It was one of Sweden’s biggest ever export deals. On 3 December 1999, the South African government signed a contract to buy 28 JAS 39 Gripen fighter aircraft. But it would transpire that behind the scenes, grubby, billion-kronor dealings had occurred, involving controversial middlemen and suspected bribes all the way up to the South African government.
Questions still remain unanswered, and the last JAS Gripen planes were delivered to South Africa as recently as 2012. Following several closed investigations, a South African commission is now looking into the weapons deal. To date Saab has not admitted any payments to agents and has put the blame on the British partner in the deal, defence giant BAE Systems.
In a new testimony to the South African weapons commission investigating the deal, Saab states that they were not aware of the controversial agents and their remuneration. But Expressen can today reveal the secret documents that show how Saab’s money was channelled to the suspected bribery agents and how Saab was fully aware of and approved BAE’s payments to agents.
An internal BAE document that was handed over to the British police’s Serious Fraud Office, gives details of how the agent costs would be allocated between Saab and BAE Systems. The agreement is dated 20 September 1999, written by BAE’s head of marketing and marked “Strictly confidential”. The document is also signed by three of BAE’s top directors. The agents would receive commission as a percentage of the sales figure for Saab’s JAS Gripen and BAE’s Hawk plane, both of which were included in the deal.
7.25 percent of the total sales figure for the JAS aircraft – SEK 13 billion – would go to the secret middlemen. This means that at least SEK 940 million went on agent fees, which the British police were treating as bribes. Allan MacDonald, responsible for the contracts and BAE’s head of marketing in southern Africa and Asia at the time, confirms the allocation in a confidential interview with British police that Expressen is able to disclose. He adds that on top of the agent cost, Saab also paid additional fees to BAE in return for them taking primary responsibility for the agents.
MacDonald describes how Saab paid a percentage of the sales figure for the JAS Gripen to avoid taking primary responsibility for the agents. “They did not want any responsibility for taking care of the agents.”
Investigator: So you paid for Hawk and Saab paid for Gripen?
“We paid for Hawk, they paid for Gripen, yes.”
Investigator: So they would pay 100 percent of the Gripen’s marketing costs?
Saab has since – in interviews and during questioning by the Swedish police – referred to the fact that it was BAE that had responsibility for the agents.And in a new testimony to the weapons commission in South Africa, Saab writes that they did not know any details about BAE’s agents and their remuneration.
But Expressen is now also able to reveal that Saab was informed about both agent costs and exactly who the various agents were. During the confidential police interview, Allan MacDonald, the director at BAE who was in charge of the agents, talks of his meetings with Saab’s executive management at the end of the 1990s: “I briefed them, gave them more information than they had ever had before and at managing director level they were aware of the agency arrangements. They were aware. They had to approve, they had to have knowledge of who we were engaging and who approved the fee.”
MacDonald also confirms that the Saab directors not only knew the names of the anonymous companies that received the money from Saab and BAE. Saab’s management also knew exactly which individuals received the money.
Investigator: Do you mean the principal or the name of the company?
“The principal, not the process of how it was managed.”
Investigator: Ok, so they knew the principal and the amount, the percentage on Gripen?
MacDonald says that it was the managing director who was informed and it was MacDonald himself who personally travelled to Saab’s head office in Linköping and gave him the information. “Personally, face to face, in Linköping.” The agents who received hundreds of millions of Swedish kronor from Saab and BAE were notorious weapons dealers and businessmen whose names had cropped up in bribery affairs on previous occasions. Money that the British police regard as bribes.
“Highly suspicious”, write the British police regarding Saab and BAE’s payments. The Serious Fraud Office suspects that it was a case of “onward payment of monies to South African government officials who could influence the decision-making process on the selection of the Hawk and Gripen”. Account statements and lists of transactions obtained by Expressen show how the money ended up in the agents’ accounts in various tax havens.
Those who got to share the billions – and who Saab is alleged to have known about – include the infamous arms and tobacco dealer John Bredenkamp, who has been blacklisted by the EU, US and UN. The agents also include individuals who have previously been named in connection with weapons bribes in Saudi Arabia. One of the controversial agents is Fana Hlongwane, former adviser in the South African government, who is suspected of having channelled money from Saab and BAE to South African power brokers.
As recently as February this year, Saab told Sveriges Radio that they did not have any “particularly distinctive relationship” with Hlongwane. But the contracts and account statements seen by Expressen and all the details from the British police investigation show how a total of what equates to SEK 214 million was channelled from Saab and BAE to Hlongwane. One of the payments occurred on 6 October 1999, just a few months after he had left his position in the South African government.
The statements show how SEK 1.3 million was channelled from Saab’s and BAE’s secret subsidiary Red Diamond. They reveal how the money initially went via a completely different agent in Switzerland. On the instructions of BAE’s marketing director, the money was then channelled discretely on to Hlongwane’s company Westunity. The British police are calling the payment “highly suspicious” and suspect that it is a bribe.
Three weeks before the secret payment, South Africa had announced that it was planning to sign a contract on Gripen and the contract was formally signed two months later. Expressen tried to reach Allan MacDonald – the BAE director who gave the most comprehensive insider descriptions in the British inquiries – for comment. When he finally responded by email, he seemed to want to withdraw his detailed account.
“The fact that you have read a transcript of my interview with SFO in 2007 concerns me. Firstly, the interview was given on a strictly confidential basis,” he writes to Expressen.
MacDonald believes the interview is not legally relevant as the British police made formal errors. He maintains that the transcript of the interview was incorrect, that he never had the opportunity to listen to the tape as it was lost and that he should have received an apology from the British police. But when Expressen contacted the British police, it emerged that the interview was in fact valid.
“I’m afraid we would never comment on the details of our operational work including specific interviews but for your guidance only, our interview with Mr MacDonald in relation to the corruption investigation was legally valid,” says Nilima Fox, spokesperson at the Serious Fraud Office, to Expressen. Bengt Halse, Saab’s managing director at the time, is reported to have been fully aware of the controversial agent contracts.
When Expressen confronted him outside his home in Gothenburg for a comment on the internal documents, his response was brief: “No bloody comment. I’ve moved on, I’m into bee keeping now.”
BAE has chosen not to respond to Expressen’s questions regarding the suspected bribery payments.In a testimony to the weapons commission in South Africa, they briefly emphasise that Saab was also involved in the agents.
“BAE Systems engaged the services of agents in relation to BAE Systems and Saab”. Otherwise, BAE is keen to distance itself from suspicions of corruption and in a statement to Expressen, spokesperson Richard Webster-Smith emphasises that the investigations have been closed: “In February 2010 BAE Systems announced the agreement of a Global Settlement with the SFO and the DOJ following long investigations by those authorities relating to a number of countries, including South Africa. Neither settlement involved charges of bribery or corruption relating to South Africa or any country.”
However, the background was that the British police, who also cooperated with the Swedish police, wanted to prosecute the defence giant for corruption in September 2009. Instead, a much-criticised settlement was made with authorities in the US and the UK.BAE bought its way out – paid USD 450 million in fines – and the investigations were closed.