More on Fana Hlongwane
Written by defenceWeb, from the Sunday Independent, Monday, 18 July 2011
The windfall is detailed in a letter addressed to Hlongwane by retired SANDF Brigadier General Damian de Lange, a fellow director in the company, Ivema, from whose accounts the consultancy payments were made, the Sunday Independent reports. The eight-page communiqué, a copy of which is in the possession of The Sunday Independent, questions the legality of the consultancy arrangement.
The payments to Hlongwane were effected in April 2007, at a time when BAE – under investigation by the UK’s Serious Fraud Office – distanced itself from Hlongwane and previously agreed “consultancy” fees were no longer forthcoming.
The “consultancy” agreement was not approved by the Ivema board, but instead effected by Ivema’s then chief executive – supposedly at the instruction of the chairman of the board, Hlongwane himself. The paper reminds Bernard Collier, CEO of Ivema at the time the arrangement was concluded, had earlier served as general manager of British Aerospace’s arms deal offset programme in South Africa. He was one of four signatories to the September 2003 consultancy agreement which would have netted Hlongwane R98 million in the space of eight years for furthering BAE’s interests in South Africa’s National Industrial Participation programme. Collier has further been identified in the Swedish media as the BAE executive who, in 2003, authorised an allegedly irregular payment of R24 million to Hlongwane, who is currently under investigation by prosecuting authorities in Sweden. According to the Swedish authorities, Collier also failed to record the payout on the books of audit for the SAAB-owned but BAE operated offsets company Sanip (Pty) Ltd.
At the time he sent his letter to Hlongwane on 18 March last year, former uMkhonto we Sizwe stalwart De Lange had succeeded Collier was CEO of Ivema, having succeeded Collier in the position in 2009. Questioning the probity of the transactions he found in the Ivema books, De Lange records the following payments from the account of Ivema to Ngwane Defence between April 2007 and July 2008.
The Sunday Independent established through an inspection of the company’s share register, that 100 percent of the shares in Ngwane Defence are held by the entity Les Amis (Pty) Ltd, which in turn reflects a 100 percent shareholding by Hlongwane in his personal capacity. De Lange found a sum of R997 500 was paid on April 25, 2007. This is recorded as “service fees for services to be provided by Ngwane Defence from April 1 to June 30 2007”. On June 6, 2007, a round sum of R1 million is paid under signature of Collier and fellow Ivema director Andre Mouton, without any description of services rendered. On April 22, 2008, R997 500 is paid out for “services rendered” between April and June 2007”. Though seemingly a duplication of the April 2007 payment, the money was in fact, according to De Lange, paid into Hlongwane’s account.
On June 11, 2008, another payment of R600 000 was effected under signature of Bernard Collier, with no explanation. On June 30, 2008, R196 250 found its way from Ivema’s accounts to Ngwane Defence, signed off by Collier as “Services Fees for services provided during the period 1st July 2007 to 31st March 2008”. Then on July 31, 2008, an identical amount of R1 196 2500 was again paid to Hlongwane, this time as “service fees for services from 1st July 2007 to 31st March 2008”. Though, again, a seeming duplication of an earlier payment, De Lange attests that the amount was in fact recorded as having been paid by Ivema. During the same period, without any given justification being given, another sum of R1 400 000 was paid to Hlongwane Consulting (which was also 100 percent owned by Hlongwane). The Sunday Independent understands this particular sum was in repayment of a R900 000 cash flow loan taken by Ivema from Hlongwane in the previous year. “This could not be verified,” the paper says.
When De Lange queried the payments Collier said that, though the matter had never been addressed at any Ivema board meeting, “it had to be carried out due to the fact that it was an instruction by the chairman of Ivema and the chairman of Ngwane Defence”. When De Lange persisted in querying the arrangement, Collier’s wife Jane – also in the employ of Ivema – was tasked by the Ivema board to draft a formal agreement on the issue. Jane Collier then drew up a document on August 11, 2009, specifying a “continuity of the service charges/fees payable by Ivema to Ngwane Defence for the provision of consultancy services and specialist advice and guidance”.
The proposed agreement committed Ivema to paying a sum the equivalent to 5% of turnover for 10 years in respect of such services. By 2009, Ivema’s turnover was measured at around R230 million a year. Ivema – which manufactures a successor to the Casspir armoured troop carrier – was one of a group of six local defence manufacturers brought together under the umbrella of Hlongwane’s Ngwane Defence Group. The other five were: systems engineering outfit IAD; light utility vehicle manfacturer Uri Vehicle Manufacturers; Sonoro, maker of grenade launchers; specialist rifle manufacturer Truvelo; and Rippel Effect, marketing entity for Sonoro and Truvelo. Former SANDF chief and sacked communications minister General Siphiwe Nyanda was Ngwane CE at the time.
At the time of the above events Hlongwane, as BEE partner, held 51 percent of shares in Ivema via his company Ngwane Defence Holdings – as well as a similar share in the other companies within the group although he had made no personal financial investment in the company, the Sunday Independent said. As per the original proposal for the Ngwane Defence Group in 2006,component companies would all contribute to its funding. The Ngwane Defence Group was, however, never formally established, and finally dissolved in late 2007.
Contacted for comment this week, De Lange said he regretted the leak of his letter, but confirmed its authenticity. “I didn’t want this in the public domain,” he said. “I was hoping it would be addressed in the civil and labour law environment. I am gearing myself up to fight it out in court.”
In the fallout from his confrontation with Hlongwane, De Lange is caught up in two sets of legal proceedings – one arises from a claim of unfair dismissal from Ngwane Defence in late 2009 and is being, pursued in the CCMA [sic, this contradicts the assertions that Ngwane was never established and/or dissolved in 2007]. The other is and a civil claim brought by Hlongwane in the North Gauteng High Court against alleged embezzlement and irregular payments of bonuses and salaries by De Lange.
Hlongwane was not available for comment. However his legal representative and fellow Ivema director Christo Stockenström said the matter was sub judice. “De Lange was fired for good solid reasons and the matter will be pursued in the labour court. We will address it in the appropriate forums, and until then neither I nor my client will comment,” Stockenström said.
Pic: The Ivema Gila MRAP
Top stories this week
- Mbeki will be on the Seriti Commission witness stand this month
- Witness dates set for phase two of Seriti Commission
- First round of Arms Deal Commission public hearings almost done
- BAE Systems unveils new RG35 variant
- UK defence industry has high hopes for unmanned aircraft Taranis
- Brazilian Ocean Patrol Vessel Apa heads for home
- BAE Systems debuts new tactical turrets
- BAE SA making its own opportunity
- Saab receives order for sight and fire control systems from BAE Systems
- ATE South Africa awarded Hawk Design Authority
Airbus Defence and Space successfully develops Swiss soldier engagement system to level necessary for series production
by Cassidian, 1 August 2014
The company has successfully developed the Swiss soldier engagement system to the level necessary for series production.
Seeker 400 passes vital round of testing conducted by Denel
by Denel Corporate, 1 August 2014
Denel's unmanned aerial vehicle system successfully completed the second round of flights tests at the Alkantpan range in the Northern Cape.
Airbus Defence and Space completes P-3 Orion modernisation programme for Brazilian Air Force
by Cassidian, 31 July 2014
The company has modernised a total of 12 P-3 Orions, nine for the Brazilian Air Force and three for the Spanish Air Force.