BAe's £4m eases arms deal

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The Independent Online

By Jonathon Carr-Brown

By Jonathon Carr-Brown

28 November 1999

A British arms company has given £4m to a South African trade union after enlisting its support for a controversial arms deal.

Before the donation from the Saab-British Aerospace consortium in July, the trade union had been opposed to the deal to supply BAe Hawk and Saab Gripen fighter aircraft to the South African air force.

Politicians in Britain, Sweden and South Africa believe the £3bn deal and other "economic sweeteners" attached to it raise serious ethical questions.

The money will go towards establishing an "Industrial School" for the National Union of Metalworkers of South Africa (Numsa) and is being channelled through two Swedish trade unions, Metall and the Union for Clerical and Technical Employees in Industry.

Although the British police have found nothing illegal, Ann Clwyd, Labour MP for Cynon Valley and a prominent member of the Commons Select Committee on Strategic Arms Exports, said last night she would put the issue of these sweetener deals called "offsets" on the committee's agenda.

Pressure is also growing in Sweden, where Saab is based, for the deal to be investigated by a joint Swedish-South African parliamentary commission. Patricia de Lille, an MP for the left-wing Pan Africanist Congress, has accused members of the ANC government in parliament of taking kickbacks, enjoying foreign holidays and setting up companies to benefit from the deal.

None of the allegations of corruption have been substantiated but the Heath Commission, set up by Nelson Mandela to investigate allegations of state corruption, is considering making preliminary inquiries into the deal, according to the commission's spokesman.

The deal between the union and Saab-British Aerospace was signed in July - nine months after the South African government announced Saab-British Aerospace was the preferred bidder with its offer of 28 JAS39 Gripen fighter aircraft and 24 BAe Hawk 100 trainer aircraft.

BAe, which has a 35 per cent stake in Saab, was later told the order was to be cut to nine Gripens and 12 Hawks, after pressure to put more money into poverty relief and education.

As part of the deal BAe agreed an "offset" package of investments to re-equip South African defence industry factories so they could supply parts for the Hawks and Gripens.

The original deal in 1998 included orders from defence companies in the UK, Sweden, Italy and Germany, all of which agreed similar investment deals.

Peter Hain, the Foreign Office minister with responsibility for Africa, yesterday told The Independent on Sunday that the Government would investigate the deal if any substantiated allegations were made.

He has praised the deal as a model of ethical trading and claimed that "nobody could object to Britain selling arms to South Africa". However, it appears that many South Africans object to the deal and are beginning to question exactly who will benefit most from the lucrative "offset" deals.

Mr Hain said: "The offset principle is the right one. A country like South Africa will receive near equivalent investment in its economy. But obviously the world is not perfect and if there are any vagaries about any aspect of this deal the Government will investigate."

Both BAe and Saab said everything was done "by the book". A BAe spokesman said the trade union deal was so open a press release announced it and described suggestions of kickbacks as "rubbish".

A spokesman for the Metropolitan Police confirmed that detectives had made preliminary inquiries into an allegation of corruption. She added: "The case is not closed and would be reactivated if further evidence was brought to our attention."

Rachel Harford of the Campaign Against the Arms Trade said: "The deal is a prime example of how arms companies use sweeteners to sell weapons. Even if it is legal it doesn't make it ethically right."