There is a reason Cope’s president will not reveal the details of the arms deal, a deal that will lock South Africa into servicing billions in debt over the next 20 years — the same deal that Lekota was in all probability privy to as former minister of defence and chief of intelligence of the ANC. It’s no secret that the arms deal lies at the root of the ANC’s crisis of integrity, a stain that should by all rights be transferred to Cope as an entity composed of people who were until recently, members of the ANC.*
Does Cope’s split symbolise a significant shift from the political culture of the ANC? Or does it reveal the ire of those who resent the manner in which the Zuma edifice managed to arrange facts — playing the victim card in a way that proved highly advantageous to his political career — while ensuring that the ANC understood the larger menace — Zuma’s threat to disclose all, should he go down.
It is alleged that Zuma was personally enriched by the arms deal, rigged to benefit certain suppliers. Zuma’s trump card is that the ANC as a whole allegedly was a beneficiary of the kickbacks, using the money, for example, to fund the elections of 1999 as MP Andrew “Mr Clean” Feinstein and others have claimed. This is why Zuma, it is claimed, believes he should not be singled out, and also why many ANC members believe he should be — the ANC allegedly did it for the “greater common good”, Zuma allegedly received funds for his personal enrichment.
Zuma is innocent until proven guilty — as he should be. But, if the trial is postponed until after Zuma is elected president, what are the chances of finding a judge with enough guts to convict the president, if guilty? If Zuma is guilty, will this inspire lawmakers to make distinct the blurred context of tithes in a world where political parties and politicians are often sustained on the side by corporate patrons?
Moreover, is South Africa a unique case?
Is it all that uncommon for governments of developing (read: exploited) regions to collaborate with arms companies in an attempt to generate funds? Transparency International states that 100% of arms deals are corrupt, accounting for 50% of global corruption. The Grimmet Report, prepared for US Congress, disclosed that more than 70% of all arms manufactured by governments and multinationals — or subsidised warrant agents of developed countries — were delivered to exploited countries such as Nigeria.
Were we to use Nigeria as an example, we could draw on the militarisation of the region as directly corresponding to the presence of natural capital such as oil and water, the vehicle used by the Nigerian government to oppress the nation and repress ground-up movements agitating for freedom.
In 2008, oil corporations including Chevron, Shell and Exxon-Mobile jointly invested $3,7-billion beefing up concessions. Since 1990, the population of people living on less than the proverbial dollar a day has increased by 10%; 70% of the population has been blessed with a life of extreme poverty (or simplicity if you would prefer, uncluttered by useless services like water and electricity). Nigeria supplies a minimum of 22% of US oil imports, and is on the verge of overtaking Saudi Arabia as the US’s geopolitical oil cushion. By paying for the limo and arming the parking lot, the US (and China and India and Malaysia) have expended their sphere of influence in Africa.
It is therefore important for us to contextualise the roots of the arms deal, a creaking, rust-bitten ladder extended by developed countries to bankrupt corrupt governments as a means of financially botoxing penniless state coffers, often sweetened by mythical offsets.
During an interview with Terry Crawford-Browne — anti-apartheid activist, economist, author and head of the Economists Allied for Arms Reduction (ECAAR) I learned: “the arms deal goes right to the top in South Africa, and beyond to Tony Blair, Jacques Chirac and Helmut Kohl in England, France and Germany. Tony Yengeni and Jacob Zuma may have had [allegedly] ‘dirty fingers’ but they are only ‘small fish’ in the saga”.
He went on to say, “because of the revolving door between BAE and the British government, Tony Blair was considered the number one salesman for BAE because the pressures he exerted on governments, including ours, to buy BAE warplanes we did not need”.
Blaire visited South Africa twice in 1999, allegedly to hasten the SA deal.
Note: Mirroring the South African connection is the notorious Al Yamamah arms deal, said to be the most lucrative deal in history, involving BAE and concluded by the British and Saudi governments. Characteristic of the arms industry, the Serious Fraud Office was effectively prevented from furthering investigations into the nature of the rigged and dirty dealings when Saudi Arabia threatened to shut off “intelligence sharing”.
The UK, led by Blair, pulled the plug on the case.
Robin Cook, the former Labour foreign secretary who opposed the sale of BAE equipment to countries with lethal human rights records stated: “I came to learn that the chairman of BAE appeared to have the key to the garden door to No 10. Certainly I never knew No 10 to come up with any decision that would be incommoding to BAE.”
Wafic Said, the deniable facilitator of the deal stated: “The agent for British Aerospace (BAE) is the British government and the contract was a government to government project. King Fahd and Lady Thatcher were responsible. The big role was played by Lady Thatcher.”
The UK has insured all BAE deals; should Saudi Arabia collapse due to Middle Eastern attempts at democracy. The Al Yamamah deal kept BAE afloat via the Saudi’s $40-billion.
The Defence Review states that “deals with the ministry of defence tend to come wrapped in the Union flag”. BAE deals are underwritten by the British taxpayer via the ECGD (Export Credit Guarantee Department), and facilitated by the DESO (Defence Export Services Organisation).
BBC journalist Will Self described the intimate relations between BAE Systems chairperson Dick Evans and Tony Blair. “Dick got Blair to write a piece for the BAE SYSTEMS newsletter in the run-up to the 1997 election saying: ‘Winning exports is vital to the long-term success of Britain’s defence industry’.”
“In short, Blair, John Major and Margaret Thatcher were all in BAE’s pocket and they dress up British arms exports as the ‘national interest’ to create jobs and earn foreign exchange and rah-rah for England and the Queen! I would describe BAE as organised crime on a scale that makes the Mafia look like amateurs,” said Crawford-Browne.
What is the present value of the arms deal anyway?
