South African Strategic Defence Procurement Package

Introduction

submarine

A decision by South Africa ’s first democratically elected government to purchase US$ 4.6 billion worth of weapons has been the single largest - and one of the most controversial - public procurement deals in post-Apartheid South Africa.

In the 1995 Defence White Paper, the Ministry of Defence highlighted the need for restructuring and reviewing the status of the new South African National Defence Force. The Defence Review highlighted the need to re-equip the SANDF to meet the traditional national-security needs of the new democracy.

This process resulted in the proposal of a multi-billion rand Strategic Defence Procurement Package, widely referred to as the Arms Deal. The bill for the Package will be picked up by the South African Treasury, indirectly through taxes, over the next few years. Expenditure of this nature ignited a national debate on Defence spending.

Government has claimed that the Package will pay for itself in the long run through counter-trade agreements of investment in South Africa with contracted companies, known as the Offsets programme. This case study will document this debate with specific reference to the rationale of and delivery on the Offsets programme.

Controversy around the Arms Deal spread as allegations of irregularities in the tendering process and the lack of transparency in subsequent investigations came to light by the media. This national outcry has not as of yet resulted in the cancellation of any Arms Deal contracts; this seems increasingly unlikely as much of the hardware has already been delivered.

This study includes articles highlighting the issues around corruption in the Arms Deal: the details of the allegations of corruption including both the bribe-takers and the bribe-payers; and documentation linked to the response of the Chapter 9 Institutions, Parliament, and various civil society organisations and media sources to the controversy surrounding subsequent investigations into corruption in the tender process.

Various legal documents of criminal prosecutions as well as civil actions by the ECAAR-SA and the businessman Richard Young linked to the legality of the Arms Deal are also cited. The following reports/documents are included:

  • the Joint Investigation Report into alleged of irregularities in the Strategic Defence Procurement Package – drafted by the Auditor-General, the National Prosecuting Authority and the Public Prosecutor
  • the Auditor-General’s Joint Investigation Report into the SDPP and his response to allegations of irregularities in the initial Joint Investigating Report
  • the Fourteenth Report of the Standing Committee on Public Accounts (SCOPA)
  • SCOPA’s response to the Auditor-General’s Special Report.

For the sake of a broad comprehension of the entire ‘Arms Deal Scandal’, a number of case studies from civil society sources have been included. There are also various media articles pertaining to the involvement of the following firms - African Defence Systems (ADS), BAe Systems, European Aeronautic Defence and Space Company (EADS) and Thales / Thompson.

(Photo: AP/Heribert Proepper: The submarine 'S101' is launched at the Howaldtswerke-Deutsche Werft (HDW) shipyard in Kiel, northern Germany, on Tuesday, 15 June 2004. This submarine of the 209-class was officially handed over during a short naming ceremony to the Navy of South Africa.)

Overview

  • Richard Young, The Arms Deal - a Litany of a Rampant Corruption of Power, 7 June 2004 (PDF 116KB)
  • Business Day, Timeline of the Zuma-Shaik Saga, 3 June 2005 (PDF 40KB)
  • IDASA; Arms Deal: Chronology of events, March 2001 (PDF 76KB)
  • iAfrica.com; Arms Deal timeline, 15 November 2001(52KB)
  • IDASA; Arms Deal 2003 update, January 2004 (PDF 88KB)
  • Visual press office; Organogram of parties in corvettes procurement scandal (downloaded January 2004) (PDF 16KB)
  • ANC Today; Letter from the President: "Fishers of Corrupt Men"; Vol. 3 No. 21, 30 May 2003 (PDF 48KB)
  • ANC Today; Media Myths- The Real Arms scandal, 2001 (PDF 68KB)
  • Hawley, S; Turning a Blind Eye - Corruption and the UK Export Credit Guarantee Department; The CornerHouse, June 2003, pp. 52-55 (336KB)

