Worries over meaningful contributions at the National Convention | Newzroom Afrika

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August 16, 2025

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  Hennie Van Vuuren

Director at Open Secrets Hennie van Vuuren and National Coordinator at Right2Know says it looks like the National Convention convened to discuss problems that are already known in the country. Van Vuuren and Right2Know’s Sthembiso Khuluse discuss this further on Newzroom Afrika.

 

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Hennie van Vuuren, Director of Open Secrets and the author of “Apartheid Guns and Money: A Tale of Profit” says it must be remembered that the Public Protector’s Ciex report on the lifeboat paid to Absa bank’s predecessor by the apartheid state was penned by bounty-hunters who wanted to be paid a commission on recovered apartheid loot.

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On the 21st of April 2016, President Jacob Zuma announced the release of the report of the Commission of Inquiry into allegations of fraud, corruption, impropriety or irregularity in the Strategic Defence Procurement Package (the ‘Arms Deal’). During the same announcement, President Zuma provided a summary of the findings of the Commission.

The Commission found that there was nothing wrong with the Arms Deal in its conception, execution or economic impact, despite considerable evidence in the public domain to the contrary. Most importantly, it found that there was no evidence that any of the contracts in the Arms Deal were tainted by evidence of corruption, fraud or irregularity.

We are disappointed, but hardly surprised, that the Commission has come to these findings, which are tantamount to a cover-up. Indeed, it was abundantly clear during the work of the Commission that it was ill-disposed towards undertaking a full, meaningful and unbiased investigation into the Arms Deal. It routinely failed to either admit or interrogate any evidence of wrongdoing in relation to the Deal.

In August 2014, we withdrew from the Commission of Inquiry in protest at the manner in which it was conducting its investigation. Our withdrawal and subsequent refusal to testify before the Commission in October 2014 was supported by over forty civil society organisations who shared our concerns. We identified four primary problems, which we believed indicated that the Commission was failing to investigate the Arms Deal fully, meaningfully and without favour. These concerns were:

During the life of the Commission, a number of employees resigned in protest at the manner in which it was conducting its work. In at least two cases, the employees stated that they were resigning because the Commission did not intend to investigate the Arms Deal. Rather, the Commission was pursuing a ‘second agenda’, namely, to discredit critics of the Arms Deal and find in favour of the State and arms companies’ version of events;
The Commission refused to admit vital documentary evidence of wrongdoing during the public hearings. One such document was the Debevoise & Plimpton Report, an internal audit of the arms company Ferrostaal, which received contracts in the Arms Deal. The Report indicated that Ferrostaal had made tens of millions of rands in payments to politically connected politicians and procurement officials. The report also quoted senior Ferrostaal employees as stating that the offset program was merely a conduit for bribes. In their resignation from the Commission, evidence leaders Advocates Barry Skinner and Carol Sibiya specifically pointed out that refusing to admit the Report ‘nullifies the very purposes for which the Commission was set up.’
The Commission refused to allow critical witnesses to testify about documents that they had not written, or events to which they were not personally witness. One major consequence of this is that the only people who could testify to corruption in the Arms Deal were those who paid or received bribes.
The Commission failed to provide documents to which we were entitled under the terms of our subpoena, despite repeated requests. The Commission claimed that it was refusing to do so as we were undertaking a ‘fishing expedition.’ The failure of the Commission to provide us with the documents to which we were legally entitled was typical of the Commission’s attitude of sometimes open hostility to critical witnesses.
Despite the above concerns, we are pleased that the Commission Report is now public. We look forward to interrogating its contents in full, and intend to provide a detailed response to the material therein at the earliest opportunity.

In addition, we are seeking legal advice as to the legality of the Commission’s conduct and the viability of a legal review to have the Report set aside. An announcement on this process will be made in due course.

We believe that the report represents a massive missed opportunity at arriving at the truth. However this is not the end of the road in the struggle for truth justice and accountability of corruption in the arms deal.

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A recurring line from those trying to dismiss allegations of corruption in the Arms Deal is: “Show us the evidence.”

During his testimony at the Seriti Commission two weeks ago, former president Mbeki took an opportunity to lash out at critics, saying: “For all of these years we have been saying, let this evidence be produced so that action can be taken.” This response seems especially cynical considering that efforts to investigate these allegations have routinely been derailed. Interested parties have not been granted access to the documents in which such evidence would be found, and an entire corruption-busting unit, the Scorpions, was disbanded over the issue. These difficulties are why a commission of inquiry was called for in the first place.

