January 19, 2007

Calls for probe into defence deal with British arms manufacturer BAE

Calls for a "speedy investigation" into a controversial multibillion-dollar defence package that has already claimed a deputy president have been renewed by anti-arms campaigners. The deals date back to 1999, and a contract worth over US$4 billion involving the British arms manufacturer BAE is the latest to come under scrutiny. The company has caused public interest after senior BAE executives were named as suspects in a government corruption probe in the United Kingdom. Jacob Zuma, then South Africa's deputy president, was dismissed in 2005 after an investigation into the defence package fingered him. Two senior figures in the ruling African National Congress (ANC) have been convicted of corruption and jailed. The UK Serious Fraud Office (SFO) has asked its South African counterpart, the National Prosecuting Authority (NPA), to help it track down more than $139 million in "commissions", allegedly paid by BAE to eight South African businesses and a political adviser since 1992.

The NPA has also been probing the deal and confirmed that a request had been received, "which was being processed". "It is a tragedy that so much time and energy has gone into this deal when we have real problems like housing shortages, illiteracy and high unemployment. Instead, we had people lining their nests," said Terry Crawford-Browne of the South African chapter of Economists Allied for Arms Reduction, a New York-based research and policy organisation. He has campaigned against the arms deal since its inception, and had written to the British government calling for a probe into the transactions. According to him, the South African government had "aggressively promoted the sale of armaments, and actively colluded in the economic irrationality and absurdity that offsets would make the transactions not only 'affordable', but would stimulate economic development and create more than 60.000 jobs - none of which have really materialised". Offsets are generally measures included in arms procurement deals to encourage local development.

The British arms sales included BAE Hawk aeroplanes for training pilots and BAE/Saab Gripen fighter aircraft, but the overall deal also procured submarines, frigates and helicopters from other European manufacturers. The total package reportedly secured an offset deal of more than $15 billion. In October 2006, Business Report, a section of the South Africa-based Independent Group of newspapers, quoted BAE and Saab as saying that South Africa's acquisition of Hawk and Gripen aircraft to modernise its air force had resulted in 100 new investments in manufacturing, skills development and technology transfer projects across its aerospace, defence and various civil industries. The companies also said they had invested more than $120 million in six existing South African projects, and created about 800 jobs. South Africa's Department of Trade and Industry has consistently defended the offset deals linked to its foreign arms suppliers, reporting that several thousand jobs had been created with the billions of dollars worth of industrial investments.

According to Crawford-Browne, the European armaments industry had a long history of corruption, and "the South Africans probably got a very tiny portion of the kickback".
Critics of the deal also point out that South Africa did not need the high-tech Hawks or the Gripen fighters, when its foreign policy role is geared more towards peacekeeping in Africa. The British daily The Guardian has speculated about the involvement of British Prime Minister Tony Blair in the South African deal, as well as similar deals in Tanzania, Kenya, India and Czechoslovakia. According to the BBC, in December Blair had ordered the SFO to end its investigation of BAE payments to Saudi Arabia in the controversial $80 billion Al-Yamamah arms deal, saying that it was not in Britain's national interest. (The Mail & Guardian, Johannesburg)

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