The R30-billion figure was a thumbsuck rand equivalent at R6,25 per $1 back in 1998. There have been huge escalations since then, including foreign exchange losses, so with finance costs up to 20 years we are probably talking about R100-billion. It is very complicated to calculate this, but the National Treasury apparently has a computer model for this purpose. That’s the direct costs.
What was the state of our economy at the time?
In 1994, the ANC was forced to sell state-owned assets in order to pay off odious apartheid debts, — one of the historic compromises that Mbeki alluded too. This debt — demanded in full by commercial banks — was valued at R189,9-billion in 1994.
It should be noted that the IMF, et al, made odious loans as recent as 1982 in flagrant violation of the UN’s repeated calls to divest from South Africa. Professor Dennis Brutus, Mandela’s former cellmate on Robben Island and leading light in the Jubilee Movement, was told to keep quiet when he contested the legitimacy of apartheid debt.
And though South Africa was emancipated politically, this magic button — the right to vote — was diluted, constrained and undermined by the inherited economic structure of apartheid, as evidenced in the blanket amnesty granted to corporations that financed and facilitated the longevity of the apartheid regime. The latter has often been portrayed as one-dimensional in nature, a militarised state of pigmentocracy that has since been dismantled.
Nothing could be further from the truth. The purpose of apartheid is best understood when examined in light of the close ties to developed countries — beneficiaries of exploited natural capital, and multinationals that financially propped up the regime. Former prime minister John Voster once stated, “each bank loan, each new investment is another brick in the wall of our continued existence”.
These loans were extended by banks ranging from Chase Manhattan (JP Morgan) who led a consortium of 10 banks to invest a minimum of $40-million after the Sharpeville Massacres, Commerz Bank, estimated by the UN to have injected $870-million via 30 capitals loans over a six-year period, and Dresdner Bank AG, who invested more than $1,767-billion via 54 loans over a 30-year period. Barclays, also known as the colonial piggy bank, was highlighted by the United Nations as being responsible for “one of nine major loans to the SA government and its corporations, totaling $478-million”.
The Truth and Reconciliation Committee established by the state to redress wrongs committed during apartheid, conveniently allowed for these bankrollers — who have not yet requested amnesty nor offered reparations, to escape scrutiny.
Basil Hersov, former head of Barclays during the apartheid era, later acquisitioned in part by Anglo-American — labeled the pillar of apartheid in 1988 — even served on Mbeki’s economic advisory panel, while Chris Stals, apartheid’s central “banker”, was retained in his position of governor of the Reserve Bank. Ali Mazrui summarised South Africa’s political emancipation by stating, “black people [were told] to assume the crown of political power, and white people should retain the jewels of economic prosperity”.
Various class-action lawsuits instituted by civil-society groups such as Khulumani charged corporations such as Barclays with aiding and abetting apartheid via the Alien Tort Claims Act (ATCA), have been blocked by the SA government under the guise of “interference”. Is such interference necessary given the SA government’s protection of said multinationals via the blanket amnesty, among other acts of legal fellatio? Never did these entities conceal their interest in South Africa, for example, Ford, suppliers of armed vehicles, openly said, “Why are we in South Africa? We would not be there were there not an opportunity to make a profit.”
Though Dullah Omar, the former Minister of Justice, gave his full support, his successor would nix it, later threatening to “get Khulumani by the jugular”.
This same minister would later represent the apartheid corporations in his capacity as an advocate.
According to an excerpt of an article, “the Minister of Justice was instructed by the US government to oppose lawsuits brought in the US against multinational corporations which allegedly benefited from apartheid, lawyer Michael Hausfeld has alleged.”
The US government classified multinational support of the apartheid regime as “constructive engagement”.
ATCA cases like that of Khulumani represent lifelines for the peoples of various countries from Nigeria, Liberia and Cote d’Ivoire to Burma, who find no safety in courts situated on home ground against exploitative non-state entities collaborating with, and often sustaining, despotic third world governments.
These days, the South African economy is almost entirely controlled by foreign capital, much of which is speculative. This is not unknown to the corporations, nor is it incidental. As early as the 1980s, Mbeki wised up to the nature of “corporate democracy”, heading a delegation that began directly negotiating with corporations such as Anglo-American.
In 1985, Mbeki met with Anglo’s chairperson Gavin Relly in Zambia. Several years later, in 1988, Relly was quoted as saying that financial investment in apartheid SA generated a stabilising effect. Perhaps Mbeki understood that without a political platform from which to agitate for economic freedom, such a reality would not be realised.
Pigmentocratic apartheid may have ended, but as George Soros stated in Davos, “South Africa is in the hands of international capital”. Mandela would describe retirement as, “like being out of jail a second time”. The global financial architecture regulated by the World Bank, and IMF via loans, debts and structural adjustment, allows for the governments of developed countries to control and direct the extent and degree of development (maldevelopment and underdevelopment) of former colonies, while corporations dominate the free market by way of large portfolios, subsidies and export credits, and the overall power of oligopsonies.
This is the continuation of economic resource colonialism by other means. Yet it requires and has attained the full support of most comprador — or native regimes — from Equatorial Guinea to Angola. The latter have endorsed the inherited structures of colonialism — in the case of South Africa — apartheid. Each year the African continent experiences a loss of $20-billion to $28-billion in capital flight that remains largely unrecorded — a situation manufactured by developed countries on the receiving end of corrupt and criminal cross-border outflow. It must also be said that this form of economic iron-fisting centered on the plunder of the ecology did not begin with those we assume to be the first and last victims of colonialism …
Prior to the discovery of “new lands”, Europe enacted privatisation (enclosures), dispossession, exploitation of the commons and other instruments of organised state terror on their own populations by criminalising the displaced, while shipping abroad “malefactors” to work on British colonies. It was only when the slave trade proved profitable that whites were freed from the whip. Colonialism used race as a flammable mobilising tool, and so racism, packaging the newly discovered as barbaric peoples in need of civilising, was manufactured.