Case Studies & Reports

  • Peter Batchelor and Paul Dunne, Industrial Participation, Investment and Growth: The Case of South Africa’s Defence Related Industry, February 2000 (PDF 88KB)
  • African Pilot, Gripen, African Pilot Correspondent, Photography by Frans Dely, 7 Jan 2004 (PDF 1.4MB)
  • Corporate money, 7 January 2004 (PDF 1.4MB)
  • J.P. Dunne and G. Lamb, Defense Industrial Participation: The South African Experience (PDF 60KB)
  • IDASA; Democracy and The Arms Deal; an interim review by IDASA; prepared by PIMS – The Political Information and Monitoring Service, 15 May 2001 (PDF 204KB)
  • IDASA; Democracy and the Arms Deal; A Submission to Parliament; prepared by PIMS – The Political Information and Monitoring Service, December 2001 (PDF 204KB)
  • IDASA; Democracy and the Arms Deal - Part 3; prepared by PIMS – The Political Information and Monitoring Service, 5 August 2003 (PDF 184KB)
  • Campaign Against Arms Trade (CAAT); The South African Deal - A case study in the Arms Trade, June 2003 (PDF 504KB)
  • Allan, C; Comment; Democratic Accountability in South Africa at a Crossroads; PSAM; Rhodes University, 19 January 2001 (PDF 84KB)
  • Crawford-Browne, T; Arms Reduction and Sustainable Development; the South African Arms Deal and Civil Society; Economists Allied for Arms Reduction (ECAAR - SA), August 2002 (PDF 160KB)
  • Woods, G; "Making Oversight Effect" Workshop; 11th International Anti-Corruption Conference; South Korea , 25-28 May 2003 (PDF 124KB)
  • Erwin, A; Presentation to Parliament on the Strategic Arms Debate; 13 August 2000 (PDF 112KB)

Offsets Programme

  • Business Day (South Africa), Are the defence suppliers delivering? Carli Lourens and Chantelle Benjamin, 13 May 2003 (PDF 40KB)
  • Business Day (South Africa), Radio report puts question mark over offset deals, Carli Lourens and Linda Ensor, 9 March 2005 (PDF 40KB)
  • Business Day (South Africa), SA defies critics as arms-deal offsets create 7 000 jobs, 18 November 2004 (PDF 36KB)
  • Business Day (South Africa), Touted offsets lure us into debt trap,Terry Crawford-Browne, 5 August 2003 (PDF 36KB)
  • Business Day (South Africa), Moment of truth for arms offset deals, Carli Lourens, 15 November 2004 (PDF 36KB)
  • Business Day (South Africa), Trade minister asked about 'missing' billions, Carli Lourens, 25 November 2004 (PDF 36KB)
  • Paul Dunne and Richard Haines, Defence Procurement and Regional Industrial Development in South Africa: A Case Study of the Eastern Cape, August 2001 (PDF 60KB)
  • Business Day, Denel Scoops R210m BAE Export Contract, 21 April 2005 (PDF 36KB)
  • Jurgen Brauer and J. Paul Dunne, Arms Trade Offsets and Development January 2005 (PDF 56KB)
  • Business Day (South Africa), Are the defence suppliers delivering?, Carli Lourens and Chantelle Benjamin, 13 May 2003 (PDF 40KB)
  • Mail & Guardian, ANC Downplays Arms Deal Offsets, 8 August 2002 (PDF 36KB)
  • PSAM; A Chronology - Coega and the arms procurement deal, August 2001 (PDF 80KB)
  • Botha, P; Offsetting the Costs of SA's Strategic Defence Package; Institute for Security Studies, July 2003 (PDF 484KB)
  • Brauer, J; Economic aspects of Arms Trade Offsets; International Conference on Defence Offsets and Economic Development, September 2002 (PDF 60KB)
  • Burger & Bradshaw; Public Participation in the Development of the Coega IDZ: A flawed process?, September 2002 (PDF 284KB)
  • Allan, C; Coega, Conflicts of interest and the Arms Deal; PSAM; Rhodes University , 24 July 2001 (PDF 84KB)
  • Crawford-Browne, T; Offsets and the affordability of the arms Deal; ECAAR-SA, November 2002 (PDF 260KB)
  • Engelbrecht, L; Defence Offsets filter into General Economy; Sapa; 29 May 2003 (PDF 96KB)
  • Leigh, D; The sordid truth behind an arms deal; The Guardian, 17 July 2002 (PDF 68KB)
  • McEwan, G; Defence offsets and the South African Aerospace Industry; University of Port Elizabeth (downloaded January 2004) (PDF 144KB)
  • News24.com; Unfinished condoms for arms; 1 December 2001 (PDF 36KB)
  • PSAM; Coega, Parliamentary Accountability, Offsets and the South African Arms Deal (downloaded January 2004) (PDF 68KB)
  • PSAM; The Coega Project- A test of Constitutional Democracy, 30 August 2001 (PDF 80KB)

Joint Investigation Report into the Strategic Defence Procurement Packages, November 2001

