S. African Arms Deal Graft Inquiry Faces Credibility Test

Photographer: Sasha Mordovets/Getty Images

South African President Jacob Zuma is making changes to his Cabinet. Close

South African President Jacob Zuma is making changes to his Cabinet.

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Photographer: Sasha Mordovets/Getty Images

South African President Jacob Zuma is making changes to his Cabinet.

The credibility of a South African panel investigating allegations of corruption linked to about $5 billion worth of weapons purchased in the late 1990s is in doubt amid delays and several resignations.

Judge Willie Seriti, chairman of the commission of inquiry, postponed public hearings that were due to begin today in the capital, Pretoria, by two weeks following a request from the Defense Ministry. The inquest has already been delayed by four months and hampered after two of the three judges on the panel quit.

The purchase of jets, warships, helicopters and submarines from companies including ThyssenKrupp AG (TKA) and BAE Systems Plc (BA/) has been dogged by graft claims since it was agreed in 1999, with allegations of wrongdoing going all the way to former President Thabo Mbeki and his successor, Jacob Zuma. Mbeki and five of his cabinet ministers are scheduled to testify at the hearings.

“It’s a fiasco,” anti-arms campaigner Terry Crawford-Browne said in a July 29 phone interview from Cape Town. “There is an agenda amongst the staff to spin this out forever so they can continue to get more taxpayer’s money out of it. They are deliberately floundering in as much paperwork as they can find.”

Crawford-Browne sued the government in 2011 to revive an investigation arguing that the state had failed to meet a constitutional obligation to fight corruption, forcing Zuma to agree to set up a judicial inquiry. Zuma said last week he will consider extending the two-year mandate of the panel by another 12 months.

Ballooning Costs

Seriti said today he received a draft of an urgent application late yesterday from two applicants, one of which was the Defense Ministry, to postpone the commission. Zuma will probably respond to the application by the end of the week, he said.

The arms deal was controversial even before the corruption allegations were made. Opposition political parties criticized Mbeki’s administration for spending billions of rand to buy weapons at a time when the government was restricting its budget and under pressure to expand healthcare and education five years after the end of white minority rule.

The cost of the weapons contract, which the government estimated at 47 billion rand ($4.8 billion) in 2011, may reach as much as 70 billion rand after taking into account debt payments and the currency’s depreciation, according to the Cape Town-based Institute for Accountability in Southern Africa.

Judges Resign

While there have already been several official probes of corruption in the weapons contract, only two people have been convicted in South Africa on related charges.

In 2003, Tony Yengeni, a former lawmaker for the ruling African National Congress, was found guilty of defrauding parliament by failing to disclose a discount on a luxury car from one of the companies bidding for the arms contract. In 2005, Zuma’s then-financial adviser Schabir Shaik was convicted of trying to solicit a bribe for the politician.

The Hawks, a police investigative unit, halted its probe in 2011, saying it was unlikely to secure further convictions.

While the success of the current inquiry can only be assessed once it is complete, it hasn’t got off to a good start, said Pierre de Vos, a law professor at the University of Cape Town.

‘Second Agenda’

Seriti is the only remaining member of the original panel. Judge Willem van der Merwe quit shortly after his appointment and was replaced by Judge Hendrick Musi. Judge Francis Legodi’s resignation was announced on Aug. 1 and a substitute has yet to be named.

Both judges cited undisclosed personal reasons for stepping down and Zuma said last week he was confident the panel’s integrity hadn’t been compromised.

Investigator Norman Moabi quit in January and his resignation letter, published by Johannesburg-based Beeld newspaper, accused the commission of a lack of transparency and “a second agenda” that was at odds with its mandate of uncovering the facts about the arms deal. The panel dismissed the allegations in a Jan. 17 statement, saying its credibility was critical if it was to fulfill its mandate properly.

Tayob Aboobaker, the commission’s evidence leader, also threatened to quit, Johannesburg’s Sunday Times reported yesterday, citing a copy of his resignation letter that was subsequently retracted.

Cabinet Ministers

“They are already having an uphill battle as far as perceptions are concerned and that is a problem,” De Vos said in a July 31 phone interview from Cape Town. Besides the resignations and the delays “there appears to be a reluctance by the commission to find and subpoena some of the people who are alleged to be deeply implicated.”

Among those due to testify at the inquiry are former cabinet ministers -- including Trevor Manuel, Ronnie Kasrils, Mosiuo Lekota and Alec Erwin -- and National Treasury officials, such as Andrew Donaldson, a deputy director general in charge of public finance.

The air force has grounded 18 Augusta A109M helicopters and 26 Gripen fighter aircraft acquired as part of the deal because it couldn’t afford to operate them, Beeld said on July 24, citing a senior officer who wasn’t identified. Siphiwe Dlamini, a spokesman for the South African National Defense Force, declined to comment on the report when called by Bloomberg News.

Bribery Investigation

BAE, Europe’s biggest defense company, agreed in February 2011 to pay almost $450 million in fines to resolve bribery and fraud investigations by U.S. prosecutors and the U.K.’s Serious Fraud Office relating to deals in six countries including South Africa. In June 2008, German state public prosecutors dropped a two-year bribery investigation of ThyssenKrupp, Germany’s largest steelmaker that was part of the group that supplied four frigates to the South African navy.

The commission’s findings aren’t legally enforceable, and the government will have to decide how to implement its recommendations, said Bonita Meyersfeld, a law professor who heads the University of Witwatersrand’s Centre for Applied Legal Studies.

“There is a credibility problem,” she said in a July 31 phone interview from Johannesburg. “I’d be very surprised if there were consequences for people who are currently in power.”

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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