Even the formation of South Africa as a nation, initially composed of privatised portions of land granted by the Crown to pioneering corporate barons such as Cecil Rhodes, was rooted in the expropriation of resources. Cheap sources of labour were used for extracting wealth, which was then exported, unprocessed, for personal profit and the favour of the crown.
Colonialism — a system facilitating economic and ecological injustice, deliberately disassociated from its context — has created a fundamental gap in our thinking; a yawning chasm firmly entrenched in the dialectics of apartheid and the present legacy, marred the arms deal, among other factors.
Is it even legal to peddle arms to a country mired in poverty?
Not so, said Crawford-Browne.
“Criterion eight of the EU Code requires consideration of the socioeconomic conditions in recipient countries. This was ignored and the economic absurdity was concocted that expenditure of R30-billion on armaments would translate into offsets worth R110-billion to create over 65 000 jobs, and this would provide economic stimulation.
“Offsets are internationally notorious as a scam promoted by the arms industry to fleece the taxpayers of both supplier and recipient countries.”
In 1998, advocate Anton Katz requested that Crawford-Browne, “take up the arms deal as important constitutional matter”.
A brief glimpse into the history of the deal reveals that as early as 1991, BAe approached Umkhonto we Sizwe (MK) through the vehicle of Joe Modise, later to become Minister of Defence. Then there is the subject of Chris Hani, assassinated in 1993. Hani allegedly advocated a policy of demilitarisation, and was pegged by some as a potential future minister of defence.
This link between arms companies vying for the South African market and the murder of Chris Hani, was taken up by investigative journalist Evelyn Groenink. A summary of her book, prepared for the Freedom of Expression Institute (FXI) can be seen here. Groenink narrows the motives behind Hani’s assassination down to a few people, including Modise.
In 1993, Modise allegedly began negotiating with Victoria Buxton (allegedly connected to Barclay’s Buxton). The main loan agreement would later be concluded by, “Barclays Bank, British government and South African government: Loan Agreements for the BAe Fighter Aircraft Contracts.”
In his book Eye on the Money, Crawford-Browne writes, “The arms deal is interrelated with criminal activity on a significant scale. I filed an application asking the High Court to set aside the loan agreement signed by the Minister of Finance that gave effect to the arms deal. Collapse the loan agreements, I believed, and that would collapse the deal itself.”
In 2002, Trevor Manuel, signed an affidavit under oath claiming that the arms deal stood independent of the loan agreement.
Barclays would provide the largest of the loans for the arms deal — $3-billion — alongside Commerzbank of Germany and Societe Generale of France.
Covenant 21.16 of the main loan agreement between Barclays bank, the UK and SA government (for the purpose of BAe products) states: “The Republic of South Africa is … eligible to use the resources of the International Monetary Fund.’
Crawford-Browne writes: “The default clauses in the agreements filed in court confirmed that the Minister had ceded control over South Africa’s economic and financial policies to European banks and governments, and the International Monetary Fund.”
From afar, these issues appear to be nothing more than a crack, a single jagged black line extending across the canvas of our democracy; a somewhat worrying hitch, but nothing too pressing given the global state of affairs, and the current spirit of our pay-as-you-go political culture, to the detriment of the true heroes of the struggle and the wealth of talent in our government and political parties — all immobilised, imprisoned.
Are we truly liberated then, or do we just imagine ourselves to be, that we may sleep at night for a little while longer, safe from the kind of truths that require us to stand up once again and face the beast? And if we are forced to demand that these issues be raised come election time, will it reveal our democracy as a semi-banged-up tin can, with parties banking on a liberation we are still in the process of achieving?
* In an attempt to check some facts, I sent this article to the rainmaker and was informed that Dr Desai debated Lekota, raising this point, among others.
Excellent Khadija as always thought provoking articles!
Excellent post.
Now I wait for the familiar, knee-jerk, “conspiracy theory” comments.
What makes it even worse is that the aircraft are still not functioning properly. We actually don’t have a half way decent airforce.
However, it takes 2 to tango. If big business and western governments are corrupt so too are all the ‘liberation heroes’.
Hi guys, thanks for reading:-)
The M&G recently reported, “the Zuma plan involved the intended appointment of (spin doctor) Timothy Bell…Bell helped put Margaret Thatcher in power and keep her there and more recently helped sweep Britain’s most protracted arms scandal under the carpet.”
The article continues that Bell has not yet signed on. http://www.mg.co.za/article/2009-02-20-why-did-zuma-want-niehaus
Perhaps Bishop Dandala, COPE’s Presidential candidate, will reveal all – God (or Lekota) willing.
“Are we truly liberated then, or do we just imagine ourselves to be, that we may sleep at night for a little while longer, safe from the kind of truths that require us to stand up once again and face the beast?”
Once again your writing has provoked so much thought.
Khadija Sharife @ 2:59 pm
I don’t think COPE or the DA will take on the multinationals/foreign governments because they are neoliberals and that will be seen as scaring off “foreign investors” and will not be “received well by” the markets. In fact – I think this whole vendetta against Zuma is very little else than an elaborate side-show to make everybody take their eye off the ball.
Interesting article here with Patricia De Lille painting the bigger picture:
“Corruption grounded in colonialism
The genesis of corruption in Africa lies in the state of the continent when the colonial powers pulled out, leaving behind systems of government based on elitism, patronage and power.
Corruption involves both parties to the deal and, according to Transparency International, “multinational companies are fuelling corruption in the world’s poorest countries by routinely issuing bribes”. These companies should no longer regard bribery in export markets “as a legitimate business strategy”.
Domestic companies in five G8 nations – France, Italy, Japan, Russia and the US – are seen as the worst offenders in paying bribes among the world’s most industrialised countries.