  • Statement of the South African Government on the Joint Investigation Report Into the Strategic Defence Procurement Packages, 15 November 2001 (PDF 52KB)
  • Transmittal letter to the Speaker - Signatures (PDF 192KB)
  • Preface (PDF 20KB)
  • Index (PDF 16KB)
  • Chapter 01 -Background (PDF 92KB)
  • Chapter 02 -Methodology (PDF 64KB)
  • Chapter 03 -Review of Procurement Process (PDF 420KB)
  • Chapter 04 –Selection of Prime Contractors – ALFA & LIFT (PDF 236KB)
  • Chapter 05 -Selection of Contractors – Light Utility Helicopters (PDF 160KB)
  • Chapter 06 -Selection of Contractors Submarines (PDF 184KB)
  • Chapter 07 -Selection of Contractors Corvettes (PDF 156KB)
  • Chapter 08 -International Offers Negotiating Team (IONT) (PDF 120KB)
  • Chapter 09 –Financial and Fiscal Implications (PDF 92KB)
  • Chapter 10 -Selection of Subcontractors (PDF 116KB)
  • Chapter 11 -Allegations by C2I2 (PDF 632KB)
  • Chapter 12 -Industrial Participation NIPDIP (PDF 116KB)
  • Chapter 13 -Drafting of Contracts (PDF 16KB)
  • Chapter 14 –Findings and Recommendations (PDF 416KB)
  • Definitions / Abbreviations (PDF 36KB)

Bribe Payers?-The corporate players

African Defence Systems (ADS)

  • Business Day (South Africa), Payments 'were for Zuma RDP trust', 11 November 2004, Kevin O'Grady and Nicola Jenvey (PDF 44KB)
  • Sunday Times, Man Who Blew Whistle On Arms Deal Vindicated, 5 June 2005 (PDF 4KB)
  • Laurence, P; Joe Modise, Tony Yengeni, and Shamin and Shabir Shaik are among those alleged to have benefited from the arms deal; Helen Suzman Foundation, March 2001 (PDF 72KB)
  • Kirk, P; State tries to gag us over "arms secrets"; Mail & Guardian, 5 February 2001 (PDF 88KB)

European Aeronautic Defence and Space (EADS)

  • Economist Vol. 361 Issue 8244, Not quite so squeaky clean, 20 October 2001 (PDF 40KB)
  • Agence France Presse, South Africa signs giant deal to acquire eight Airbus military transport, 28 April 2005 (PDF 44KB)
  • Van Vuuren, H; State nets small-fry Yengeni while big fish slip away; Sunday Times, 13 July 2003 (PDF 52KB)
  • Bezuidenhout, J and Mzilikazi wa Afrika; Arms boss wined and dined Yengeni; Sunday Times, 19 May 2002 (PDF 60KB)
  • Transnationale.org; Head of EADS South Africa face corruption charges, 10 April 2003 (PDF 28KB)

BAE Systems

  • BAE Systems Alternative Report, April 2002 (PDF 312KB)
  • Business Day, UK Parliament Probes SA Arms Deal, 31March 2004 (PDF 36KB)
  • Mail & Guardian, BAE denies it paid for Modise's cars, Joy Russell, 3 July 2003 (PDF 36KB)
  • Mail & Guardian, BAE hit by corruption claims, 14 June 2003 (PDF 48KB)
  • Mail & Guardian, New light on arms deal cost, Sam Sole, 26 September 2003 (PDF 40KB)
  • Mail & Guardian, BAE rubbishes arms deal claims, Johannesburg, 16 December 2003 (PDF 36KB)
  • Economist, Gunning for profit, 24 November 2001, Vol. 361 Issue 8249, p45, 1/2p (PDF 40KB)
  • Mail & Guardian, DA questions UK arms deal investigation, 7 July 2003 (PDF 36KB)
  • Mail & Guardian, Secret Pinochet payments linked to BAE, United Kingdom, 18 December 2004 (PDF 40KB)
  • Mail & Guardian, Slush fund: BAE chief implicated, David Leigh and Rob Evans, 5 November 2004 (PDF 44KB)
  • Crawford-Browne, T; Expel Yengeni; Business Day, 2003 (PDF 44KB)
  • Crawford-Browne, T; ECAAR-SA will release BAE Systems arms deal loan agreements; ECAAR-SA, 19 September 2003 (PDF 96KB)

Thales / Thompson

  • Zuma knew of bribe, says Judge , 2 June 2005 (PDF 32KB)
  • Tim Cohen and Nicola Jenvey, Storm gathers over Zuma's future as Shaik goes down, 3 June 2005 (PDF 36KB)
  • Business Day, Thales may join Zuma in the dock, Nicola Jenvey and Tim Cohen, 30 June 2005 (PDF 36KB)
  • Business Day, Speculations in the Shadows of Shaik Case, 17 March 2005 (PDF 48KB)
  • Business Report, Thomson-CSF is as guilty as Shaik, Alide Dasnois, 6 June 2005 (PDF 36KB)
  • Business Day; France - SA bid to bring boss to SA court, 5 July 2003 (PDF 44KB)
  • Carter, C; Senior defence official in arms corruption scandal; City Press, 7 February 2000 (PDF 96KB)
  • Business Day; Ethics body finds Zuma innocent in gifts saga, 20 November 2000 (PDF 68KB)

