Press statement: Feinstein, Holden and van Vuuren withdraw from Seriti Commission of Inquiry

Andrew Feinstein, Paul Holden and Hennie van Vuuren, witnesses whom Lawyers for Human Rights (LHR) has been representing before the Seriti Commission of Inquiry into the 1999 Arms Deal, on Thursday announced they would no longer participate in the Commission and instructed LHR to withdraw from proceedings on their behalf.  A letter detailing their decision was delivered to the Commission. 

LHR has taken an active role in the Commission on behalf of its clients and in its own interest as a public interest legal body which has monitored the fall-out from the Arms Deal since allegations of corruption were made public in 2001. LHR shares the view that the Arms Deal and various parties’ attempts to cover up their involvement in corruption has been one of the biggest blows to South African state institutions since the end of apartheid.  This has included numerous trials of politically connected individuals, leadership battles within the ruling party and attacks on constitutionally protected institutions such as the South African Police Service and the National Prosecuting Authority. Even today, the alleged “spy tapes” saga, with its roots in the arms deal, is still playing itself out before the courts. 

With our clients, LHR had hoped the commission would be the opportunity for robust investigation into the allegations of corruption, engagement with the full spectrum of people involved, uncluding foreign investigators, and a thorough and judicially-led analysis of the mountains of documentary evidence which has pointed to wrong-doing and corruption within government and in the arms industry. Unfortunately, it is these very documents that our clients and other “critic” witnesses have been barred from using during their testimony and cross-examination. The Commission has recently indicated that it may allow this evidence on a case by case basis, but refused to provide an assurance to our clients. Various rulings from Chairperson, Judge Willie Seriti, have made it clear that witnesses may only speak from their “personal knowledge” and may not refer to documents which they have not written. As our clients were not involved in the negotiation, finalisation or implementation of the deal, they have only been able to rely on the large amount of documentary proof of corruption and unjust enrichment at the expense of the state.   

Our clients have faced numerous administrative hurdles in properly participating. On their instructions, LHR has attempted to cross-examine witnesses who have testified in contradiction to the documentary evidence but we have been barred from referring to that evidence. Even before hearings began, we were concerned that there would not be enough time to prepare cross-examination immediately after the witness had finished testifying.  This proved to be true, particularly in the majority of cases where we were only given the witness’s statement and hundreds of pages of documentary evidence the morning of their testimony. Applications to postpone cross-examination were met with hostility from the chairperson and commissioner Judge Hendrick MT Musi. In the end, government witnesses who testified on behalf of the state were given far more leeway than our clients. This has resulted in a fundamentally unfair process which will leave our clients unable to properly testify or defend themselves against aggressive cross-examination intended only to discredit them. 

We support our clients’ decision to withdraw from the Commission and will continue to support their endeavours to ensure that the truth behind the Arms Deal is eventually uncovered and wrong doers are held to account.  

Evidence of Corruption
Highlights

A refrain that has been heard throughout the Seriti Commission’s proceedings is: ‘bring us the evidence of wrongdoing!’ The implication is that those of us who have criticised the Arms Deal have none, and have simply been making a lot of noise with no substance. There is a significant amount of evidence that we have submitted to the Commission and which we would have presented as evidence if the Commission had been willing to allow it. These documents which will again be placed in the public domain suggest corruption and should be properly investigated and the relevant people charged where appropriate:

1. The ‘SFO’ Affidavit
An affidavit submitted by the UK Serious Fraud Office described BAE Systems use of a highly secretive offshore company – Red Diamond Trading – to make millions of pounds of payments to covert agents on the South African deal. These included John Bredenkamp whose role, according to a BAE executive, was to identify the key decision-makers and financially incentivise them to make the right decision on the contract BAE won. BAE also contracted indirectly with Joe Modise's political advisor Fana Hlongwane’s South African companies. The SFO discovered over £100m had been paid to ‘covert agents’ on the South African deal.

2: The US Department of Justice vs. BAE Systems Plea Agreement
In 2011, BAE Systems entered into a plea bargain with the US Department of Justice in return for a fine of $400m. BAE admitted that it had made payments of at least £135m and $14m to ‘advisors’ and ‘agents’ to secure contracts around the world ‘through offshore shell companies even though in certain situations there was a high probability that part of the payments would be used in order to ensure that BAES was favored in foreign government decisions regarding the sale of defense articles.’

3: The US Department of State Plea vs. BAE Systems Plea Agreement
The following year, BAE Systems entered into a further plea agreement with the Department of State, in return for a fine of $79m for violating a number of arms trading regulations in the US. BAE admitted that it had made over 1000 payments to ‘unauthorized brokers’ around the world between 1995 and 2007. BAE admitted that it, or its shell company Red Diamond, had ‘made payments to brokers involved in securing the sale to South Africa.’

4: The BAE Systems/Stella Sigcau Faxes
These company faxes indicate that BAE’s representative in South Africa, Alan McDonald, had helped to arrange for Stella Sigcau’s daughter to be given a job in the United Kingdom, and had paid for other costs, including higher education. The faxes suggest that Sigcau, who was part of the Ministerial Committee making decisions on the Arms Deal, was vital to the success of BAE in their bid.