Corruption is costing Africa $150 billion each year and robbing Africans of a better, more democratic and secure world order. There would be less corruption in Africa if there was no place to hide the proceeds of corruption, said Ms de Lille.”
http://www.epc.eu/en/er.asp?TYP=ER&LV=293&see=y&t=2&PG=ER/EN/detail&l=&AI=815
Once again, you try to find the “hidden White Hand” in all of Africa’s corruption cases, in a similar way to an Anti-semite, “looking for Jewish Financiers”.
Apart from being about forty years out of date, you also fail to notice that the British courts had court cases trying to re-open the BAE corruption cases (Which involved Saudi Arabia in particular and the Tanzanian military radar, NOT SA.) and fail to mention much more relevant and modern cases.
Such as the 300 MILLION Rands of SADC money that was given by the ANC SA Govt to ZANU and lying about it being aid, as the country starves and dies of disease, kept alive by Western food aid and Red Cross/ Medicins Sans Fontieres (and UN) medicines.
To a country now begging for more (without audits and accounts), with a bloated govt of about 77 (with provincial governors) as 75% of the country are on (Western) Food Aid.
But since this had nothing to do with Blair, Bush, the West, Colonialists and White people and was entirely a Black African affair, you wont mention it will you?
By the Way, how’s the Slave Trade going in Darfur, where an Arabic Govt is operating a policy of Genocide against Black Africans and telling the West to stay out of it, apart from feeding the refugees so the govt can make money out of exporting food rather than feeding its people?
Or, do you have some difficulty finding “The Hidden Blair Hand” in that, or is it because they are a Muslim govt mistreating Africans, dear KHADIJA?
If it were not for the massive amount of corruption at all government levels and throughout much business, I might agree to amnesty on the arms deal with the intent of starting from a clean sheet. However, considering the lack of principles within our present regime it would be judicial and constitutional capitulation not to continue prosecution and further it would not deter ongoing or future illegal acts if we fail. Justice for all is vital to the health of society, and most urgently important in matters of governance. To deny justice for the people of South Africa in the arms deal – and considering the current lot in control – is to insure such incidents not only continue but will likely increase.
Dear Khadija,
Once again you try to blame White poeple for all Africa’s woes.
The G8 nations are not viewed as the most corrupt, China is, and was that a deliberate racist lie or just showing your ignorance.
And where’s the bit about Africa’s Woes being mostly Corrupt African Politicians?
Or even the bit about the only colony left in Africa being occupied by an Arabic nation? (Western Sahara and Morocco.)
And please inform us of when it is and how man years it will be before the Independent African Nations will be taking responsibility for their own problems, rather than backdating everything and trying to blame a White person for it? (Incidentally ignoring 2.5 Millenia of arabic colonisation and exploitation of Africa?)
40, 50, 100, 200 years, Or will (European) Colonialists always be responsible for Africa’s Corruption.
Compared with what SE Asia and Latin America did with their ex-colonies after being freed from European control.
Hi Mzwakhe – thank you for taking the time to read what was a (very) long piece;-)
Ozone – you hit the nail on the head. Cross-border capital outflow reinforces inherited structures of economic (and resource) colonialism. The automatic exchange of tax information was scrapped from the draft (IMF) save for permitted exchange or soft laws, the result of intensive lobbying by Wall Street. Traditional financial institutions and offshore tax havens are routinely used by multinationals (by way of transfer mispricing accounting for 60% of global trade)…Multinationals (fictive legal citizens) are allowed to engage in tax avoidance though not tax evasion, so while it is not strictly legal, nor is it strictly illegal to cook the books and so minimise exposure to tax. The Guardian recently did a great expose of this issue by tracking the tax avoidance of UK banana sellers who raked in profits of $400 million yet paid just £128,000 in taxes. While most corporations operate largely tax free, individual tax is killing the middle and low income groups and subsidising the corporations.
Each year $20 – $28 billion leaves Africa (criminal and corrupt capital), with an overall figure of $1 trillion globally (the World Bank puts the figure at $600 billion from developing countries). Multinationals plunder lands, as you stated, through the instruments of comprador or native satellite governments required to give the okay….certainly, oil pipelines, big dams etc add little to nations (and a great deal to mobile corporations) and remain largely self-regulated, even informing compradors of the $$$ to be paid to the state. If tax avoidance were outlawed, if automatic exchange of tax information (from country receiving flight to country experiencing flight) were legislated by the international community (as the UN is attempting to and other great organizations like the Tax Justice Network), and if multinationals were required to provide country-by-country analysis as opposed to invoices lumped per region, the problem would be mostly solved. Apparently, there is $12 trillion presently stashed in banks known for their discretion:-(
This goes to earlier discussions on: “who runs the world?”
The answer: the undemocratically elected bosses of big corporations who work for maximizing profits for their shareholders who –in turn- are often the pension funds of the poor sods who slave their way through life for a miserable income with the promise of a quiet old age.
The arms industry is one of the less scrupulous parties. But the car industry, the food industry (GM) or mining industry are not much better under the guise of generally accepted benefits of “globalization”, preached by the corporate world as the solution to all evils of poverty and disease in the world. And the politicians have been buying this, filling their pockets in the process.
Back to the arms deal in SA. SA was never liberated by the ANC. The ANC in exile had been asked to keep a low profile until the East block has collapsed. The fall of the Berlin wall was the sign for the ANC to come out of the woodworks and De Klerk was asked to step aside and make place for the best know prisoner in SA. He duly did as he had no choice. …and they all lived happy together for ever.
Comes pay back for the ANC: the arms deal. At the time there was no war, no threat of a war and a reasonably functioning army. SA did not need the stuff. A little “Vaseline” here and there to smooth the process and pacify potential opponents seemed necessary. Pity people outside the game found out and made noise. Conspiracy? Not at all. This has happened for thousands of years.
How can we make an end to corruption, bribery, double games, conspiracy or whatever we call it? How can we change the mindset of African politicians?
