Double+standards,+Chris+McGreal,+The+Guardian



=Double standards=

Chris McGreal, Guardian Unlimited, London, 13 November 2007
//The ANC is not known for its fondness of multinationals but it has made an exception on a grand scale in the case of BAE.//

Thabo Mbeki is not big on globalisation. The South African president can reel off the names of multinationals that are ill serving the world by exploiting developing countries and the poor. Top of his list are the big pharmaceutical companies, which he accuses of profiteering on the back of misery by overstating the link between HIV and Aids in order to sell drugs that he says poison and kill more people than they save.

But there is an exception. Mbeki takes an entirely different view of the world's arms manufacturers, who have sold South Africa £4bn worth of warships, submarines, fighter jets and other weaponry. Critics say the country doesn't need the weapons and that the billions would have been better spent on schools, hospitals, job creation and, yes, dealing with Aids.

Cynics might say this difference of attitude toward contentious multinationals can be traced back to what the weapons dealers have done for the ruling African National Congress and the drug companies haven't - money.

Major weapons firms, including Britain's BAE Systems, are embroiled in a political and corruption scandal in South Africa that, despite Mbeki's efforts, refuses to go away.

BAE, along with German and French firms, have been accused of paying bribes to senior ANC politicians and government officials, and of helping to fund the ANC's 1999 election campaign in return for a slice of the country's largest ever weapons buying spree.

A former ANC speaker of parliament has already been convicted of accepting a bribe from a German weapons manufacturer. A financial adviser to South Africa's former deputy president, Jacob Zuma, is in prison for setting up a deal by a French arms company to bribe him. Zuma is now expected to face charges himself.

Britain's Serious Fraud Office is investigating BAE over the £75m it alone paid in "commissions", some of which made it into the pocket of the then defence minister, Joe Modise, and one of his senior advisors, Fana Hlongwane, who is believed to have received about £3m according to an SFO request to the South Africans for assistance.

That help has not been forthcoming. Instead, Mbeki has quashed investigations by the South African parliament, the auditor general and the director of public prosecutions into the links between senior ANC officials, the party and the arms companies.

Mbeki has denied any wrongdoing, characterising the investigations as a "substantial campaign to discredit our government". But others see it as a move to protect the ANC from devastating revelations about where the party got its cash and the extent of corruption among some senior officials.

Mbeki may also be looking out for his own reputation - he chaired the committee that selected what is proving to be the most controversial of deals - BAE's £1.5bn contract to supply fighter aircraft for training that critics say represents a blatant piece of political rigging in favour of an arms contractor.

The British company won the contract in a joint venture with Saab only after the bidding criteria were changed significantly by the politicians to exclude the price because the British bid was nearly twice that of an Italian company, Aeromacchi.

But even with costs removed the BAE bid still failed because Aeromacchi came out on top on the technical requirements set by the air force.

It was only when the contentious "industrial offsets" - the supposed economic benefits in which arms companies commit to building factories and providing jobs in South Africa as part of the contracts - were included as a factor that BAE emerged ahead.

The offsets proved to be an illusion. The man who negotiated them on behalf of South Africa, Jayendra Naidoo, later said that it was "highly questionable" that the offsets generated any economic development.

Andrew Feinstein, who was sacked as the most senior ANC member of a parliamentary committee investigating corruption in the arms deal after he resisted pressure from Mbeki to curb the investigation, says in a new book that the BAE contract was of no benefit to South Africa.

"We eventually established that for 17% greater technical value [which was not required by the air force] the ministers had decided on a 72% greater cost!" he wrote.

Feinstein says that besides eventually shutting down his investigation, the presidency also put pressure on the auditor general to alter a report saying there were "fundamental flaws" in the process was manipulated to ensure the contract went to BAE.

"During the investigation it became apparent that preference was given to BAE/Saab by making changes to value systems midway through the process," the original draft of the report said.

It goes on to say that the South African air force's requirements could have been adequately met through the cheaper Italian bid. All of this was stripped out and replaced with a paragraph saying that the BAe/Saab bid was chosen by ministers "for strategic reasons, including the total benefit to the country in terms of counter trade investment and the operational capabilities [of the South African military]".

In fact the air force was so strongly opposed to buying the British fighters that its chief said it would only accept them if "politically obliged" to do so. The secretary of defence, Pierre Steyn, later resigned over what he described to investigators as the "arse-about-face" decision in which the military's requirements were tailored to suit the choice already made by the politicians.

Feinstein said the politicians decided in favour of the British planes at an "informal meeting" attended by Mbeki, Modise and at least one official since implicated in corruption in the deal. The BAE bid was then presented to the cabinet for approval without any other bids on the table.

"The unexpurgated version of the [auditor general's] report thus revealed the full extent of the manipulation undertaken in order to award BAE the contract," the book says.

Feinstein says the offsets that were so crucial in the numbers game that won BAE and others their contracts have proved the illusion that many predicted they would be.

In 2000, the government promised that the arms deal as a whole would deliver 12,000 new jobs through offsets. The department of trade and industry now tells parliament that it will be only a quarter of that figure.

The weapons manufacturers were also contractually obliged to generate about £7bn for the South African economy through new economic activity, but all that has been achieved is about £3.5bn through investments and exports.

"To put it politely, the South African government was taken for a very expensive ride by the arms industry," writes Feinstein.

"All the usual tactics were on display: create inappropriate relationships with those you think might influence a deal, persuade the boys that they need far more toys than they actually do, blind even the clever with economic nonsense about offset benefits, involve your most influential salespeople, especially if they happen to be your prime minister, charge more than the goods are worth and smile all the way to the bank as the country realises it paid too much for armaments it doesn't need, with no economic benefit to anyone other than the arms companies."

And a few individuals in the ruling party. Despite Mbeki's efforts to bury the issue, the graft around the arms deal keeps rearing its head. Modise is dead but the ANC's chief whip, Tony Yengeni, who led the campaign on behalf of Mbeki to shut down parliament's investigation of the weapons contracts, went to prison for accepting bribes from a German arms manufacturer. Schabir Sheik is serving 15 years after being convicted of bribing the then-deputy president, Jacob Zuma, on behalf of a French arms consortium.

Zuma is now facing the prospect of corruption charges himself which may derail his efforts to replace Mbeki as president. He has said that if he does land up in court he will name names, and bring others in the ANC down with him.


 * From: http://www.guardian.co.uk/insideafrica/story/0,,2209938,00.html**

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