Intrigue in the air over apartheid helicopter sales
Legal action set to be heard in SA this week is the latest in a long-running, $600m dispute around the covert purchase of helicopters by the apartheid state
For all the appalling death and misery wrought by Cyclone Idai this month, the disaster had a silver lining for former Portuguese racing driver Jorge Pinhol. There, amid the destruction in Mozambique was the SA Air Force, its Oryx helicopters saving desperate survivors from the floodwaters, ferrying food and medical supplies, and generally doing good.
The hero helicopters were indisputably on a humanitarian mission, not a military one. And that, for Pinhol, backs his argument in a $600m claim against state-owned company Armscor.
According to UK-based Pinhol — who went into commodity trading and other pursuits after quitting the track — it is because of him that Armscor, back in the bad old days of apartheid and UN sanctions, was able to acquire 50 DIY Super Puma kits from French company Aérospatiale and assemble them in SA as the Oryx.
Pinhol, who has been a middleman in a series of international arms transactions but insists he is a "businessman", not an arms trader, has since 1993 been fighting Armscor in courts in SA and Europe. He says the company owes him a 10% commission on the $3bn Oryx deal.
It is a kind of morality play, with a cast that includes the late Pik Botha, Canadian billionaire John Risley, Michael Oatley of Ciex and many, many others.
In recent years Hennie van Vuuren, the Open Secrets director who wrote about the Pinhol case in Apartheid, Guns and Money, has become a vocal member of the audience.
The public has a fundamental right to knowHennie van Vuuren
The latest chapter in the saga takes place this week in Pretoria, where Pinhol’s legal team, headed by David Lawson, a US attorney based in Geneva, is trying to get an order from the North Gauteng High Court telling the auditor-general (AG) to hand over secret documents from three decades ago.
One of the problems for Pinhol, on his version, is that he foolishly trusted his Armscor "friends" — he pronounces the word with heavy irony — when they said in 1987 they could not let him have a written copy of their contract because of the sensitivity around the deal.
Then, just before the ANC took power in 1994, Armscor is said to have shredded or incinerated any possibly incriminating records, leaving no paper trail to support Pinhol’s claim.
More recently though, Lawson says he heard from a former official in the office of the AG. The official claims to have audited Armscor’s secret accounts in the late 1980s, and said the records still exist in the AG’s archives — hence the court case in Pretoria.
AG Kimi Makwetu is fighting the application, having apparently rejected a carrot Lawson dangled in front of him three years ago: a treasure trove of hitherto secret details of how allegedly corrupt Armscor executives pillaged state coffers in the dying days of apartheid.
In a 2016 letter to Makwetu, Lawson suggested a meeting, writing: "One of the purposes of the proposed meeting is to provide you with information and documents which have come into our possession from former Armscor employees, ‘whistleblowers’ … [They] demonstrate that large sums of SA state funds were illegally diverted by senior Armscor executives on a regular basis through irregular secret channels."
Makwetu replied at the time that he found the request for a meeting "unusual", and said he could not provide Lawson with the Armscor records because the AG’s work is confidential. His letter showed no interest in the Armscor embezzlement claims.
The case in Pretoria is an adjunct to the main action in a court in Lisbon, which has been running for 11 years. There, Pinhol, in the shape of his two companies — Beverley Securities Ltd and Beverley Securities Inc — is suing Armscor for his 10% commission, plus interest, for a total Lawson puts at $600m.
"If we get these documents [from the AG] that’s going to strengthen our case," Lawson tells the FM. But even without the documents, he says they are "ready to go to trial … I think we have a bloody good case".
Lawson says the $300m that was earmarked for Pinhol was part of the much larger sums that Armscor executives allegedly took for themselves — a total he says is at least $900m. He says one of the Armscor whistleblowers left the company with banking records that followed the money from the then Volksbank in Pretoria to "hundreds" of shell companies in the Far East and elsewhere.
"I have that evidence in my office, and I’m working out how to use it in my court case," Lawson says. "If we could get this case settled, we’d be happy to provide them [Armscor] with this information."
For Van Vuuren, the Pinhol case is "no ordinary litigation … [or] a matter of pure commercial interest".
He says that, in the course of researching his book, he had not come across evidence of Armscor executives embezzling money — but if Lawson has such information, he should make it public. "The public has a fundamental right to know."
I was first in contact with Pinhol in 1995, two years after he dropped his first action against Armscor in an SA court. His lawyer at the time cited threats to Pinhol’s life and said the chances of success in a local court were slim.
At the time, Pinhol made no bones about this having been a sanctions-busting deal. He said — as he has told countless judges and lawyers since — that he used his contacts in the Portuguese military to create a clandestine channel through Portugal to ship the helicopters from France to SA.
When the shipments began but Armscor refused to pay him, Pinhol said he appealed to Botha, who was still foreign minister, and who apparently asked SA diplomats in Lisbon to investigate. They are said to have reported that Pinhol was in fact entitled to his commission.
Pinhol, looking to recruit all manner of investigators to his cause, also introduced me to Oatley at a meeting in a London hotel. The head of Ciex, who later investigated the Absa "lifeboat", also hinted at corruption in the Oryx deal.
At the time the deal was struck, SA was deeply involved in the war in Angola, which was raging fiercely in the mid-1980s. But Lawson, who became involved in the case in 2006, with funding from Risley, describes the Super Pumas as "search and rescue" craft. "These are vanilla-flavoured helicopters, built for search and rescue," he says.
If this version is accepted in court, it would mean that the deal was a legitimate one that had not violated sanctions.
Armscor says in its court papers that Pinhol wasn’t involved in the deal — and that the deal was illegal, given that it contravened sanctions. So Pinhol’s claim should not be entertained.
What it means
If it is accepted that the helicopters are for ‘search and rescue’, the sale may be deemed legitimate
The danger for Pinhol, now 70 and suffering from Parkinson’s, is that if the Lisbon court decides the deal was illegal, it might throw out his case. That will pretty much be the end of the road for his somewhat obsessive campaign against Armscor.
Van Vuuren has accused Lawson and Risley of being "bounty hunters" out to extract millions of dollars from Armscor and, by extension, the SA taxpayer. (Risley, in return for funding Lawson, will take a cut of any money Pinhol wins.)
Lawson finds the accusation "objectionable", adding that this is a "perfectly normal civil case".
He says Armscor has rebuffed his offers to discuss a settlement, apparently because it is confident that the Lisbon court will accept its arguments. He notes that if his client wins, Armscor could be liable for substantial legal costs. It has already had a penalty of €1m imposed for lodging what a Portuguese court said was an unfounded appeal against a legal ruling.
Armscor had not responded to requests for comment by the time of going to press. However, in its 2016/2017 annual report it noted that "the prospect of success in the defence of the matter still remains good".
AG spokesperson Africa Boso said the AG’s lawyers were opposing the matter in court. "We will therefore not comment on it at this stage, as doing so might pre-empt the outcome thereof."