Ghadaffi, the new president of the AU, has thrown some interesting ideas around. One that intrigued me was his idea to redraw the borderlines of African countries allowing tribal communities to become a “country”. He might have underlying and secret motives but the idea is not bad. It would have the potential to create homogenous societies in language and culture.
Then we have the phenomenon of the Western democracy based on the British model with all the outdated pomp and meaningless ceremonial proceedings. African “democracy” and political decision making is based in a different culture. Western democratic processes are happily being manipulated to suit the various African agenda’s.
If Ghadaffi wants to get it right, he will have to work hard to get the corporate world out of the game. I hear you saying: “…his human rights record”. He is not worse than Bush or Blair as far as I am concerned. However, he might just get involved in a fatal accident as did Hanie and Kennedy and many others before him.
I do not have the answers. One step in the right direction would be to clamp down on the “globalization” of the corporate world and cut their powers to country size.
Ironically, the countries on the receiving end of corrupt capital outflow – the Switzerlands, Britains and various offshore havens such as Cayman Islands, are never labeled as ‘corrupt’ by Transparency International and other watchdogs. Why has corruption been limited to bribery on the part of comprador states without taking into account their partners? The question then is, how do we define corruption?
Khadija, a well written and informative article -Thanks!
South Africa’s strong economic infrastructure with all its warts, inherited from the apartheid regime, is the result of many concessions made during the final stages of negotiation in the liberation struggle. However, its tight inter-dependency with the rest of the world especially through multi-nationals, is essential for its long term economic growth and survival. I would not go so far as to categorize the inherited economic structure purely for the purposes of propogating colonialism. I feel that since SA is a country rich with abundant natural resources and the necessary infrastructure to leverage it, SA could slowly wean itself off this dependency in time.
Obviously, these huge arms deals are out of alignment with SA’s defence needs given its geographic position and neighboring countries, but nevertheless, some upgrading and restructuring of SA’s defence system is still necessary to to cope with possible regional disturbances or threats.
There will always be corruption in large financial transactions between governments, multi-nationals etc. since they are inherently complex, involve many intermediaries and are dependent on a plethora of economic and political circumstances to setup, execute and unwind, sometimes over multiple years. The challenge is how to minimize this corruption.
“ozoneblue” references Patricia De Lille’s comment which cuts to the heart of the matter “There would be less corruption in Africa if there was no place to hide the proceeds of corruption”.
Khadija, its extremely difficult to battle these tax havens and offshore banking accounts but a some interesting news recently, illustrates how the US has recently been shaking down some international banks (infamous for those overseas noname bank accounts) to hunt down taxpayers committing tax fraud who diverted enormous undeclared gains into these offshore accounts and tax haven countries. Remember these very wealthy individuals require absolute anonymity, financial safety and custom management services for their money. That’s why they will not entrust their money to just any country. As you point out, its a perfect setup for corrupt politicians and of course the usual suspects -dictators, drug cartels, organized crime, arms dealers etc. Needless to say, many of these accounts are used legitimately for wealthy individuals with perfectly legitimate needs for these services.
Now imagine for a moment if SA could muster up the political will to chase down corrupt politicians and their cohorts similar to the US? This could easily put a HUGE damper on the financial incentives for corruption and organized crime. Bear in mind these offshore banks and countries will fight vigoursly to retain their clients privacy. The reason why its so hard to crackdown on these offshore accounts is the lack of political will. With the US shakedown, too many very wealthy, very well connected people in the US are extremely nervous! I can imagine the same here in South Africa as well. A recent US settlement where they expected to get tens of thousands of names, they ended up getting about three hundred! The UK and Germany have had no success getting these offshore banks to do what the US has forced them to do with considerable pressure. So I’d say, SA has a pretty remote chance of getting these banks to cooperate. Similarly, inter-country exchange of tax information is also highly unlikely.
One possibility is to identify some of the domestic activity that could be indicators of illegal offshore transactions (don’t ask me how its done, ask the financial experts at SARS) but this would require an anti-corruption unit that consists of high-calibre agents that have the knowledge and motivation to deal with these sophisticated cross-border transactions. A possible structure might be to create a division within SARS that has greater jurisdiction the financial and banking systems to perform anti-corruption functions. Once a crime has been known to be committed by a SA taxpayer, these offshore banks, bound by international treaties, are more likely to divulge information on the individual. With SA’s anti-corruption strategy in current disarray I wonder how important this is to the new leadership to make a renewed commitment towards building a non-political anti-corruption unit with enough teeth to root out this type of corruption?
“Innocent until proved guilty” is a legal fiction; it’s not a reality. The instant someone commits a crime, he or she is guilty of it.
But the State prosecutors are, from then on, required to persuade the judge and assessors that the crime was indeed committed by the accused.
The accused doesn’t have to prove anything: his innocence is presumed as the default position. Even if the accused knows in his heart that he’s done the deed. All he needs to do is deny it.
Yet even this legal assumption isn’t absolute. Many people are arrested, charged and then remanded in custody even before their guilt is proved. Some are even denied bail.
So “innocent until proved guilty” isn’t something which fits into the real world. It’s only a legal fiction, and even then it’s a qualified fiction.
We shouldn’t bandy it about.
How do we define corruption? We define it by hammering home the last point made by Khadija again and again. That corruption in the ‘third’ world is a symptom of a larger disease – corruption in the ‘first’ world. It takes two to tango as Owen points out, but if it’s a question of “perceptions” as Transparency International promotes, then it’s time there is much more focus on “white” collar crime. How can the UK feature so high on TI rankings when it just shut down an official inquiry into multimillion dollar bribery in the BAE arms deal. Perhaps because we don’t hear it enough?
Revealing and depressing. Good article. Keep up the good work.
Interesting read, Ms Sharife. However, a major disservice is done to this important issue through the addition of unsubstantiated speculation by the likes Crawford-Browne and other peaceniks.
