Johannesburg - Fana Hlongwane, the arms deal “playboy” and
former adviser to the late defence minister Joe Modise, has been dumped by
British arms company BAE Systems.
Hlongwane, who has been paid commission of more than R200m
by BAE for assisting them in winning arms deal contracts and managing their
offset projects in South Africa, is now claiming R36m from the multinational
for unpaid fees.
City Press can reveal that:
- BAE dumped Hlongwane in April 2007 after Britain's Serious
Fraud Office (SFO) initiated an investigation into the arms deal and
"extremely negative" articles about their relationship appeared in
the local and British press;
- BAE makes no reference in arbitration papers to
allegations that it bribed Hlongwane, but rather refers to claims that
Hlongwane "made corrupt payments to South African public officials";
- In a threatening counterclaim, BAE has warned Hlongwane if
he or his companies are ever convicted of bribery or any related criminal
offence, it will seek repayment of all money paid to him.
BAE was the biggest winner in the arms deal, scoring two
multibillion rand contracts. With Swedish conglomerate Saab, BAE provided the
airforce with 26 Gripen fighter jets at a cost of R30bn, while BAE also
received the tender to produce 24 Hawk training planes for R11bn.
Hlongwane’s involvement in the arms deal - as adviser to
Modise and to BAE/Saab - has never been properly explained and an investigation
of his role, first by the Scorpions and then the Hawks, was shut down last
He has been living the high life since he got involved in
the arms deal in the late 1990s, residing in luxury mansions in Hyde Park,
Johannesburg, and at the upmarket Zimbali lodge outside Durban.
Apart from managing to escape investigation by the
authorities, Hlongwane has successfully kept out of the media spotlight and is
rarely seen at social events.
The revelations of a nasty arbitration case between
Hlongwane and BAE come after Saab chief executive Håkan Buskhe said last month
that BAE had paid Hlongwane R24m for consultancy fees without its knowledge.
Hlongwane has never denied receiving these payments and last
year successfully argued to prosecutions boss Menzi Simelane that they were
The vehicle used to pay the arms deal "playboy" is
a private South African firm called South African National Industrial
After the statements by Saab, the DA released further
documents, showing Hlongwane received R51.3m from Sanip between 2003 and 2005.
Documents filed by Hlongwane in the arbitration matter in
2008 and 2009 reveal he received a further bonus of R11.3m in April 2006 after
certain BAE offset programmes were signed off.
Documents filed by BAE show the company also had a marketing
agreement with Hlongwane under which it paid him £1m a year since January 2002.
When this agreement was cancelled in April 2007, Hlongwane would already have
earned more than R60m in marketing fees.
Citing clauses that allow it to terminate agreements, BAE
states it was entitled to end Hlongwane's services after he was implicated in
corruption that negatively affected the company’s image.
"The criminal investigations into the activities of
Ngwane (Aerospace, one of Hlongwane's companies) and Hlongwane, and the
associated high profile in the media mean association with Ngwane adversely
affected BAE’s reputation or was likely to do so," reads a defence
statement prepared by BAE's London-based solicitors.
BAE spokesperson Leonie Foster says the documents in City
Press' possession are confidential and were leaked "in breach of
She confirms the company has not had a contractual
relationship with Hlongwane for more than three years.
"All documentation in the company's possession relating to
the company’s historical relationship with Mr Hlongwane was examined by the SFO
(UK’s Serious Fraud Office) in the course of its investigation (that) commenced
in 2004. The SFO’s investigation, which among other things addressed
allegations relating to South Africa, was concluded last year and formed part
of the company’s 2010 court-approved settlement with the SFO," Foster said.
BAE paid a $400m (about R2.8bn) fine to the US last year
after pleading guilty to one charge of conspiring to make false statements, and
£30m (about R360m) to the UK after pleading guilty to one charge of breach of
duty in keeping accounting records relating to payments made in Tanzania.
In May, BAE paid a further $79m (about R520m) to the US
state department in settling a civil matter relating to covert payments made
through BAE's "Red Diamond" system.
The Mail & Guardian reported last week that R54m was
paid to a Hlongwane-linked entity through Red Diamond.
City Press sent questions to Hlongwane’s attorney, but
received no response.
- City Press