Arms dealer dumped

2011-07-03 13:26

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"; and

- 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 year.

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 above board.

The vehicle used to pay the arms deal "playboy" is a private South African firm called South African National Industrial Participation (Sanip).

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 confidence".

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

  • Anonymous Thinker - 2011-07-03 14:18

    "Hlongwane, who has been paid commissions of more then R200m by BAE for assisting them in winning arms deal contracts" <-----translation: BRIBERY!

      Left Screwed - 2011-07-03 16:25

      I read anything pertaining to armsdeal as bribery.

  • grant9 - 2011-07-03 14:23

    I've said all along that there wont be any high profile prosecutions in South Africa as there are too many top people involved including our 'beloved' Madiba. How these people can sleep at night knowing how they've stolen from the poor amazes me. The first investigation should be into why all the arms - aircraft, submarines and corvettes were ordered in the first place.

      Left Screwed - 2011-07-03 16:22

      They don't see self enrichment as a crime, they see it as PAYBACK TIME.

  • pennypincher - 2011-07-03 14:28

    Every official at BAE should be jailed for life. What did they expect, and could they not have known? This is not bribery, it is corruption, rotten capitalism at its best. BAE has stolen money from the SA taxpayer and should be brought to trial in SA

      oldpilot - 2011-07-04 09:04

      And while you're at it, maybe jail the Brit govt. of Tony Blair - after all they have always protected and assisted BAE in many shady deals!

  • Amera - 2011-07-03 14:30

    And on the corruption goes, crippling our beautiful country!

  • Nuck Choris - 2011-07-03 14:36

    What qualifications did Hlongwane have to be involved in, and an advisor to the DEPT Of DEFENSE. Was he an expert in the AK47 or what. These were mulitibillion rand deals being concluded by this chap. This deal is so crooked that only the ANC could have thought it up and believed they would keep it quite. Such unsophisicated criminals.

      Left Screwed - 2011-07-03 16:18

      Friends in Government. The one that would have got most, died, leaving the front man holding the purse.

      Left Screwed - 2011-07-03 16:31

      Friends in high places.

  • Tuggles - 2011-07-03 14:44

    Didn't Hlongwane get enough? Another R36 million, after R200m. Ye Gods, this country is slipping further into the abyss of no return. Sadly we don't have leaders with spines. backbone or balls.

      Sedick - 2011-07-03 17:59

      @tuggles - you are so wrong. The "leaders" have spines, but they are also involved in the backhanders - all the way to the top....

  • SM - 2011-07-03 15:27

    What consultancy did he do? What is his companies benefit to the process of procuring these military supplies? I do not understand why there always has to be a middleman in these big deals... it happens all over Africa (and other parts of the world)... just makes the system more expensive without contributing any significant value. Is this the only way we can become millionaires in SA, what about some entrepreneurial sprit, build something, invent something, make something... the country will not always be able to offer these kinds of "free money", I guess the next step is we will also sell our assets and resources to China like other African nations and again only the selected few will benefit!

  • Left Screwed - 2011-07-03 16:33

    How does anyone in Government sleep knowing that we know they stole.

  • andrew.hartung - 2011-07-03 16:37

    This is criminal!!!! There is something really wrong with society. Just imagine what could be done with this money instead. He should be forced to give everything back to the needy people in this country.

  • Left Screwed - 2011-07-03 16:38

    Seven of my comments have been MODERATED, I feel like I'm in China.

      Pragmatist - 2011-07-04 14:37

      you eating a lot of rice???

  • Mad Dog - 2011-07-03 16:49

    Nail the criminals! Bring it out into the open!

  • observing - 2011-07-03 17:29


  • Kosmonooit - 2011-07-03 18:00

    This really make me feel ill - such obscene wealth so illy deserved! And what more this ultimately public money, yet nothing happens, not even a slap on the wrist. How screwed up is that.

  • cgtours - 2011-07-03 18:16

    Keep at it, we WANT KN0W WHO GOT OUR TAXPAERS MONEY in their Pockets! wE WAANT TO KNOW HOW MUCH brIbery was paid to who! wE WANT TO KNOW how much the cost to this Country and Taxpaers was inflated and how much was Bribery and to who? We are not going to stop.They cannot keep on huiding it it is going to come out! and maybe a lot of people/kidnapped/killed- UNTIL it comes out.

  • John - 2011-07-04 09:04

    with this amount of money their must be a clear paper trail, follow the yellow brick road

  • Cui Bono - 2011-07-04 10:30

    Dumped .. he should be in jail .. his actions was the start of the culture of corruption that has crippled this country !

  • Pragmatist - 2011-07-04 14:37

    When are we going to see real jail time for corruption?

  • AJ - 2011-07-04 14:41

    This chap is just the bagman - he may have a lot of money behind his name, but he's definately holding onto a large chunk of it for others, who dont want it linked to them. There's no paper trail is someone is physically holding cash for you on a faith / trust / fear basis. Sure the interest sucks, but the cash is real. SA has lots of bag men....

  • Hangmann - 2011-07-04 15:59

    Both parties are guilty, BAE paying R200M to assist winning a contract, what a joke. Not only do SA Gov think we're stupid, so do UK companies.

  • JohnPicarra - 2011-09-18 18:02

    There was also the Volvo Bus bribery payment to the Johannesburg Municipality. This is recorded in the court case of the SA 5 bus companies against the Johannesburg Municipality.

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