There are many valid reasons to criticise the deal, without resorting to hyperbole.
Will respond later, detailing the more glaring inconsistencies.
The major question is why the media has gone cold on the arms deal since the formation of Lekota’s COPE. Having been at the epicentre of the DEAL from the onset, his refusal to talk is,quite frankly,damning!!!!!!!!!!
Where are the “investigative” journalists we hear so much about?
Excellent piece Khadija…
As you allude to, the arms deal could only happen because of the existing international political economy. SA foreign policy and thinking must continue to challenge the north/south trade philosophies and protocols on the transformation of (embedded) power relations.
Without absolving ANC & govt heavyweights’ culpability, we need to also examine the footprint of foreign interests and their lobbyists in SA govt purchases. Specifically the role of companies born out of the Apartheid military industrial complex and their role influencing govt spending in specialised sectors such as defence spending and technology applications & maintenance. Most of these companies will have small (or highly decentralised) operations, will be JSE unlisted, mostly based in pta & cpt-with balance sheets in the (ZAR/$)hundreds of billions…
(…)sorry, tens of billions…
Superb article Khadija. Always thought provoking and well researched.
Alisdair Budd – It appears you would have liked the article to include absolutely everything currently unfolding in world politics and all of history as well, especially the bits that make you feel better about yourself and your opinions. Quite what all of that has to do with COPE and the arms deal is still a mighty mystery to me.
Perhaps you can elaborate on specific points you do not agree with in the article instead of taking all of us on a mysterious global rant for no apparent reason?
The article does make the interesting point that in order to overthrow the apartheid regime and then survive in the ensuing period, the ANC had to make compromises, which the author does not like. Fair enough, but unless plausible alternatives can be presented, what this amounts to saying is that you would rather either the apartheid regime had not been overthrown, or the post-apartheid government had not survived.
Broadly speaking, it is obvious that if there were any corruption in the arms deal, foreign governments would have been involved, and since we know that there was corruption in the arms deal, we know that foreign governments were involved. THINT is a company intimately involved with the French government, just as Daimler-Chrysler (as was) is intimately involved with the German, and BAE with the British.
However, the problem with the core accusation is that we don’t know very much about the arms deal. We have heard accusations, some of which have been shown to be false, others of which cannot be either proven or disproven, coming from people like Feinstein, Crawford-Browne and De Lille, all of whom have political agendas which have nothing to do with democracy in South Africa and everything to do with personal gain or self-importance. This does not prove them wrong, but it does not prove them right, either. The fact that their statements are taken as gospel by, most particularly, the South African white ruling class suggests, painfully, that the arms deal is not so much an important issue, as an opportunity for the far right to undermine their enemies without having to provide any factual information.
How much of this is circular (eg, the right wing primes the popular propagandist, as with the intimate relationship between Feinstein and the neoliberal propagandist Howard Barrell, and then benefits from the PR spin given to it without being implicated) is hard to guess.
I am so proud of you Khadija. You are an intelligent young woman who is not afraid to speak uncomfortable truths- and you are a damn good writer at that. Yes, a few shallow minds will reduce your (evidently) well-researched article to conspiracy theorizing but such people are not to be given any attention. Keep it up. You don’t disappoint!
Khadija, nice analysis that loses credibility as you slip into the rut of blaming whites, colonialism, apartheid, Donald Duck etc for to day’s corruption. Rather stick with facts and leave out ideology, dogma and the indoctrinated beliefs that you pass off as fact.
Guys I really don’t know why there is this scramble to shift blame around. Bust everyone you can I say. The obsession with offshore tax havens, corrupt multinationals etc seems like a smokescreen to deflect attention from the absolutely rotten to the core African politicos, Mugabe et al. Mbeki trying hard for a mention.
Blaming offshore havens is like blaming parking garages for hi jacking because that is where the thieves hide the cars.
Joe Modise was the first Minister of Defence, and minister during the negotiating of the arms deal. Lekota was second minister of defence and part of the pressure group shutting up SCOPA. Even Andrew Feinstein,himself, writes than Lekota was possibly innocent; but that Joe Modise was not.
Nigeria has the tenth largest reserves of crude oil in the world, and should be one of the richest countries in Africa. It is because of corruption, not because of oil companies. In 2001 Transparency International rated Nigeria the second most corrupt country in the world. Nigeria ranked number 148 on the United Nations’ Human Development Index (behind Bangladesh and Haiti) in 2005.
“Oil rich Nigeria may be called the largest failed state on earth, dwarfing Afghanistan in every miserable respect; it is the ground zero of African despair and rage”
“The Lost Kingdoms of Africa” by Jeffrey Tayler (who attributes it all to corruption).
And the subjugation of the black Christians and animists in the South continues – Biafra was this at its worst. They can never get independence, because the oil is in the South.
Jeffrey Taylor also depicts graphically all the “slave tribes” of North Africa – still treated as slaves today, despite the West having abolished slavery in their domains about 200 years ago.
I will, however, say this for Gadaffi – he does use his oil to look after his own people, UNLIKE Nigeria!
“the same deal that Lekota was in all probability privy to as former minister of defence and chief of intelligence of the ANC.”
FACT: Lekota only became DoD minister in 1999, when all the shenanigans were concluded.
“Zuma’s threat to disclose all, should he go down.”
FACT: Zuma’s people have advanced 2 arguments around this. The one you’ve mentioned and the other being that he was MEC in KZN at the time and therefore minimally involved. Which do you prefer or is it determined by the argument you’re making?
“Zuma’s trump card is that the ANC as a whole allegedly was a beneficiary of the kickbacks, … to fund the elections of 1999 as MP Andrew “Mr Clean” Feinstein and others have claimed.”
