Zuma reopens probe into murky arms deal

PRETORIA, South Africa, Sept. 19 (UPI) -- South Africa's government reopened a potentially explosive corruption investigation into a $4.8 billion arms deal in 1999 in which President Jacob Zuma, fighting for his political survival in a leadership battle, has been implicated.

Zuma's former financial adviser, Schabir Shaik, was sentenced to 15 years in prison in 2005 for soliciting bribes from Thint, a South African subsidiary of the French arms giant Thales International that was linked to the deal and illegally paying Zuma more than $150,000.

Shaik was released on medical grounds in 2009 after serving less than three years.

Another official, Tony Yengeni, who was chairman of parliament's defense committee at the time of the deal, was convicted of fraud in 2003 and sentenced to four years in prison. He was freed in January 2007.

Zuma was subsequently charged with corruption over the deal, in which a key player was Europe's biggest defense contractor, BAE Systems of Britain.

But in August 2003, charges against Zuma, then deputy president, were dropped. After Shaik was convicted, Zuma was sacked as deputy president and charged with two counts of corruption in the 1991 deal.

These charges were dropped on a legal technicality in September 2006 following allegations of political interference in the case that had tainted evidence against him. He became president in 2009.

The South African media has repeatedly alleged that BAE maintained a $100 million slush fund that was used to bribe South African politicians. Zuma has consistently denied any wrongdoing.

So have BAE and Thales, although BAE agreed in February 2010 to pay almost $400 million in fines to resolve bribery and fraud investigations linked to arms sales in the United States and Britain.

That ended years of investigations by the U.S. Defense Department into alleged kickbacks in global arms deals, most notably in Saudi Arabia.

In 2006, Britain's Serious Fraud Office dropped an investigation into BAE's $43 billion arms deal with Saudi Arabia in 1985 after the Labor government of Prime Minister Tony Blair forced prosecutors to drop the case on grounds of national security.

The 1999 deal, which also involved defense companies from Germany, Italy and Sweden, was post-apartheid South Africa's largest arms transaction and was intended to modernize the country's defenses.

It included Gripen fighter aircraft built by Saab, Hawk training aircraft from BAE as well as submarines, corvettes and helicopters.

The Democratic Alliance, South Africa's main political opposition, has repeatedly called on Zuma to reopen the arms deal investigation, which was shut down last October.

DA leader Helen Zille, prime minister of Western Cape province, accused the ANC government of "a massive coverup" after the probe was abandoned.

She told the Financial Times substantial evidence had been found of "procurement deals that didn't follow due process or the needs of the military, precisely to secure benefits for the ANC as a party, and key individuals."

Zuma's surprise decision to reopen the investigation came after documents came to light indicating that Saab had paid bribes to Fana Hlongwane, adviser to Defense Minister Joe Modise.

Saab disclosed in June that payments totaling $3.5 million had been made through BAE to the Swedish company's South African subsidiary, Sanip Pty Ltd. It said the payments, which occurred without Saab's knowledge, were made to a South African consultant, but were never entered in Sanip's accounts.

Saab said it has handed over all documents to Sweden's anti-corruption authorities and will work with any further inquiry. BAE insists the matter was settled in the 2010 court settlement.

The British defense giant, a major contractor to the U.S. Defense Department, has been implicated in investigations of half a dozen major arms in Africa and the Middle East over the years. It produces a wide range of weapons systems, including Eurofighter Typhoon aircraft and Trident nuclear submarines.

Andrew Feinstein, a former ANC member of Parliament who headed an earlier official probe into the 1999 deal, said, "If an investigation is reopened in Sweden it could prove an embarrassment to a number of countries."

Zuma's move is widely seen as a bid to take control of the new investigation and limit damage to himself and his political allies in the ANC as they strive to fight off challenges from younger figures who seek to take power in party elections in 2012.