But the public outcry about the Arms Deal is not just rumour and allegation. Here are seven inconvenient facts for the people who say, “Where is the evidence?”

1. Schabir Shaik went to jail for soliciting bribes from a winning contractor
In 2005, a court found businessman Schabir Shaik guilty of fraud and corruption, including for his role in brokering an agreement with French defence company Thomson-CSF – whereby the company would give R500 000 a year to then deputy president Jacob Zuma in exchange for protection from investigation into the arms deal bidding process, plus support in future bids. The judgement by Judge Squires was upheld on appeal, and Shaik was sentenced to an effective 15 years in prison. You can read the charges here, the Squires judgement here, and the Supreme Court of Appeal judgement here.

2. Arms deal corruption led to Zuma being fired
Although he wasn’t an accused in the case, the Squires judgement also clearly implicated Zuma. Here’s a key statement from the appeal court judgement: “there is abundant surrounding evidence to find that there was proof beyond reasonable doubt that what Mr Shaik requested of Thomson was a bribe to Mr Zuma.” The case against Zuma has not been tested in a court, as the numerous charges of corruption, fraud, money laundering and racketeering were withdrawn by the NPA in 2009 under enduringly controversial circumstances. Read the text of the 2007 indictment here, and President Thabo Mbeki’s speech releasing Zuma of his responsibilities as deputy president here.

3. Tony Yengeni went to jail because of an arms deal “gift”
While chairperson of Parliament’s defence committee in 1998, Tony Yengeni received a nearly 50% discount on a Mercedes Benz 4×4 from a major shareholder in an arms deal bidder. Daimler-Chrysler Aerospace owned 33% of Reutech Radar Systems, which in 1999 won a R220-million contract to provide radar tracking for the corvettes. Yengeni was prosecuted and sentenced to four years in prison for failing to disclose to Parliament that this huge discount had been arranged for him by Daimler-Benz Aerospace South Africa, a company with an interest in the arms deal. See the High Court judgement here.

4. An arms company’s internal investigation found that it paid for decisive political access
MAN Ferrostaal was part of the German consortium that won the submarine contract. It later hired Debevoise & Plimpton (a well-known US law firm) to figure out its legal risks worldwide. Among many other things, the 2011 report found that the company had paid $40-million (roughly a quarter of its ultimate revenue from the project) to gain “political access” to support its South African bid. These political contacts were afterwards considered to have had a “decisive influence” on their success. Though Ferrostaal has refused to release the report, it has been leaked. Read it here.

5. British Aerospace paid fines for breaking rules on the use of middlemen
British Aerospace (BAE) won the contract for the Hawk and Gripen fighter aircraft (the latter in consortium with SAAB). The US State Department charged it with violating its arms export regulations through its unregulated and covert use of an offshore company (which operated with specific “intent to circumvent the normal payments reviews”) and middlemen all over the world, including in South Africa. Rather than face these charges, BAE settled – agreeing to pay $79-million as a penalty. Read the charge sheet here and the plea agreement here.

Bonus context: A year earlier, BAE pled guilty to knowingly and wilfully failing to prevent and detect corruption and bribery in its operations, as well as conspiring to impede the related US investigations. It was found to have been aware of the “high probability” that its payments would be used to influence foreign government procurement decisions. The sentence was a criminal fine of $400-million. See the US DoJ press release here.

6. British investigations show that BAE paid almost R2 billion to agents in SA
The UK Serious Fraud Office (SFO) also investigated BAE’s use of agents and secret commissions worldwide, again including South Africa. It asked for the Scorpions’ help, and provided them with a number of documents to help motivate for a search warrant for BAE-linked premises in SA. The SFO ended up only charging BAE with an offence related to its work in Tanzania, but the leaked docs included details on £103-million (that’s R1,79 billion using this week’s currency conversion) in covert payments to BAE agents in South Africa – including R280-million paid to BAE’s undisclosed agent Fana Hlongwane. The SFO could find no substantial work done by Hlongwane that could justify such payments. Hlongwane, in case you’ve forgotten, was defence minister Joe Modise’s special adviser. For more on this, see here.

Bonus document: Have a look at this doc, in which BAE discusses how to set up a secret system of payments to advisers.

