SAAB discloses secret “arms deal” payments

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Swedish defence multinational SAAB says BAE Systems paid defence consultant Fana Hlongwane R24 million a decade ago to help secure contracts that formed part of the still-controversial Strategic Defence Package signed in 2000. The Swedish company adds that news of the payment was hidden from it by its partner in the deal.

The local Mail & Guardian newspaper says today Hlongwane, an adviser to Defence Minister Joe Modise at the time the deals were negotiated, has received so-called “commission” payments of more than R200 million from entities controlled by BAE.

Dow Jones Newswires reported from Stockholm overnight that SAAB Chief Executive Håkan Buskhe had told it in an interview yesterday that a person employed by BAE Systems had, without the company’s knowledge, signed a contract, processed transactions and approved the audited and inaccurate financial statement for 2003. “We can only assume that the BAE employee wanted to hide this,” he added. “We have informed BAE Systems of our findings and how we regard this matter,” he added.

SAAB launched an internal investigation into the matter last month. The agreement between SANIP and Hlongwane was “completely new to us,” Buskhe said at a press conference at the time. Nothing supports that SAAB has paid out any money based on the contract,” between SANIP and Hlongwane. “We have zero tolerance regarding bribes, corruption and unethical conduct when it comes to doing business. … We have no desire to cover up anything.”

The allegations of corruption surfaced in a May 17 report aired by the Swedish TV4 channel. Relying on bank statements, TV4 said SANIP paid Hlongwane nearly US$8 million in several installments from 2003-05 to make sure that South Africa would go through with an order of 26 Gripen fighter jets. The UPI news service added the dealings of SANIP “are a bit obscure”. The company was founded to promote business activities in South Africa. “SAAB says it was operated by BAE Systems but owned by SAAB until 2004. That was “not too clever,” Buskhe said, adding that SANIP was now dormant.

Buskhe yesterday said the investigation was now complete. SAAB and BAE Systems in 1999 negotiated to sell 28 Gripen and 24 Hawk fighters to South Africa in a deal then valued at R15.8 billion. The Gripen order was later trimmed to 26. Swedish counter trade for the purchase amounted to 500 million Swedish kronor (US$77 million), according to Dow Jones.

BAE Systems told Dow Jones this “and other matters were fully reviewed by the [UK] Serious Fraud Office (SFO) and formed part of the overall resolution that the company reached with the SFO in February 2010. Any questions relating to SAAB and its subsidiaries should be directed to SAAB.”

Dow Jones reminded that the British defence giant last year reached an agreement with the SFO over allegations that it failed to provide accurate records in connection with the supply of an air-traffic control system to Tanzania. It admitted the charge and agreed to pay a penalty of £30 million, while the SFO waived its right to investigate other allegations.

BAE Systems last week sold the last of its shares in the Swedish defense company and its representative on SAAB’s board resigned Thursday last week. SAAB and BAE Systems still owns an equal share in a joint venture company called Gripen International, Dow Jones noted.

Buskhe added SAAB has now handed over “all investigation material” to the country’s national anti-corruption unit that will now look at whether there “are grounds to initiate an investigation of bribery, at the individual or corporate level, in connection with the sale of the … Gripen in South Africa.”

The M&G adds the development “casts new doubt on National Director of Public Prosecutions Menzi Simelane’s decision to halt the investigation of Hlongwane.” Simelane last year March ordered the Asset Forfeiture Unit to abandon its bid to freeze Hlongwane’s assets, mostly held in offshore accounts. The unit had obtained an interim order and was preparing to make a case to seize the assets as the proceeds of crime.



Simelane invited representations from Hlongwane’s attorneys and thereafter accepted that the consultancy agreements presented to him were above board, in spite of the fact that there was no evidence of legitimate services provided to account for the enormous sums paid, the M&G said.