5: The Saab Statement and supporting documents
In 2011, Swedish TV revealed that a Saab subsidiary, Sanip, had made substantial payments to Fana Hlongwane. Saab, after an investigation, acknowledged that the payments were made, but were not reflected in their audited annual statements. In addition, the documents showed that R750 000 was transferred from Sanip to a company by the name of Veriytech CC by means of a loan that was later written off without a single repayment. The company's sole director was Professor Viktor Verijenko. In the year that the loan was written off (2003), Verijenko approved the award of a PhD in mechanical engineering to his student, Chippy Shaik. The PhD was later revoked as it had been plagiarised from other sources, including Verijenko’s own work.

6: The Debevoise & Plimpton Report
This is a vital document that the Commission has ruled inadmissible despite our attempts to have it admitted during proceedings. In 2011, the US law firm Debevoise & Plimpton delivered its commissioned report on the activities of Ferrostaal to the company. It indicates that Ferrostaal made millions of euros in payments to two well-connected individuals: Tony Georgiades and Anthony Ellingford. Georgiades was close to government officials, while Ellingford was particularly close to Defence Minister Joe Modise. The Report also noted that two further former Navy employees – Jeremy Mathers and Llew Swan (who was part of the selection team on the submarine deal) – had acted as consultants to Ferrostaal during and after the Deal. It provides evidence that Chippy Shaik, had entered into a joint mining venture with Ferrostaal’s South African subsidiary, Ferisa. Finally, Ferrostaal employees had told investigators that the offset program was merely a means of paying bribes rather than generating proper economic benefits for South Africa.

7: The German-Swiss Mutual Legal Assistance Request
In 2007, German authorities identified payments to a letter-box company Mallar Inc (controlled by Tony Georgiades) as well as $3m paid to Chippy Shaik via the middleman Ian Pierce. German authorities were of the opinion that ‘the consortium had, in fact, paid considerable bribes to achieve the conclusion of the agreement.’ An internal German Frigate Consortium memorandum indicates that Chippy Shaik had requested a $3m payment from ThyssenKrupp.

8: The List of Luxury Vehicles
As long ago as 2001, we have known that a whole host of individuals connected to the Arms Deal received discounts on luxury vehicles from EADS, a subcontractor on the corvette contract. Amongst the recipients of discounts were Siphiwe Nyanda (Chief of the SANDF),  Llew Swan (a member of the arms selection team), Vanan Pilly (a member of the Arms Deal negotiation team) and Tony Yengeni. Yengeni eventually pleaded guilty to fraud in relation to the arrangement. At the time of the Arms Deal, Yengeni was Chairperson of Parliament’s Joint Standing Committee on Defence.

9: The Schabir Shaik Judgment
Schabir Shaik, brother of ‘Chippy Shaik’, was found guilty of having a corrupt relationship with Jacob Zuma. The judgment, which was upheld by both the Supreme and Constitutional Courts, found Schaik guilty on two counts of corruption. One of these counts involved soliciting a bribe from Thomson-CSF, who supplied the combat systems for the corvettes, for Jacob Zuma, in return for protection from investigation. The other, of ‘general corruption’, found that Schabir Shaik had turned to Jacob Zuma to ensure that his company, Nkobi Holdings, was made a joint-venture partner with Thomson-CSF in African Defence Systems, which provided the combat suite for the corvettes.

10: The Jacob Zuma Indictment and Supporting Documents
In 2007, after a substantial delay, Jacob Zuma was charged with corruption and racketeering due to his relationship with Schabir Shaik. According to the indictment, Zuma was important in securing Schabir Shaik’s participation in the Arms Deal, while it was alleged that 'Chippy' had met with representatives of Thomson-CSF to ensure that his brother received a portion of the corvette combat suite contract.

11: Interview with Ambassador George Trail III regarding Futuristic Business Solutions
Paul Holden and Andrew Feinstein seperately interviewed the former US ambassador, George Trail III who had worked for Bell Helicopters in trying to win the Light Utility Helicopter contract in the Arms Deal. In this on-the-record interview, Trail claimed that he was instructed by ‘Chippy’ Shaik that, in order to win the contract, Bell would need to hire Futuristic Business Solutions as a consultant. Futuristic Business Solutions (FBS) featured two relatives of Joe Modise as shareholders, along with Ian Pierce (the man that German investigators believe facilitated a $3m payment to Chippy Shaik from ThyssenKrupp). In documents submitted to the High Court during the Schabir Shaik trial, it was confirmed that FBS, had received a contract to supply logistic services on the Light Utility Helicopter contract less than a month after the final Arms Deal contracts were signed. FBS was to receive R17m from the contract.

13: Payments to the ANC?
During the Schabir Shaik trial, investigators found correspondence between Shaik and Zweli Mkhize, an ANC representative in KwaZulu-Natal. The correspondence indicated that one of Shaik’s companies had made regular payments to the ANC during the Arms Deal, and that it had been established predominantly for the purpose of making donations to the ANC. One letter referred to such payments as a ‘dividend.’ This may have been a mistake, or may be indicative of the fact that the ANC was considered a de facto partner in Shaik’s companies. A document by Johan Van Der Walt, an auditor who testified during the Schaik trial, describes the mechanisms used by Shaik to pay the ANC. In addition, Andrew Feinstein was told by a senior ANC NEC member that the party had received money from the Arms Deal.