7. Chippy Shaik, top arms deal decision-maker, went into business with one of the winning companies
Shamin “Chippy” Shaik played a crucial role in the Arms Deal as head of acquisitions for the SANDF. Five years later, Ferrostaal (part of the German Submarine Consortium) invested nearly $1.5-million in a joint mining venture with him. Debevoise and Plimpton found no evidence that Chippy’s party had contributed financially to the venture. It concluded that although these dealings were not necessarily improper, they were problematic in that Ferrostaal failed to conduct any due diligence in this regard, and their commercial rationale was markedly unconvincing.

Of course, there’s a lot more to it all than this. There is a clear need to strip away rumour and inaccuracies around the many other concerns of irregularity in the Arms Deal, to get to the truth. The “critics” that will be testifying at the Seriti Commission over the next few weeks can help with this, but it is ultimately neither their job nor within their powers. It is the Commission itself that has been given the mandate, the resources, the access to the documents, and the ultimate responsibility to “inquire into, make findings, report on and make recommendations” about any fraud, corruption, impropriety or irregularity in the arms deal.

And it’s the responsibility of the rest of us to hold them to it.

This article was originally published on Groundup on 29 July (see here) and then on the Mail&Guardian on 30 July 2014 (see here).

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This past week marked a significant milestone in the seemingly unending saga that is the arms deal. The fact that a former Minister of Trade and Industry, Alec Erwin, was required to testify at the Arms Procurement Commission represents an important step in the process of deepening the roots of democratic accountability in South Africa.

This is not to suggest that Erwin has recognized the folly of poor judgment in supporting a deal riddled by the type of corruption that typifies the international arms business. His testimony is an example of the arrogance of so many of the key players associated with the deal who still choose to defend the indefensible. They authorised the procurement of weapons we could not afford and simply did not need. This failed our constitutional vision of a society characterized by social justice and greater equality. Instead they chose to emulate the apartheid securocrats who nearly bankrupted the country as a result of massive, secretive, arms procurement in the 1980’s and early 1990’s. In some instances we bought weapons from the same companies that busted sanctions for the apartheid regime. The continuities from apartheid stretch beyond just the practice of procurement to include repeated attempts to cover up allegations of criminality over the past 15 years.

The social impact of the arms deal is readily dismissed by only the most cynical among us. They are to be found in the empty seats at family gatherings and child headed households. The trade off for buying weapons and subsiding bribes and kickbacks was that the State failed, amongst other, to provide adequate medical treatment to the most vulnerable. There can be little doubt that the arms deal significantly contributed to the country’s economic and social problems in the first two decades of freedom.

Seriti Commission – a crucial opportunity

The Seriti Commission, with its broad and important mandate, therefore represents a crucial opportunity to hold top officials, politicians and global arms corporations to account for the greatest scam perpetrated against the South African people in the post-apartheid period.

With the stakes this high, it’s useful to cast an eye into the Sammy Marks building in Tshwane where the Commission hearings, chaired by Judge Willie Seriti, are held. The chair and the documents that form part of the evidence-in-chief arrive and depart every morning surrounded by blue lights, guarded by police in bulletproof vests holding rifles. Once in session, Judge Seriti from his bench, has a view over an arena teaming with lawyers – sometimes numbering up to two dozen who either exclusively work for the commission or the many interested parties who are defending the deal: ARMSCOR, the SANDF, Trade and Industry and others. Collectively they are paid hundreds of thousands of rands in public money on a daily basis.

A handful of journalists and military officials observe the proceedings together with the lawyers and lobbyist for the arms companies. The lobbyist, paid to report to arms companies in various European capitals, can often be seen engaging in whispering campaigns during breaks, including with the media present. The intention appears to be that nothing should stick and that facts don’t gain traction. It is an unseemly exercise to behold.

Probe reduced to a whimper

Given the scale and scope of this epic tussle for the truth it is mind-boggling that the Arms Procurement Commission (APC) too often appears to have been overly cautious and conservative in its approach. The net impact is that its probe of the powerful is often reduced to a whimper. It seems intent on not rattling the status quo and most certainly not using its powers to ensure consistent probity of the deal. This continues even after former senior staff members leveled accusations of a so-called ‘double agenda’ against the commission.

A case in point this week was when our attorneys, Lawyers for Human Rights, were forced to decline the opportunity to cross-examine Alec Erwin at the APC due to lack of access to vital documents central to the witness’s testimony. Judge Seriti interpreted it as us declining our right to cross-examine. This is a disingenuous conclusion. The truth is that independent parties such as ourselves cannot cross- examine witnesses without access to crucial documents. During the past week we asked the commission to assist us with accessing the arms contracts. Had the commission not been overly cautious, it would have instructed that the documents are released, as there appears no legal barrier to do so. This is sadly part of a pattern of denying public access to key documents.

