South Africa

Letter to the Editor: History of the Arms Deal cannot be rewritten to salvage Joe Modise’s reputation

By Andrew Feinstein 23 October 2017

In their most recent letter to the editor, the family of former defence minister at the time of the Arms Deal, Joe Modise, stated that they were chagrined at the need to fill up the pages of Daily Maverick with a tedious back and forth. It is too bad, then, that they have decided to write a letter that adds little of value to the discussion beyond both lengthily claiming I am a liar and proceeding to repeat myths, half-truths and outright lies to defend their position. For those, like me, who have worked on the Arms Deal for over a decade, it is freshly frustrating to have to set the record straight regarding shibboleths that have been repeatedly and consistently disproven. By ANDREW FEINSTEIN.

I apologise, in advance, to anyone who detects a broken record, and I will endeavour to respond as succinctly as possible. To this end I refer readers to my response to the Modise’s first letter, which documents some of the evidence against Joe Modise.

The Modise family points, in defence of Joe Modise, to the fact that investigations have been undertaken into the Arms Deal by a range of South African and international investigative agencies, including the Auditor-General, the Scorpions, the UK’s Serious Fraud Office (SFO), and the findings of the Seriti Commission. I have already addressed this previously in our correspondence, so I won’t repeat myself at length – suffice to point out that each of those investigations was hamstrung and undermined, and produced findings clearly at odds with the evidence. As the Modise family must know, the Seriti Commission, for example, is currently being challenged by Corruption Watch and Right2Know, for failing to conduct a meaningful investigation. Their founding papers are a shocking indictment of the commission’s conduct and its findings, which virtually nobody, except those who dirtied their hands in the deal, credits with any value.

The credulous belief that legal action related to the Arms Deal has taken place freely, fairly, and fully, is of course most recently undermined by the Supreme Court’s judgment on the Zuma Spy Tapes matter. As that judgment indicates, powerful players in the NPA, including its former director, made irrational decisions to stop the prosecution of Zuma, and have been rightly lambasted for doing so by both the High Court and the Supreme Court. Zuma’s charges, of course, related to the Arms Deal. Apologies for repetition but I must also remind the Modises that it was the ANC’s refusal to countenance an unfettered investigation into the deal that led to my resignation from Parliament.

But returning to the matter at hand, it is interesting that the Modise family mentions the Serious Fraud Office investigation, but fails to properly discuss how it ended. As they must know, the SFO investigation was terminated by means of a settlement with BAE Systems. The UK settlement did not address South Africa or multiple other jurisdictions, as this was dealt with in a simultaneous settlement between the company and the US Department of Justice (and a later settlement with the Department of State).

The Modise family is utterly silent about these settlements. When read together, however, the settlements confirmed that BAE Systems had established a secretive offshore vehicle to make hundreds of payments to agents and middlemen around the world, including in South Africa. Importantly, BAE Systems also admitted that it “made payments to certain advisers through offshore shell companies even though in certain situations there was a high probability that part of the payments would be used in order to ensure that BAES was favoured in the foreign government decisions regarding the sale of defence articles”. And the settlements stated that the company had failed to inform the US government that it paid “unauthorised commissions”, what most people understand as bribes, on a number of the transactions, including the South African Arms Deal.

As an aside, those looking for a pithy example of the failure of the Seriti Commission to do its job can refer to the commission’s take on these settlements. The commission, in its final report, appears to suggest that it did not look at the State Department settlement because an official at the US Department of Justice they had asked did not know about it, implying it may not exist. This despite the fact that it was given by me and my colleagues to the commission in 2011, and is easily discoverable with a Google search.

As to Col. Johan du Plooy’s testimony, I’m frankly confused as to why the Modise family claims that his evidence to the commission did not address Modise or Conlog. Clearly they cannot be bothered to consult the record properly, from which I quoted extensively in my previous letter. If they were to consult Col Du Plooy’s full evidence bundle, they would find Advocate Gerda Ferreira’s affidavit in support of search warrants directed to authorities in the Channel Islands, appearing at pages 2,569-2,588 of his bundle. At page 2,574 of the same bundle, to repeat a quote once more from my previous correspondence, Advocate Ferreira confirmed that:

This specific area of investigation was initiated after allegations were received that Modise had been paid a bribe in excess of R10-million for his role in influencing the awarding of contracts to certain suppliers of the strategic defence equipment. The allegations included reference to the possibility that the payment had been made via an offshore structure.