Civil Litigation

Economists Allied for Arms Reduction–SA(ECAAR-SA)

  • iafrica.com; Arms deal in court next week, 13 March 2003 (PDF 40KB)
  • Crawford-Browne, T; ECAAR-South Africa files amending papers ahead of arms deal court case on 17 February; ECAAR-SA, 18 December 2003 (PDF 112KB)
  • Crawford-Browne, T; ECAAR-South Africa continues legal action to block arms imports; ECAAR; November 2003 (PDF 68KB)
  • Benjamin, C; Fakie to allow access to arms deal details; Business Day, 13 March 2003 (PDF 48KB)

Richard Young (C²I² Systems)

  • Young, R; Without prejudice - aide memoire, 27 August 2001 (PDF 320KB)
  • Gibbons, C; Interview with Richard Young: Epicentre of allegations; Radio 702, 7 November 2003 (PDF 104KB)
  • Auditor-General; Auditor-General puts editing of arms deal report into perspective and highlights inaccuracies (downloaded January 2004) (PDF 112KB)
  • Benjamin, C; Court asked to throw out R150m arms-deal claim, 3 February 2004 (PDF 112KB)
  • Judgement: CCII Systems (Pty) Limited v Fakie, Baqwa, Ngcuka, Lekota, Transvaal Provincial Division High Court, 4 November 2002 (PDF 108KB)

Criminal Prosecution

  • iafrica.com; Shaik faces 2004 high court trial, 3 October 2003 (PDF 44KB)
  • Charge sheet of Shabir Shaik (PDF 152KB)
  • BBC.com; Third arrest over SA arms deal, 16 November 2001 (PDF 28KB)
  • Mzilikazi wa Afrika and Bezuidenhout, J; Now it's Tony three-Mercs, Sunday Times, 29 April 2001 (PDF 76KB)
  • Cohen, T; Echo of OJ case in corruption drama; Business Day, 4 September 2003 (PDF 48KB)
  • Sole, S; Zuma for sale; Mail & Guardian, 29 August 2003 (PDF 68KB)

The role of Oversight Bodies

Auditor-General

  • Advocate W H Heath SC, Arms Procurement Deals "Parliamentary Oversight and the Positive Impact that an Integrity Pact can Make on Defence Contracting (PDF 188KB)
  • Auditor-General; Special report pertaining to allegations on the Joint Investigating Team (JIT) Arms Deal Report, 25 June 2003 (PDF 572KB)
  • Kirk, P; Arms deal leak: Who blew the whistle?; Mail & Guardian, 22 March 2002 (PDF 100KB)

Special Investigating Unit (SIU)

  • Allan, C; Why the involvement of the Special Investigating Unit in the arms probe is vital to the public interest; Public Service Accountability Monitor, 26 January 2001 (PDF 68KB)
  • De Lange; The legal grounds prohibiting at this stage the referral of the arms deal to an investigation by a special investigating unit; IDASA, 17 February 2001 (PDF 160KB)
  • Director-General in the Presidency; Statement by the Director-General in the Presidency on behalf of President Mbeki, 19 January 2001 (PDF 64KB)
  • Munusamy, R, Jubasi and Zwane; How Judge Heath's goose was cooked; Sunday Times, 21 January 2001 (PDF 52KB)
  • Laurence, P; Arms deal enquiry crushed; Focus 24, 21 March 2001(PDF 88KB)

Standing Committee on Public Accounts (SCOPA)

  • SCOPA; Fourteenth Report of the Standing Committee on Public Accounts (SCOPA); IDASA, 30 October 2000 (PDF 132KB)
  • iafrica.com; Arms deal probe cost over R9.5m, 13 August 2002 (PDF 72KB)
  • iafrica.com; MPs go back into battle on arms deal, 13 August 2002 (PDF 40KB)
  • Laurence, P; Interview with Gavin Woods; Helen Suzman Foundation, March 2001 (PDF 92KB)
  • SCOPA: Hearing on the Special Report by the Auditor-General, 20 August 2003 (PDF 248KB)

Presidential Commission

  • The Hefer Commission of Enquiry - Report, 7 January 2004 (PDF 216KB)