A contested terrain

Despite these obvious failings the commission remains a contested terrain, even while the odds are heavily stacked against a fair outcome. On Monday Judge Seriti, and lawyers for Alec Erwin, repeatedly expressed concern that we had in our possession a copy of the cabinet ‘Affordabality Report’ into the arms deal. We find this approach both disturbing and wrong. The Commission’s job is to investigate all available facts regarding the Arms Deal. It should welcome the submission of information that helps it fulfill its mandate justly and efficiently. Furthermore the document has been reported on extensively in the media and has formed the subject of published material over a number of years.

While it is marked Secret, every South African has the right to know its contents given that it shows up the flawed logic used in justifying that we could ‘afford’ to buy arms. The report indicates that the Arms Deal’s impact on the South African economy would be broadly negative in the best-case scenario, and devastating in the worst-case scenario. On Tuesday we were told that cabinet had declassified the document. This suggests that when the commission wants to put shoulder to the weighty wheel of opening up access, anything is possible. The focus of the Commission should not be on how researchers and activists accessed a document but on the crucially important content of that document. This is especially true of a document that manifestly poses no threat to national security, contains information that is clearly in the public interest, and whose classification served only to protect the powerful from the consequences of their own actions.

The public’s right to know

We believe that that the truth will not be revealed if key information remains hidden from the public. If the Commission is to be successful in its mandate, these documents need to be brought to light and role-players made to answer to them. The continued failure to free such information severely limits the public’s ability to hold our leaders in government and the corporations they do business with to account.

Most worryingly we are aware of almost 4 million pages of evidence that according to reports is locked up in containers at the premises of the Hawks. These documents are the product of investigations of corruption in the arms deal by the disbanded Scorpions unit. We have little reason to believe that the Arms Procurement Commission is actively collating, digitizing and analyzing the content of the documents. This despite promises that the APC would do so in August 2013.

It is imperative that public access is granted to these documents. Our lawyers wrote to the commission this week requesting access to these documents. Failure to do so would certainly only serve to confirm increasing public cynicism of the commission and suspicion of an active cover-up. These documents and others that we have requested would enable independent witnesses such as ourselves to ask the difficult questions of powerful players who have been called to testify. This includes high-profile individuals such as former President Thabo Mbeki and others. Knowledge of the contents of the documents might enable the commission to pursue other allegations of criminal conduct. Some of these could well end at the doorstep of the current administration. Others could show a clear trail of bribery leading to the boardroom of some of the world’s largest arms companies.

We cannot allow the Seriti-led Arms Procurement Commission to fail its mandate and the South African people. At least four other investigations into the arms deal have failed over the past 15 years due to political interference. If the commission is the fifth on that list we will allow the defining scandal of a free South Africa to continue to shape our politics and by extension our future. We must engage with vigour in this and other processes to challenge this bleak prospect.

Feinstein, Holden and van Vuuren are writers and activists represented by Lawyers for Human Rights at the Arms Procurement Commission.

This article was originally published in the Sunday Times on 23 February 2014.

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Even among Israelis, Sharon has long been a controversial figure. A career soldier, considered a brilliant strategist, but one with a history of insubordination, he brought to both his military and later political life a leadership style that would rightly be termed reckless, were it not so often rewarded with success. His place at the centre of almost every key military moment in Israel’s bloody second half of the twentieth century earned him the title of war hero, while his role in two civilian massacres (one of 69 people in a village in the West Bank in 1953, another of as many as 3000 in a Lebanese refugee camp in 1982) earned him the moniker of the ‘Butcher’. He was instrumental in developing the Israeli policy of guaranteeing swift, violent reprisals for any attack on Jewish life.

His subsequent political record is similarly divided. For his negotiation style, particularly as Minister of Housing in the 1990’s, he received another epithet – the ‘Bulldozer’ – before a stroke ended his career as Prime Minister in 2006.

While some South Africans have expressed their admiration for Sharon (who visited South Africa numerous times before becoming Prime Minister), there has been little reflection since his death on Sharon’s place in the relationship between the two countries, particularly during the highly militarised final decades of apartheid rule. The military alliance between the two pariah states was largely covert, but, according to reams of correspondence between the respective defence ministries, unreservedly supportive and warm. Sharon played a key role in keeping it so, going further than most in publicly asserting South Africa’s urgent need for more and better weaponry. There was a clear sense of parallel between the struggles of the Apartheid and Israeli states, and although many Israelis were at pains to maintain their ideological distance, Sharon was not among them.