Modise’s personal finances and business transactions in which he had been involved before and during the arms acquisition process were subsequently investigated. During these investigations it was established that Modise had acquired a substantial shareholding in a entity by the name of Conlog (PTY) Ltd, during 1997 as a result whereof he had stood to benefit by an amount of approximately R20 million.”

In fairness to the Modise family, Joe Modise was not the only shareholder in Conlog connected to the Arms Deal. The investigation undertaken by South African authorities revealed that three other shareholders “had close links to the arms acquisition process by virtue of their positions within government and/or arms industry.” They included Ian Deetlefs, then Chairman of Denel; Ron Haywood, the Chairman of Armscor and an active member of an Arms Deal selection panel; and Seshi Chonco, a managing director at Denel. Or, in simpler terms, Modise and a whole range of senior officials, including one directly involved in the Arms Deal selection process, would benefit from any business given to Conlog through the Arms Deal.

The Modise family also quotes from a statement given by Phil Soucy, the one-time spokesperson for BAE Systems, pointing out that BAE Systems did no business with Conlog through the Arms Deal offsets. They are, of course, correct – BAE Systems did not do any business with Conlog, as far as can be established. But neither I nor any of my colleagues have ever said that, and, in fact, my colleague Paul Holden addressed this point a good nine years ago in his book The Arms Deal In Your Pocket.

While it is true that BAE Systems did not do business with Conlog via the Arms Deal, it planned to do so, and submitted a project with Conlog as part of its offset bid to win Arms Deal contracts. This meant that, while Joe Modise was Defence Minister, and making decisions that led to BAE winning its bids, he owned shares in a company that he expected would make money if BAE won. Why BAE decided not to pursue the venture with Conlog is uncertain, but revelations about Conlog’s ownership published in Noseweek shortly after the final Arms Deal contracts were signed could easily have been a factor.

This is clear from a reference to a simple timeline. BAE submitted their original bid in 1997, but was forced to submit a fresh bid in April 1998. Joe Modise acquired his shares in 1997. BAE was selected as the preferred bidder in late 1998, securing its sale of Hawk and Gripen aircraft in the final contracts a year later. Importantly, Joe Modise, in April 1998, at the very time he held Conlog shares, directly intervened to have the Hawk assessed with cost excluded as a criterion. Finally, in September 1999, the South African government published a list of offset projects it expected to happen as a result of the Arms Deal. And, on that list, was a joint venture between ABB SA (a partner of SAAB and BAE Systems) and Conlog “to produce pre-payment electrical meters and solar power manufacturing for the domestic and export markets… Feasibility studies and implementation plans completed.”

Consistent with this account is what I was told privately by a then serving senior military official that a small group of senior military and arms industry players offered to manage Joe Modise’s ill-gotten gains for him. With his consent they set up a series of accounts to house the money but also set up a set of parallel accounts in almost identical names, to which they diverted significant amounts of the payments due to Modise.

The Modise family ties itself in knots trying to put distance between Fana Hlongwane, recipient of millions from BAE/SAAB, Joe Modise and the Arms Deal, stating, absurdly, that Hlongwane was not contracted to advise Modise on matters related to the Arms Deal. As they know, Fana Hlongwane was appointed as Joe Modise’s Special Adviser, and, in that role, had direct access to Modise. It is at best disingenuous to believe that Modise’s Special Adviser did not speak to him about the single largest transaction undertaken by the South African Ministry of Defence simply because his vaguely worded employment contract did not specifically mention the Arms Deal.

The family also refers to the fact that Hlongwane testified before the Seriti Commission, presumably to indicate that Hlongwane’s evidence was properly tested and questioned on this matter. In fact, this is yet another example of how farcical the Seriti Commission was – during his testimony, which lasted no more than a few hours, Hlongwane was not asked a single question of substance by Judges Seriti and Musi, nor was he cross-examined – despite making easily ascertainable errors of fact in his witness statement.

