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South Africa in the same mess as Portugal over German submarine deal

submarineSouth Africa purchased four frigates, three submarines, helicopters, jet training aircraft and Gripen fighter jets in a Strategic Defence Procurement Process that, in 1999, came with an estimated price tag of R30-billion. That figure has since ballooned to an estimated R70-billion, taking financing costs into account.

President Jacob Zuma established a commission of inquiry into the arms deal in September last year to probe allegations of fraud, corruption and impropriety.

Arms deal activist Terry Crawford-Browne said the incident was further proof of the folly of the arms deal. “South Africa has not yet paid for these submarines. They are being financed by Commerzbank until 2016, these loans being underwritten by Hermes and German taxpayers,” he said.

Former ANC MP and author Andrew Feinstein, who has written extensively about the international arms trade, said the latest submarine incident raised familiar questions about the logic behind South Africa’s arm deal.

“This is another example of what happens in arms deals all the time, but it seems to be happening more than most in deals in South Africa which was sold equipment that seems to be of dubious quality at inflated prices because of the bribes that were paid, and the performance of this equipment across the board has been, to put it politely, very poor,” said Feinstein.

He said submarine manufacturer Ferrostaal was under fire for corrupt dealings with Greece and Portugal, whose own arms deals contributed to the
current European fiscal crisis: “This submarine deal is a déjà-vu situation with Portugal and Greece.

Hawks boss Anwar Dramat last year rejected calls to probe Ferrostaal, a member of the German submarine consortium that supplied the three submarines to South Africa. The company was implicated in making questionable payments to South African “consultants” involved in the arms deal.

Portugal:

The trial in Lisbon of those involved in the submarine deal ostensibly ended in February 2014 when nobody was found to have done anything wrong at all in Portugal, despite German executives from Germany's Ferrostaal already having received sentences and fines in their own country for bribing the Greeks.

However, Portugal's Public Prosecutor has reviewed the case and in a stinging report has decreed that the Lisbon’s Appeal Court should cancel the judgement that saw all 10 defendants walk free despite serious accusations of having benefitted from €30 million in secret payments from the German consortium that supplied the two submarines.  

The Public Prosecutor commented that the judges in the case had made errors and had displayed poor reasoning when the facts pointed to the guilt of those on trial, in other words the judges are either stupid or crooked, in her esteemed opinion.

This strongly worded review is welcome and almost unprecedented, bringing into question influences and impartiality of the judges in the case bearing in mind that the original purchase was approved under the Prime Ministership of Duarte Barroso, and when the Ministry of Defence was run by current Deputy Prime Minister, Paulo Portas.

The submarines cost the Portuguese taxpayer over €1 billion in 2010 with an estimated additional cost of €300 million in financing and maintenance costs.

Portugal’s serious Crimes Squad brought charges including corruption at the highest level and offences under money-laundering legislation.

With the reappraisal of the case odered it is widely hoped in Portugal that those who benefitted from any bribery and corruption from the Gerrman consortium will be harshly sentenced once their guilt has been proven.

The Germans in the meantime have made little real effort to uphold their side of the deal where they agreed to invest hundreds of millions in the Portuguese economy. The feeble attempts to date, including one that was rejected for taking the mickey, show that there may have been no intention at all to invest in Portugal, but when forced to do so by a red-faced Portuguese government, have dragged their heels hoping the whole bribery and corruption mess will simply sink beneath the waves.

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