20 April 2009

By Khadija Sharife

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.