrongdoing, albeit every arms deal contract was revealed to have been very seriously flawed by tendering irregularities. Richard Young, by court order, subsequently obtained the draft JIT report, and was able to prove that its findings had been dramatically and illegally edited by President Mbeki's office.

4.3 President Mbeki was dismissed from office in September 2008 following allegations in the Sunday Times newspaper in August 2008 that he had received a bribe of R30 million from MAN Ferrostaal on behalf of the German Submarine Consortium, of which he paid R2 million to Jacob Zuma, and the balance to the ANC. Although Mbeki threatened an action for damages at the time, there has been no such action by him, by the ANC or by President Zuma, and the report stands.

4.4 Archbishop Desmond Tutu and former President FW de Klerk in December 2008 jointly petitioned President Kgalema Motlanthe to appoint a judicial commission of inquiry into the arms deal. They did so one week after the "Scorpions" raided BAE's premises in Pretoria and Cape Town. It is also public record that the Scorpions held 460 boxes and 4.7 million computer pages of evidence against BAE, which was subsequently transferred to the "Hawks." President Motlanthe dismissively told Archbishop Tutu and Mr de Klerk to take their information to the police.

4.5 In June 2009, soon after President Jacob Zuma took office, I also petitioned him to appoint a judicial commission of inquiry. His response in July 2009, notwithstanding per the paragraph above that mountain of evidence against BAE as well as the German Frigate and German Submarine Consortia, was that there was no case to answer for such an investigation.

4.6 My application CCT103/2010 came before a full bench of the Constitutional Court in May 2011. To the intense irritation of the judges, both in pre-trial correspondence and in court, the State's legal counsel simply refused to deal with the substance of the matter. The Chief Justice noted then the extreme impact of the arms deal scandal on South Africa's constitutional democracy, and declared the Court needed to hear both sides of the case.

4.7 Accordingly, the Chief Justice allowed a postponement and instructed the State to supplement its papers to deal with the substance. A second postponement was allowed, but by September 2011 the State was yet again unable or unwilling to refute the massive volume of evidence of irregularities around the arms deal.

4.8 President Zuma reportedly told the ANC's National Executive Council in September 2011 that he would appoint a commission of inquiry because, otherwise, he was going to lose the case in the Constitutional Court that I had brought against him in the public interest.

4.9 I refer to the judgment of the Supreme Court of Appeal on November 29, 2012 in the matter of the Dalai Lama's visa application (Case 242/12). Mr Justice Robert Nugent ruled that purposeful procrastination is illegal and unconstitutional. As outlined herein, there is a thirteen year history of purposeful procrastination by the State in the arms deal scandal which, I submit, has also been unconstitutional and illegal.

A Public Apology From The Government To The People Of South Africa:

5.1 The arms deal has had devastating consequences for our fragile constitutional democracy and the commitments of the Constitution to transparent and accountable governance.

5.2 That bribes were paid by the contracting companies to secure their arms deal contracts is not disputed. A former British Secretary for Trade and Industry admitted before the British Parliament that BAE had paid "commissions" (for which read bribes) but, she pleaded, "they were within reasonable limits."

5.3 Amongst the documents I submitted to the Constitutional Court are 160 pages of affidavits that detail why and how BAE paid bribes of £115 million (R1.5 billion), to whom the bribes were paid, and which bank accounts in South Africa were credited.

5.4 In Sweden, Saab acknowledges that BAE misused its accounts to launder some of these bribes. Recent television exposes have revealed how bribes were laundered in 1999 through Swedish trade unions to obtain support from ANC MPs for the BAE/Saab Gripen fighter aircraft contracts at a time when the Department of Finance affordability study team were recommending that these acquisitions be cancelled, or at least deferred.

5.5 In Germany, ThyssenKrupp reportedly plea-bargained a fine of Euros 46 million (R500 million) after claims were rejected by German tax authorities that bribes for the frigate contracts were "useful business expenses."  

5.6 MAN Ferrostaal, which managed the submarine contracts, maintained a whole department which specialised (for a fee) in arranging bribes to secure export contracts in "third world" countries both for MAN Ferrostaal and other German companies. The MAN Ferrostaal scandal may well eclipse the previous Siemens scandal, for which Siemens was fined US$1.6 billion (R14 billion) by American authorities in terms of the US Foreign Corrupt Practices Act. New management at MAN Ferrostaal acknowledges that offset contracts for the submarines were simply vehicles to pay bribes.

5.7 Instead of taking note and remedial action when allegations of corruption surfaced, Cabinet ministers associated with the arms deal actively misused the powers of state, and systematically destroyed the system of checks and balances established by the Constitution.

5.8 The arms deal contracts include "remedies in case of bribes" clauses. These provide that South Africa can summarily cancel the contracts, and claim damages. Why have these provisions not been enforced?

5.9 Failure by the Commission to recommend tough remedial actions will represent nothing less than the betrayal of the struggle against apartheid. BAE and BAE/Saab and the other arms deal companies comprising the German Frigate and Submarine Consortia should be blacklisted both in South Africa and internationally.

5.10 Given the consequences for South Africa of the arms deal, I respectfully suggest to the Commission that the people of this country are entitled to explanations by Mbeki, Erwin and Manuel of their actions and behaviour. Recipients of bribes, including Hlongwane, Bredenkamp and the late Charter, were simply "bagmen" for transactions negotiated between European governments and arms companies, and our government.

5.11 The arms deal was clearly fraudulent. The international remedy applies that the contracts should be cancelled, the equipment returned, and the monies recovered. The principle also applies that the fraudster should not benefit financially.

5.12 Cancellation of the contracts, return of the equipment, recovery of the monies plus claims for damages, and blacklisting of the companies involved would be an appropriate remedy. In the process, South Africa would also recover the bribes since, obviously, they were built into the financial costs of the arms deal.

5.13 I also respectfully suggest to the Commission that recovery of the estimated R70 billion expended on the arms deal equipment, which (per paras 3.1 and 3.2 above) is now functionally useless, would serve as a tangible apology to the people of South Africa.

Bheki Jacobs:

6.1 My book Eye On The Diamonds published this year is dedicated to Bheki Jacobs (Hassan Solomon) who led a team of ANC whistleblowers. Jacobs and his team had been trained in the Soviet Union, and had seen what happened in Russia when communist "apparatchiks" became super-capitalists. They insisted that they had gone into exile to fight for the liberation of South Africa, and became whistleblowers after they realised that the struggle had been betrayed.   

6.2 Jacobs told me:

the arms deal is just the tip of the iceberg that concerns oil deals, the taxi recapitalisation process, tollroads, drivers' licences, Cell C, the Coega harbour development, diamond and drug smuggling, weapons trafficking and money laundering. The common denominator is kickbacks to the ANC in return for political protection.

6.3 Jacobs died in September 2008 at the age of 46 of cancer in extremely suspicious circumstances. I respectfully request the Commission to recommend investigations whether the multiple cancers that killed Jacobs were deliberately induced and that his death, therefore, was murder.

TERRY CRAWFORD-BROWNE

Signed and sworn to before me at Cape Town on this 11th day of December 2012, the deponent having acknowledged that the deponent knows and understand the contents of this affidavit, has no objection to taking the oath and considers the oath binding on his conscience, and the deponent having uttered the words: "I swear that the contents of this affidavit are true so help me God."

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