The chairman of the parliamentary Standing Committee on Public Accounts says he will be asking the police's Directorate for Priority Crimes Investigation (DPCI, commonly known as the “Hawks”) to include the allegation that German arms manufacturer Ferrostaal made R300 million in “questionable” payments to secure contracts to supply submarines to the South African Navy in its latest probe into the so-called 1999 “arms deal”.

Themba Godi told the Sunday Times newspaper he was taken aback by the revelation in a German newspaper, the Süddeutsche Zeitung, last week, that this emerged from an internal audit of Ferrostaal carried out by US-based law firm Debevoise and Plimpton. The German Submarine Consortium, which included Ferrostaal, supplied three Type-209 diesel electric submarines to the SA Navy at a cost of R8.152 billion as part of the Strategic Defence Package.

Godi said the latest development was startling, given the fact that the Hawks had closed the German arm of the investigation, citing a lack of evidence. "These revelations do indicate that unless this matter is thoroughly investigated, we will continue to have information coming to the public that shows us that maybe our anti-corruption agencies have not been doing their work."

Last week, the Hawks took the first step towards reopening the arms deal probe when Hawks chief Lieutenant General Anwar Dramat wrote to Godi to inform him that his unit would follow up an admission by Swedish defence group SAAB that its former British partner, BAE Systems, paid R24 million in bribes to sell South Africa a contract for 26 Gripen fighter aircraft. Businessman Fana Hlongwane, a former adviser to late defence minister Joe Modise, allegedly received handsome "commissions" from BAE Systems, the Sunday Times said.

The opposition Democratic Alliance party said at a statement at the weekend it would also ask
Dramat to open a preliminary investigation into the Ferrostaal allegation.

The Citizen newspaper last week reported Debevoise and Plimpton were hired to help “clean up” Ferrostaal following a series of corruption scandals and the arrest of Ferrostaal board member Klaus Lesker by the German Public Prosecutions Authority last year. Ferrostaal has said it will not release the Debevoise and Plimpton report. But the Süddeutsche Zeitung says it has a leaked copy.

Spokesman for Ferrostaal, Dr Maria Lahaye-Geusen, told The Citizen “I would not like to comment on the Süddeutsche Zeitung article in detail. The report was confidential and we are concerned how the German media obtained it. “I would, however, like to state that Ferrostaal has been taking great efforts to clear up allegations of non-compliant behaviour in the past. The newly appointed executive board of Ferrostaal (who took office in May/June 2010), implemented all the necessary measures to support the ongoing investigations of the (German) Public Prosecutor.”

Lahaye-Geusen did not deny to The Citizen the allegations of payments being made to South Africa in return for arms deal contracts. At the time of the 1999 arms deal German law allowed for payments to foreign politicians by German companies to be claimed as expenses against tax returns – allowing companies to claim bribes as tax deductions. Asked whether her company would co-operate with South African investigators, Lahaye-Geusen said: “If we were to be approached by South African Public Prosecutors of course we would assist them and co-operate.

“Our compliance programme encompasses systematic measures that are designed to prevent legal offences as well as violations of the corporate guidelines, in particular the anti-corruption regulations. A clear message was sent from the new executive board that Ferrostaal has a zero-tolerance approach to non-compliance.”

Lahaye-Geusen said that the US law firm report was partly commissioned to help the company comply with [US] anti-corruption legislation.