FACT: You’ve added 1+1 and come up with 3. Feinstein makes the claim in his book, and does not attribute it to Zuma. Alternatively, please refer us to your source that this is “Zuma’s trump card.
“what are the chances of finding a judge with enough guts to convict the president, if guilty?”
FACT: There’ve been some pretty wonky decisions by SA’s judges, but should the entire judiciary be viewed with suspicion on their account?
“Is it all that uncommon for governments of developing (read: exploited) regions to collaborate with arms companies in an attempt to generate funds?”
FACT: Out here in the real world, developing is not synonymous with exploited
“Transparency International states that 100% of arms deals
Jean Racine: thanks for the comments – Lekota was ANC party chief of intelligence in 1991. Grimmett Report – “developing world receives 71.5 percent of new arms transfer agreements; arms deliveries to developing regions compose nearly 74 percent of all global arms deliveries.”
I found this article to be really thought provoking and insightful, thank you!
The real question was did the ANC need to buy any arms at all?
Andrew Feinstein made it quite clear that the ANC itself needed funding.
No-one twisted their arms at all.
Hi Phillipa – thank you so much for reading. The information was not hard to find mainly due to the brave journalists at the Guardian and M & G; people like Crawford-Browne and Prof Brutus…It has very little to do with (the shred) of intelligence that I might posses (somewhere;-$
MFB – thanks for reading. On the issue you mentioned, “you would rather either the apartheid regime had not been overthrown, or the post-apartheid government had not survived” – my feelings are quite the opposite. As I have stated, the compromises Mbeki made allowed for us to attain a political platform that can (and should) be used to motivate for economic and ecological justice. But for us to accept (and indeed for the government and media to package) our current situation as one of ‘complete’ liberation is to deny the reality that underpins the inherited (and endorsed) economic structure of our country.
Khadija
Have you read the following books:
“Thabo Mbeki: The Dream Deferred” by Mark Gevisser
“Cyril Ramaphosa” by Anthony Butler ???
Lyndall,
Is your point about Nigeria being 2nd most corrupt country ranked by Transparency international another half truth?
Learn to check your “facts” using internet!
Hi Japes – are these particular garages neutral.. do they specifically attempt to lure criminals by way of economic incentives, legal protection, immunity, and ‘discrete subsidiary units’ in exchange for tremendous profit? It is not just developing countries that are forced to bear the brunt of corporate tax avoidance (sometimes called avoision for the blurred lines between evasion and avoidance) but also individuals in the US, UK etc who are forced to subsidise the corporations. In the US right now, the multinationals receiving multi-billion dollar bailouts maintained dozens of subsidiary units in tax havens…
I hold nothing against Donald Duck. We are friends:-)
Alisdair Budd,
Your statement “The G8 nations are not viewed as the most corrupt, China is, and was that a deliberate racist lie or just showing your ignorance.” addressed to Khadija, is confusing.
I could not find a reference by Khdija to the G8.
Ozoneblue made this statement in a comment before yours: “Domestic companies in five G8 nations – France, Italy, Japan, Russia and the US – are seen as the worst offenders in paying bribes among the world’s most industrialised countries”.
Below is the Corruption Perceptions Index 2008 ranking from Transparency International.
Note that G8 country Russia is more than 20 places lower (more corrupt) than Nigeria. Another European country, Belarus, is 4 places lower than Russia.
Denmark……..1
Botswana……36
South Africa..54
Italy………55
China………72
Nigeria……121
Ukraine……134
Russia…….147
Belarus……151
Khadija,
Nice try and typical evaisve tactics. The parking garages offer security and anonimity. They don’t care what you do – just pay the fee. Some even have entrances and paypoints above the common herd for the discerning parker. This is useful for both legal and the illegal. Same with “offshore” banks.
Now answer this. Why are you trying to deflect blame from Africa’s rottenest? There is very little we in SA can do about offshore banks but plenty we can do to root out corruption right here. Why do you not advocate doing it instead of being like Don Quixote and go looking for a windmill?
Is it because many of these corrupt leaders purport to be marxists, socialists and communists, pretending to act for the “people” against the naughty west?
Oldfox
You know I quote books – and only use the net under duress, if I can’t find another source.
The facts and figures quoted by me come from the book “The Lost Kindoms of Africa” by Jeffrey Taylor, whom Bill Bryson called one of the best travel writers.
Jeffrey Tayler is pro Islamic culture, totally anti- Bush, but also against corruption, slavery and Female Genial Mutilation.
Oldfox
I forgot to say that Jeffrey Taylor is also an Islamic scholar, has studied the Koran, and speaks fluent Arabic.
Haibo Japes – more than 60% of total capital flight from Africa is composed of corporate tax evasion and avoidance. I am not deflecting blame, simply stating that demand-side (or recipient governments) cannot survive without supply-side (capital exporters).
But what of the remaining 40%? Unfortunately the OECD countries (mobile capital exporters) do not want to move from residence-based principles of taxation (as opposed to unitary or whole, and source-based taxation)…The City of London is a major offshore haven and financial center issuing directives to one quarter of all havens globally…The system facilitates corruption by providing environments that protect dictators like Obiang (welcomed as a friend by the White House’s Condi) who have stolen the wealth of the nation and they know it. But OECD (rich government) interests are intimately intertwined with this developing countries as net creditors. For every dollar given to Africa in foreign aid (controlled by governments only as according to Paris Declaration), $10 is going the other way – back North.
Khadija
According to Taylor most of the money leaving Africa is the leaders salting their “profits” away. In case of Nigeria this is the revenues from the oil companies, but even the public officials steal petrol and sell it on the black market.
Why do you think Mugabe and his elite keep on and on about lifting “sanctions” which are merely the freezing of the private banks accounts of Mugabe and his elite? Where do you think that money came from?
Khadija
You don’t seem to understand how the oil industry works. Simplified – the oil companies pay the state for the right to extract the oil, which the oil companies then load on ships and take away. The African State gets the MONEY, the oil companies get the OIL.