The Modise family also feels it necessary to take aim at my scruples and integrity. They claim that I have been uniquely hostile to investigations into the SDPP, implying, it seems, that once the chips are down and real authorities investigate, I run off and hide away. In doing so, they conveniently, perhaps maliciously, ignore that:

  • I attempted, while in Parliament, to ensure that there was a full, unfettered and unbiased investigation into the Arms Deal while serving on the Standing Committee on Public Accounts. I eventually had to forfeit my political career, which l loved, to resign in protest at the way in which powerful political players, including our current President, intervened to prevent the investigation taking place;
  • I met a number of times with the UK’s Serious Fraud Office related to their investigation into the South African activities of BAE Systems. I was deposed a number of times and had given a witness statement. Indeed, as I discuss in Shadow World, I was being deposed by SFO investigators for yet another witness statement the very day that BAE entered into a settlement with the director of the SFO;
  • I made a substantial submission to the Seriti Commission, supported with thousands of pages of evidence, along with my colleague Paul Holden. I also personally assisted the commission’s staff contact authorities abroad. As is well-known, we withdrew from the commission in protest when it became clear that it had no intention to admit any document that showed corruption and, therefore, had no intention to properly investigate the Arms Deal.

The only example that the family can point to in “proving” their smear is the fact that Col. Johan du Plooy stated at the Seriti Commission that I refused to meet with Scorpions investigators during a trip to London.

When I was told that Col. Du Plooy had claimed this, my legal representatives, Lawyers for Human Rights, directed a letter to Judge Seriti setting the matter straight. It appears that the commission ignored this letter, as we received no reply. That letter reiterated that I had, in fact, met with prosecutors to give a statement at South Africa House in late 2001 or early 2002, and that I had signed a transcript of the meeting and my statement. Those in attendance included Col. Johan du Plooy, and Advocates Anton Steynberg and Billy Downer, the latter two of whom recall the meeting vividly.

I have no idea why Col. Du Plooy, for whom I have great respect, stated this, although I do not doubt that he was influenced by the repeated and forceful questioning of Judge Seriti and the evidence leader that sought to discredit me in any way possible. It is interesting that Col. Du Plooy offered to consult his electronic records to refresh his memory on this matter – but was told by the commission that it was unnecessary. Col. Du Plooy also indicated that my relationship with the Scorpions was maintained by Advocate Billy Downer, and that he wasn’t in close discussion with me. For reasons that remain known only to the commission, it decided not to call either Downer or Steynberg to hear their version of events. Interestingly, Col. Du Plooy also publicly attended the launch of my first book, After the Party, where we spoke animatedly about our meeting in London at which I had given them a recorded and signed statement.

The family, in what they must consider an act of considerable grace, state that I am welcome to criticise the Arms Deal, but that I must do so without sullying the legacy of their family member. Sadly, even though I do not relish talking about the misdeeds of loved ones, it is impossible to tell the truth about the Arms Deal without talking about Modise – and the proven facts that he both was in a position to benefit if BAE Systems won contracts in the Arms Deal when he was Minister of Defence, and that he directly and materially intervened, in violation of good governance and the most basic criteria of appropriate procurement practice, to help BAE Systems win a contract on which British police estimate they paid £115-million of bribes. They patently ignore the public statements of, among others, the head of the Air Force who stated that they would only accept the BAE Hawk if “politically obliged” to do so, or the Secretary of Defence, who in his evidence to investigators made clear that the selection of the BAE option had been “turned arse about face” by the minister whose “choice of the Hawk was clear from the start”.

Despite attempts by those in power to “repeat untruths until they have the force of truth” (in the words of Edward Said), it will never be possible to rewrite the history of our country’s appalling Arms Deal to salvage the reputation of any of the protagonists. DM

Photo: Secretary of Defence William Cohen (not in the frame) escorts visiting South African Defence Minister Joe Modise (left) to the Pentagon River Entrance Parade Field on 28 July, 1997. DoD photo by R. D. Ward.

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