Much of this is lucidly illustrated by Sasha Polakow-Suransky in his book The Unspoken Alliance: Israel’s secret relationship with Apartheid South Africa. From 1977 (the year the UN apartheid arms embargo came into effect) into the 1980’s, South Africa was Israel’s largest weapons customer. This provided much needed foreign currency for the Israeli state in return for intelligence exchange, technology, ships and aircraft, and ultimately co-operation in the development of nuclear weapons.

“Geen doekies omdraai”

A surprising measure of Sharon’s controversial legacy is foreshadowed in a 1982 SADF memo to South African Defence Minister Magnus Malan, providing a CV and character assessment of his new Israeli counterpart.

The last of the document’s 9 pages, translated from Afrikaans, reads:

The document was declassified by the South African National Defence Force (SANDF) in 2006 and is available here [5,1 MB].

32. Background. Sharon’s behaviour should be carefully weighed. On the one hand, he is an impulsive politician apt to make drastic, far-reaching decisions on the spur of the moment. On the other hand, his reputation in dealings with other countries is highly impressive. He always maintains a cool head in the Knesset and largely succeeds in maintaining the image of an eminent politician and statesman. He succeeded, for example, in negotiating many positive and mutually acceptable measures with Egypt in connection with the withdrawal from Sinai. The Americans not only have great respect for him, but seem to like dealing with him. (His standing invitation to visit the US speaks for itself). Furthermore, it is clear that [then Prime Minister, Menachem] Begin trusts him to handle virtually all highly sensitive matters…
33. Guidelines. In light of the above, it may be desirable in dealing with Sharon to practise principled, honest position statements without offending him. A policy of “do not beat around the bush” seems to be his preference. Creating false hope/expectations that later turn out to be unfeasible, could be counterproductive. Sharon’s actions and methods should not be dismissed as irresponsible or impulsive as he has demonstrated on several occasions that he has qualities that can make him a strong leader in the political/diplomatic arena.”

The South African approach seems to have paid off and Sharon, like others in the Israeli military establishment, developed close ties with the apartheid securocrats.

Sharon secretly visited South Africa as Defence Minister in 1981 and spoke to South African forces along the border of Angola.[1]

South African troops had by then repeatedly invaded and commenced occupation in part of Angola – in support of the CIA-backed Unita rebel movement. Sometime shortly after that, Sharon visits Washington and according to a report by the New York Times:

Sharon, in company with many American and NATO military analysts, reported that South Africa needed more modern weapons if it was to fight successfully against Soviet-supplied troops.”

While a vast amount of money was wasted on weapons that were never used during the Cold War, various Southern African countries experienced real conflict. In August and September 1981, just as Sharon took office as Israeli Minister of Defence, the South African Defence Force invaded Angola in what it termed ‘Operation Protea’. This was by far the biggest battle in the war between South Africa and Angola resulting in massive bloodshed: almost 1,000 Angolan and SWAPO soldiers were killed while 10 SADF soldiers died. To achieve this, the regime in Pretoria mobilised 142 aircraft, including Unmanned Aerial Vehicles (UAVs) used for reconnaissance.[2] These drones were developed in South Africa but based on similar drones purchased from the Israeli Aircraft Industries (IAI).[3] Some reports suggest that this was the first use of modern drones in military conflict.[4] The IAI Scout drone was subsequently deployed by the Israeli Military during the 1982 Lebanon war.

“…Wish to thank you for the friendly and understanding way”

Following the 1982 Lebanon War, mass protests in Tel Aviv led the Israeli government to establish the Kahan Commission, which found that Sharon, as Minister of Defence, bore “personal responsibility” for “the massacre by Lebanese militias of Palestinian civilians in the refugee camps of Sabra and Shatila”. The commission recommended that he resign, which Sharon did with great reluctance on 14 February 1983.[5]

Among, his allies, he could count on the apartheid regime.

Magnus Malan wrote a letter to Sharon two weeks later (2 March 1983), expressing:

regret of the circumstances under which you vacated the Defence portfolio and wish to thank you for the friendly and understanding way in which you have conducted matters of mutual interest between ourselves and our respective Defence Forces.”

Sharon responded on 20 April 1983 thanking Malan for his letter making the point that “I am sure that the understanding between our countries will develop for our mutual interest.”