Public Protector

  • Mail & Guardian; Mbeki handed Zuma Report, 13 October 2003 (PDF 52KB)
  • Fourie, Stoffel; The Joint Investigation into the Strategic Defence Procurement Package of the South African National Defence Force; Public Protector, May 2003 (PDF 256KB)

The State vs Schabir Shaik and 11 Others

  • SAGA, Workers International Vanguard League wivl at sn.apc.org, The Morals of the Immoral, 24 December 2004 (PDF 60KB)
  • Business Day, Zuma to face charges as ANC cracks party whip 21 June 2005 (PDF 32KB)
  • The Mercury, Zuma gets his day in court, 21 June 2005. By Angela Quintal, Jeremy Michaels & Moshoeshoe Monare (PDF 32KB)
  • Thabo Mbeki, Full text of Mbeki's speech, 21 June 2005 (PDF 44KB)
  • Business Day, Corruption drama wrecks careers, Razina Munshi, 21 June 2005 (PDF 28KB)
  • National Prosecuting Authority, Media statement on Decision to Prosecute Zuma, 20 June 2005 (PDF 28KB)
  • Economist, The president hits out at corruption, 18 June 2005 (PDF 32KB)
  • Business Day, Sacked former deputy quits Parliament, vows fightback, 15 June 2005, Wyndham Hartley (PDF 24KB)
  • Jacob Zuma, Statement by the Honourable Jacob Zuma on the Decision taken by the President of the Republic, Office of the Presidency, 14 June 2005 (PDF 24KB)
  • Economist, Shaik's mate: Trying times for South Africa's deputy president, 4 June 2005 (PDF 32KB)
  • Sunday Times, How the case against Shaik implicates Deputy President, Andre Jurgens, 31 August 2003 (PDF 44KB)
  • City Press, Agenda to 'Destroy Zuma Profile', Jimmy Seepe, 30 August 2003 (PDF 40KB)
  • IOL, Shaik dossier damns Zuma, Christelle Terreblanche, 26 August 2003 (PDF 36KB)
  • Estelle Ellis and Jonathan Ancer, How Shaik bankrolled Zuma, 26 August 2003 (PDF 32KB)
  • IOL, Charge me, Zuma challenges Scorpions, Jeremy Michaels, 15 August 2003 (PDF 32KB)
  • Government Statement on the Outcome of the Durban Trial (PDF 12KB)
  • High Court of South Africa, Shaik vs Shaik Judgement 31 May 2005 (PDF 1.1MB)
  • Mail & Guardian, State to seize Shaik’s assets, 4 June 2005 (PDF 28KB)
  • News24. Shaik 'lost moral compass', 8 June 2005 (PDF 28KB)
  • Estelle Ellis, Witnesses Who Made Shaik Trial Worth Watching, 10 December 2004 (PDF 44KB)
  • Agence France Presse, Major political trial opens in South Africa, 11 October 2004 (PDF 28KB)
  • Agence France Press, South African Zuma's financial adviser denies graft charges, 13 October 2004 (PDF 32KB)
  • Andre Koopman, Shaik grilled for six hours about R1bn deals, 30 July 2003 (PDF 28KB)
  • Shaik Charge Sheet, High Court of South Africa (PDF 200KB)
  • SAPA, Chronology of Developments Leading to the Guilty Verdict in the Schabir Shaik Trial, 2 June 2005 (PDF 36KB)
  • SAPA, Events Leading Up to Schabir Shaik's Corruption and Fraud Trial in Durban, High Court Today, 11 October 24 (32KB)
  • IOL, Ngcuka: Investigators will subpoena Shaik, Clive Leviev-Sawyer and Phindile Makwakwa, 18 November 2001 (PDF 32KB)
  • IOL, Arms bidder Shabir Shaik nabbed by Scorpions, 16 November 2001 (PDF 24KB)
  • Mail & Guardian, Arms deal: the Shaik link deepens, Mungo Soggot, 12 January 2001 (PDF 28KB)
  • Mail & Guardian, Nepotism in R32bn arms deal, Ivor Powell, 26 May 2000 (PDF 24KB)
  • Statement by the NPA on the Decision to Prosecute J Zuma, 20 June 2005 (PDF 13KB)
  • Statement by Mr Jacob Zuma on his Dismissal as Deputy President, 14 June 2005 (PDF 21KB)
  • Statement of President Thabo Mbeki on the Release of Mr Jacob Zuma from his Duties as Deputy President, 14 June 2005 (PDF 35KB)
  • Sentence: The State v Schabir Shaik & 11 Others, Durban High Court, 8 June 2005 (PDF 49KB)
  • Judgement: The State v Schabir Shaik & 11 Others, Durban High Court, 31 May 2005 (PDF 1.12MB)

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