So if MONEY is bleeding out – whose is it?
Kahdija,
As per usual, your post subsumes a veritable plethora of figures and of facts relating to various people and events.
Apart from the possible assertion that the world might be a better place if people were nicer to each other and to the planet and did not pursue self interest with such avarice, (something most would agree upon) I fail to discern a coherent argument or conclusion, i.e. what, exactly, is your point?
No one FORCED our esteemed public servants to become involved in the notorious ‘Arms Deal’.
They may well have been enticed, but that is another matter entirely, particularly if such enticement involved the acceptance of ‘personal incentives’ from whatever source.
Private citizens may pursue self interest from both a legal and moral standpoint, and forms the basis of the (mistaken) belief that private enterprise will never act in the public interest, while state run ‘enterprises’ or other undertakings always will.
Public servants may expressly NOT pursue self interest under any circumstances whatsoever, as this undertaking forms the fundamental basis of their public mandate.
That is why I brook no sympathy for persons who avail themselves of the coercive power of the state entrusted them by public mandate to misappropriate public resources for personal gain.
Private persons (the much maligned ‘corporatists’) have no such coercive mandate.
Should they successfully lobby to secure coercive power in the form of ‘monopolies’ through exclusive operating licenses, concessions, extraction ‘rights’ or other state sponsored or protected or subsidized undertakings, one must
Frank,
“…role of companies born out of the Apartheid military industrial complex and their role influencing govt spending…”
I worked in the military industrial complex for a while, after the demise of the Apartheid govt, but of course it was an industry built up – to world class standards – by the Apartheid govt.
I was opposed to the arms deal, long before the scandals had erupted, and before we learned that in several cases, better or more appropriate solutions had been rejected in favour of more costly or less appropriate solutions.
Firstly we did not need a package of this type (which, if any, African countries posed a serious military threat to SA?)
Secondly, funds that could have been better spent on the local industry, were being spent mostly overseas.
For example, in 1997 it cost on average around R83 000 per job created in Denel companies.
Even if one believed in the fairy tales of 65 000 jobs created and R110 billion of offsets, that amounted, for the offset portion, jobs created at R1.7 million each.
Armscor, the Denel companies and SANDF were not involved in selecting the winners.
The South African military industrial complex gained relatively little.
Here are two articles with a lot more detail on these aspects, and the inappropriateness of the actual solutions accepted.
http://www.caat.org.uk/publications/countries/southafrica-0603.pdf
http://www.ipocafrica.org/cases/armsdeal/reports/Batchelor_Dunne.pdf
Oldfox
That is very interesting – and totally sickening. What a waste of money and opportunity for local jobs.
Like the Gautrain – the whole bloody thing is imported! AND we used to make trains did we not? Or was it just carriages?
Lyndall,
Union Carriage (I think that’s the name) can still manufacture coaches in SA.
Only the first few Gautrain coach sets will be fully imported. The rest will be assembled in SA. But the price is excessive, and maybe SA will be assembling mostly imported components.
SA should have used the SA invented Sheffel bogie, permitting narrow gauge trains to safely run at speeds even faster than Gautrain’s modest 160km/h top speed. The we could have had fast trains going to Soweto, to Soshanguve, from Cape Town to Mitchell’s Plein etc.
Gautrain’s wide gauge coaches can only be used on the JHB-Pretoria route, as well as the leg to OR Tambo Airport. Cannot be used on narrow gauge railway lines used everywhere else in SA.
Oldfox
I listened to a panel debate on the issue before the gautrain was approved. EVERY expert siad the same as you. People who were expert even stopped their cars and phoned in to say why all this could be done in SA and on narrow guage, and for the cost of the gautrain the WHOLE rail network of SA, for ordinary people, could be upgraded.
The ONLY reason for the ANC ignoring the advice of all the experts, that I can think of, is kickbakcks!
Hi Lyndall – thanks for the comments. No, the oil industry does not function in that way. Multinationals are currently taxed via residence-based systems – HIPC/SAP imposed by World Bank/IMF micromanaged governments to drastically reduce taxes (tax reform wrt tax competition) resulting in little or no revenue for the nations. There is very little money that actually leaves the country by way of corrupt flow (3-5%) in contrast to multinational transfer mispricing (accounting for 60%) because multinationals (in collaboration with corrupt governments who receive their pay on the side) do not declare any profit in exploited regions (fixed price). Instead, profits are declared in tax havens (using the vehicle of tax avoidance). The financial details, particularly in hydrocarbon contracts are never revealed and so close to 63% of global trade takes place in unobserved vacuums. This is a reality that has been admitted by the Serious Fraud Office (SFO) etc The Elf Affair is a good example – funds paid to political parties in France in exchange for protection by French troops of repressive corrupt governments in Africa.
The deliberate move to prevent automatic exchange of tax information, country-by-country reporting and transparency in offshore havens is designed to protect the money laundering of multinationals and corrupt politicians. The construct of government in developing/exploited regions is politically limited and economically chained – bankrupt, indebted, fragmented.
Hi Oldfox – thanks for the comment. I am currently doing a paper on resource and environmental policies of political parties and one party has revealed that Denel has been subsidised with R5 billion over the past five years :p
Khadija,
I’m positive those subsidies are unrelated to the Arms Deal. E.g. Rooivalk helicopter was never part of the Arms Deal. But because external sales of the Rooivalk seem to be impossible to achieve (sometimes a customer wants e.g. US missiles, and US refuses to permit Rooivalks to be equipped with these, so the deal gets canceled).
Previous post incomplete. I should have added that Denel requires subsidies because it can’t get sales of sufficient magnitude to offset the very high costs of military equipment R&D and manufacture.
Hi Oldfox – that is true, but its a helluva lot of money misdirected into a highly pollutive and corrupt industry.