There can be little doubt that this relationship between the apartheid military establishment and their counterparts in Israel did in fact deepen as a mix of money and ideology smoothed over other concerns. Israel was one of the most important allies in South Africa’s weapons procurement during the brutal years of PW Botha’s regime. However, Israel was by no means alone in selling weapons to South Africa – which many countries and corporations continued to do in contravention of international sanctions, earning a fabulous profit through inflated ‘premiums’. This is an aspect of history that many wish to erase.

The life story of men like Ariel Sharon and the ‘mutual interest’ shared with the South African apartheid are open secrets. They deserve far more attention if we are to fully understand the present.

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Time, it appears, may both heal wounds and erase memory. In his recent Business Day column, Mr Leon makes an argument that falls into an all-too-common pathology: that economic crime has blossomed in the post-apartheid era, and that public accountability has withered. While acknowledging apartheid’s brutality, he writes that “we should not avert our gaze from the undertow that came in its [apartheid’s] wake: the rapaciousness of public life and the lack of consequences for leading transgressors.” The suggestion is that the new dispensation is both more corrupt and lazier in applying the rules of accountability.

Also see our article: The Good Old Days? 8 ‘Crony Capitalism’ Case Studies

This shouldn’t be reduced to an argument about which system of governance is more corrupt – that allows the apartheid apologists to draw a laager that silences all debate. When people sit back and stew in anger they are unwittingly providing support for the people who made mega-profits from apartheid.

Rather, we need a serious conversation, involving all South Africans, about the long tail of corruption in South Africa. We need this because we are in a messy middle ground in which the democratic government has been unwilling or unable to investigate the economic crimes of the old order – some of which may far outstrip the scale of corruption alleged in the multibillion-dollar post-apartheid arms deal.

Most countries that undergo transition from a secretive autocratic state to an open democracy grapple with this. We’ve seen it from Kenya to Indonesia and Egypt, where corruption charges against Hosni Mubarak are likely to be dropped this week. Wherever there have been attempts to include economic crimes as part of the transitional justice process – they have simply failed. Where corruption has been excluded from the transitional justice agenda, either by design or oversight – such as with South Africa’s TRC – the problem festers. Those networks stay in business, and rather than face justice they invite members of the new elite to the table. Arguably, this is where South Africa finds itself today.

The baffling silence on apartheid corruption benefits the powerful and carpetbaggers within the new and old elite. Any attempt to pick at this issue is a threat to the status quo, and thus a threat to the interests of politicians and businesspeople across the political spectrum. Hence, these are open secrets which few people wish to tackle. Given the difficulty we face in grappling with the alleged network of elite criminality in the post-apartheid arms deal, one can imagine how vested interests will push back against investigations that implicate the country’s old elite (who still hold considerable economic influence) and their new business partners. (We wrote about some stalled investigations of apartheid corruption here.)

These networks extend well outside South Africa’s border to include multinational corporations, financial institutions and individuals who all benefitted from apartheid graft. Sanctions-busting for arms, oil and sophisticated technology relied on a mix of ‘good-will’ by supporters of the apartheid ideology, and those who were simply willing to profiteer off the back of injustice (see for example, the oil trader Marc Rich). This was not an ideological pursuit but rather relied on criminal enterprise that made some people fabulously rich. For these reasons, it is an issue that is fiendishly difficult to investigate. Yet, our refusal as a society to investigate these issues is undermining our stated Constitutional commitment to the rule of law.

One recent investigation of apartheid grand corruption is being led by the Public Protector, who is reportedly investigating the role of financial institutions (possibly also implicating the South African Reserve Bank) in economic malfeasance during apartheid. At the centre of this is the so-called ‘lifeboat’ scandal, involving loans by the Reserve Bank to some of the country’s largest banks in the 1980s and early 1990s, that were essentially converted into gifts (‘lifeboats’). The former Finance Minister Barend du Plessis signed off on these – to the benefit of his brother, among others, who sat on the board of one of the banks.

See this list of other ‘open secrets’ that may have slipped from public memory: The Good Old Days? 8 ‘Crony Capitalism’ Case Studies.

However, there are a litany of other issues which demand equal attention from state bodies tasked with tackling corruption. Addressing these and other allegations of economic crime (there is far more to uncover!) will require a deeper understanding of the problem, an inclusive conversation and a form of justice to find resolution. But before this process can begin, Mr. Leon and millions of others need to swallow the bitter pill of truth: In secretive societies all people – including white folk – are prone to unimaginable crimes of blood and money. This is the lesson for a free South Africa. It should no longer have to be the poor man’s burden to carry.

