German arms probe fingers late Modise

The arms deal story so far.

German prosecuting authorities claim that Thyssen Krupp - a company that is part of the German Frigate Consortium involved in the tender to build four corvettes - paid about R176 million in "commissions".

Last year Independent Democrats leader Patricia de Lille told parliament that the ANC, Mandela Children's Fund and a charity organisation run by Graca Machel are said to have received at least R500000 each from the "commissions".

In 1994 the GFC made an unsuccessful bid for the multibillion-rand tender to build four corvettes for the South Africa army.

The preferred bidder was then a Spanish-led consortium, which had made the most cost-effective bid.

In 1998 the GFC was invited to bid again and was selected as the preferred bidder. The tender was allegedly reopened after then deputy president Thabo Mbeki had visited Germany.

A few months later it was announced that the tender had been awarded to GFC.

GFC then subcontracted Thomson-CSF, as the French company Thint was then known. This is the company from which Zuma has allegedly received an annual R500000 bribe.

Thomson, in turn, awarded part of its subcontract to a company linked to convicted fraudster Schabir Shaik - the man who allegedly solicited the bribe for Zuma.

On Fridaythe Mail & Guardian revealed that the Scorpions have opened investigations into the BAE systems contract.

The British arms company received the largest contract in the arms procurement deal. The contract was worth R199billion in 1999 (R30billion at the current exchange rate).

In 1999 the government contracted to buy 24 Hawk jet trainers and 28 Grippen fighter jets from BAE-Saab.

This after then defence minister Joe Modise had changed the evaluation criteria for jet trainers to exclude cost as a factor. The move put BAE in a favourable position.

The cabinet subcommittee handling the arms deal - headed by Mbeki - then awarded the contract to BAE and Saab. This despite the fact that Italy's Aermachi MB339 offered half the BAE price.

The key suspects in the investigations are Modise and his controversial adviser Fana Hlongwane.

Modise was reported to have secretly received shares from Conlog-Log-Tek electronics group in 1997.

The company was to benefit from the arms deal offset agreements - deals in terms of which arms manufacturers made a commitment to fund local manufacturing initiatives.

It has been revealed that Hlongwane not only advised Modise but also BAE.

For this he received an annual retainer of about R10million. BAE also agreed to pay a settlement of almost R64million in 2005.