LETTER: Hain’s Bain critique applies to arms deal too

Peter Hain rightly declares that “the Bain scandal is just the tip of the iceberg. These global giants thought they could get away with it in SA, even after local media had exposed their nefarious activities” (Bain just one of many corporates that helped fleece SA, January 10).

The arms deal scandal illustrates the point. During the 1990s British prime minister Tony Blair (and his Swedish counterpart) put huge pressure on the ANC government to buy BAE Hawk and BAE/Saab Gripen fighter aircraft, though in 1997 the SA Air Force rejected them as too expensive and unsuited to SA’s requirements. 

Hain was then one of “Blair’s buddies”, and a minister in the foreign & commonwealth office. He expressed astonishment that anyone either in England or SA could object to British weapons exports to postapartheid SA.

Yet evidence emerged in 1998 that BAE was laundering bribes to the ANC ahead of the 1999 elections via two Swedish trade unions. Through Campaign Against Arms Trade in London, I asked the British government to investigate. Scotland Yard was given that task, but I was soon informed that it was [then] not illegal in English law to bribe foreigners, and therefore there was no crime for Scotland Yard to investigate. Britain had signed but not yet ratified the Organisation for Economic Co-operation and Development (OECD) Conventions Against Bribery of Foreign Officials.

More, and even more serious, evidence against BAE emerged in September 1999, which Patricia de Lille and I forwarded to justice Willem Heath. The BAE/Saab arms deal supply contracts were scheduled to be signed in early December, subject to finalisation in January 2000 by Trevor Manuel (as finance  minister) of 20 year Barclays Bank loan agreements. In turn, the Barclays loan agreements to finance the war aircraft SA did not need and could not afford would be guaranteed by the British government’s Export Credit Guarantee Department (ECGD, now UK Finance).

Accordingly, I informed the [then] director of the ECGD, Chris Leeds, that the evidence was being assessed by Heath and that pending his decision it would be fraudulent for the ECGD to guarantee the Barclays loan agreement. Despite that alert and warning, Leeds signed the guarantee on behalf of “Her Britannic Majesty’s government” on January 25 2000, and Manuel signed the loan on behalf of SA. The loan agreement itself is a textbook example of the “developing countries debt entrapment” that is typical of British banks and governments.

It transpired that BAE was by far the ECGD’s largest client, and that ECGD was notorious for closing its eyes to bribes paid to promote British arms exports. 

Concurrently, Hain wrote to me on a foreign & commonwealth office letterhead that there was no evidence of BAE corruption. He repeated that to me a few weeks later during a face-to-face meeting in Cape Town during a concert at Kirstenbosch. Yet 160 pages of affidavits from the British Serious Fraud Office and Scorpions detail how and why BAE/Saab paid bribes of £115m (R2bn) to secure those contracts, and which bank accounts in SA and overseas were credited.

Those affidavits resulted in the seizure in Pretoria and Cape Town in November 2008 of 460 boxes of documents and 4.7-million computer pages of evidence against BAE/Saab. The Seriti commission chose to leave that evidence — uninvestigated  — in two shipping containers at the Hawks’ premises in Pretoria. BAE retained a senior advocate to represent it during the Seriti commission, his job being to ensure such evidence was ignored.

The August 1999 arms deal affordability study also warned the cabinet subcommittee comprising Thabo Mbeki, Alec Erwin, Trevor Manuel, Joe Modise and Stella Sigcau that the arms deal was a reckless proposition that could lead the government into mounting fiscal, economic and financial difficulties — in essence, SA’s current financial and economic catastrophe.

In particular, the affordability study recommended that the BAE/Saab Gripen proposals be cancelled. Instead, the cabinet overrode that recommendation because Mbeki and crew gullibly believed (under British and Swedish government pressure) that $2.5bn spent on the BAE/Saab war aircraft would magically generate $8.7bn in offset benefits and create more than 30,000 jobs. As predicted, those offset benefits never materialised: the aircraft were simply bought for the bribes. At current exchange rates $8.7bn equates to R139bn.

It is also apt to remind Hain of Denning’s famous maxim: “fraud unravels everything”, its principle being that fraudsters should not be permitted to profit from their fraud. Given his complicity 20 years ago in the BAE/Saab fleecing of SA, perhaps Hain might now prevail upon the present British government to make restitution of R139bn to the people of SA?

Terry Crawford-Browne
World Beyond War SA

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