See also: The Good Old Days? 8 ‘Crony Capitalism’ Case Studies

A version of this article appeared in Business Day on 22 August 2013.

Image: Political posters from South Africa’s 1994 National Elections. Available at the Unisa Institutional Repository.

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1. Oil Sales and Swiss Bank Accounts: In 1984, the Progressive Federal Party leader Fredrick van Zyl Slabbert received documents concerning oil sales to South Africa, allegedly reflecting corruption in the oil trade. These were handed to President Botha and the Advocate-General – but nothing came of the investigation. It may have been too hot to handle. See Embargo: Apartheid’s Oil Secrets Revealed [PDF download].
2. Smit Murders and Secret Accounts: After the 1978 murder of Robert and Jeanne-Cora Smit (he was a former SA IMF representative and NP parliamentary candidate), rumours persisted for decades that he was murdered for stumbling on secret overseas bank accounts which linked to members of the apartheid elite. At the same time allegations persisted, based on investigations by the Rand Daily Mail, that former Minister of Finance Nico Diedrichs may have had links to a secret bank account in Europe.
3. SADF Secret Funds: About R378 billion (current value) was spent to fund secret defence projects and procure weapons. This happened with very limited oversight from the Auditor-General. Given what we know about the global arms trade it would be fair to assume that this was open to possible systemic abuse by individuals, corporations and financial institutions, but there has never been an opportunity for public scrutiny. This was mentioned in the TRC’s final report.
4. The Apartheid Bantustans: allowed extraordinary tax breaks for white companies, some of which sidestepped exchange control laws. Concerns of an improper relationship between South African business and the homelands are typified by allegations that Sol Kerzner paid R20million (in current rand value) in bribes and facilitation fees for gaming licences to Transkei Chief George Matanzima. Kerzner argued it was extortion, and all charges were controversially dropped by Transkei attorney general Christo Nel in 1997.
5. International criminal networks: Vito Palazzolo, charged with links to organised crime in Italy following his recent extradition from Thailand, was made a special representative for the Ciskei. Noseweek has alleged that he was used by intelligence agencies to clean “hot” money to finance arms and nuclear cooperation. Though a NP parliamentarian was convicted in 1990 for having improperly secured residence permits for Palazzolo, in 1993 FW de Klerk’s Cabinet reportedly approved a new residence permit for him, despite the fact that he was wanted by Italian police at the time.
6. SADF and Ivory: Nearly 100,000 elephants were allegedly slaughtered during the civil war in Angola and Mozambique. This appeared to benefit the leadership of UNITA and possibly a small group of senior SADF officials. The post-1994 Kumbleben Commission of Inquiry found substantial proof of SADF involvement through a front company, but no action was taken.
7. Apartheid Death Squads: The CCB was allocated about R116 million each year (current value) and members were handed huge wads of cash on trust. The expenditure of approximately R45 million (current value) was found to be improperly authorised with little consequence. (See In The Heart of the Whore: The Story of Apartheid’s Death Squads by Jacques Pauw.)
8. Exchange Control Amnesty: The 2003 Treasury Exchange Control Amnesty process attempted to address capital flight from the 1980s onward. Nearly 43,000 applications were processed and a total of R68,6 billion was disclosed. Individuals and corporations made a once-off payment for being in violation of exchange control and income tax. However, there is no indication of prosecutions or legal action taken against those who were not transparent about their offshore holdings. Economists have suggested this represented a massive under-reporting of the actual value of illicit capital flight during that period.

See also:  Response to Tony Leon: When politicians dabble in half-truths

Do you have information you wish to share with the OpenSecrets team about these cases or any other issue that we are working on? Please contact us here.

The post The Good Old Days? 8 ‘Crony Capitalist’ Case Studies appeared first on Open Secrets.

On 12th September 1973, a British man in his 40s – described as having “black, wavy hair, bad front teeth with gold cap, moderately good-looking in [a] craggy sort of way” – approaches the US Consul in Lourenço Marques (now Maputo) with a fantastic story.

Identifying himself as David Goldthorpe, he claims to have an inch-thick dossier – containing lists of people and companies involved in Rhodesian sanctions busting and arms dealing, and details of agents of the South African Bureau of State Security (BOSS) in Europe and the US.

He claims to be the nephew of a Sir Henry Jeffreys, a former diplomatic official who he says is now cooperating with the United Nations on sanctions enforcement. He wants the US Consul to courier this dossier to his uncle via the Diplomatic Pouch , the secure channel of communications used by diplomats to courier sensitive material between their embassies and home governments. (He says he fears to send the dossier by open mail, because it implicates Mozambican companies as well.)

Described as “glib and chummy”, Goldthorpe paints a rather dashing picture of himself. He’s a Brit, working in import-export for a company called INTEREXSA – however, on the side he acts as an informant on Rhodesian sanctions busting and arms trade. He tells Consulate staff that he had been arrested by SA security police in Durban on trumped-up charges, and after skipping bail, he has escaped into Mozambique with his dossier. He now wants the US Embassy’s help, in couriering his dossier to Sir Henry Jeffreys and in easing his passage out the country.

The secret history of SA corruption—a glimpse from the Wikileaks cables

We know all this because the US Consul’s account of it is among the 1.7 million diplomatic cables released by Wikileaks in April. You can read it here. The so-called “Kissinger” cables contain daily correspondence between the US State Department and its embassies across the world, between 1973 to 1976.

These cables weren’t leaked, though – they are formally declassified records that have been released by the US National Archives, and immaculately curated on the Wikileaks website, fully searchable and comprehensively categorised by location, date and topic. Including, of course, thousands of cables from South Africa during that period.

Though the Daily Maverick was at best cautious about the contemporary relevance of this vast repository, it contains plenty of interesting material for researchers of the ‘long tail’ of corruption in South Africa, and provides useful historical context when today’s corruption debates often focus only on the scandal of the week.

With the Americans having inserted themselves at the centre of political intrigue in South Africa – see for example how closely they monitored the arms trade – it is clear that they were becoming increasingly aware of economic crime among South Africa’s elites. Yet the stories that these cables tell are often as frustrating as they are fascinating – rumours, hearsay, and stories that seem likely to remain half-told.

“Let the Matter Drop”

Back in Lourenço Marques, September 1973 – it seems this is not the first time Goldthorpe had come to an US consulate with this request. Five weeks earlier, the Consulate in Durban reported that a Goldthorpe had contacted them from jail with a similar story.

However, it seems in his first approach, he had made two other revelations, admitting that he himself had been a Rhodesian sanctions buster in the past – albeit now “reformed”. He also seems to hint that, if help from the US were not forthcoming, he would ‘play the other side’, by informing the SA security police about US activities in Rhodesia, in exchange for his freedom.

Goldthorpe being held charges car theft and carrying unlicensed weapon. Admits to latter, but alleges SA authorities aware his past activities and offered drop all charges if he agrees supply SAG [south african government] with info on US attempts enforce Rhodesia sanctions.”

Read it in full here.

Evidently that gambit did not work out, and after being released by Durban police and sneaking into Mozambique, he has cleaned up his story a bit and is once again asking the US for help – effectively in exchange for his “dossier”.

It must be noted that, on the face of it, this dossier contained valuable information – the US Department of State was eager to keep tabs on sanctions-busters and would certainly be keen to know the identities of South Africa’s BOSS agents in Europe, if this information wasn’t known already.

But Goldthorpe is out of luck. The State Department’s response – signed by Kenneth Rush, Kissinger’s deputy – is nothing if not terse:

Goldthorpe and Jeffries [sic] unknown to US or UK embassy. If contacted again, post should state pouch not authorized for this use and let matter drop.”

Read it in full here.

In other words, the Americans aren’t interested. Whether they disbelieve Goldthorpe’s story, or don’t want to entangle themselves with a person who seems to be deeply compromised, they are simply not willing to trade for access to the documents.

If Goldthorpe ever contacted them again, there is no evidence of it. His dossier, if it ever existed, may be lost to us.

What next?

There are thousands more records in the Kissinger cables relating to South Africa. The cables offer little more than oblique glimpses into political machinations of the time, by turns fascinating and frustrating. But each glimpse is also a clue, an unsolved mystery, a story waiting to be told.

What is clear is that the US – and presumably other foreign missions as well – were becoming increasingly aware of evidence of economic crime in South Africa, even during the brief period offered by these cables (1973-1976). But if they ever found such evidence of illicit money flowing across the world, did they act on it? Or did they tolerate such practices, or even facilitate them? Most importantly, did they keep further records?

One way to find out would be to look where Wikileaks got these records, and to get more – and from more recent times. The US Department of State appears to have reams of similar cables from the 1980s, when apartheid corruption and international money laundering is believed to have peaked.

Watch this space.

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