Trial Report: Fourteen

This report covers the period Friday 25 February - Friday 3 March

The cross examination of forensic auditor, Hennie Bruwer continued on Friday 25 February. Bruwer reiterated during questioning that the reasons for certain transactions being put forward by the defence counsel could have been offered at an earlier stage when investigations were still on going.

With regard to Charge 13, the Blackdale-Copperdale-Tagell deal for NBC suits to Iran, Adv. Cilliers stated that the structure of the deal was "very strange indeed", but claimed that a deliberately inflated selling price was included in the false contract which was designed to hide the actual purpose of the deal, namely the purchase of the peptide synthesiser. The contract, drawn up by David Webster, who knew that the Iranians were involved in supplying the peptide synthesiser, structured the deal in a way that would protect them.

Other transactions too were done in such a way as to hide the original source of the funds, in this way he explained both charges 14 and 16 which relate to funds transferred to Medchem Forschungs and funds which were used in the purchase of the peptide synthesiser. These charges, along with charge 15 will only stand if the state can prove that the peptide synthesiser was indeed never purchased. Contradictory evidence in this regard has been presented to the court. The defence counsel also claimed that the peptide synthesiser was later swapped for Quinozoline (methaqualone), and the 500kg of this substance were then destroyed, as shown on the Military Intelligence destruction certificate, so if the 500kg of methaqualone existed, the peptide synthesiser must have existed too.

Adv. Cilliers also told the court that with regard to charge 18, which refers to the alleged transaction during which Basson was to have made a divisible guarantee available to two Croatian officials so as to ensure the purchase of 500kg of methaqualone, that in fact, these funds were used to purchase "a large amount" of BZ - in a joint operation with General Peter Regli, head of Swiss intelligence. Adv. Cilliers claimed that a joint divisible guarantee had been created with Swiss and SA funds. He also said that the write-off values of drugs destroyed in January 1993 makes mention of 980kg of Product B, a variant of BZ. Cilliers told the court that approximately four tons of BZ had been bought, but by the time of destruction, "this had largely been used up". Later during the week, Bruwer said that the money referred to in Charge 18 could not have been used to purchase BZ.

Cross examination of Bruwer continued on Monday 28 February with Adv. Cilliers putting it on record that much of the documentation in possession of American attorney, David Webster, was still in Webster's possession. The court order which forced Webster to open his files to investigators was specific about which documents could be removed, so although Bruwer was able to peruse the contents of all 30 sealed cartons, he was not able to bring all of them, or even copies of all of them, back to SA.

Cilliers argued that the state's case against Basson was absurd because, he argued Basson could not have stolen the R36 million from Project Coast over a six year period. To prove this is stated that the total budget for the financial years April 1987 to March 1993 was R270-m, including establishment and privatisation costs of Delta G Scientific and Roodeplaat Research Laboratories (R60-m to set up, R70m to privatise). Operating costs of the two facilities averaged R21-m a year - R9-m for Delta G Scientific and R12-m for RRL - or about R105-m for the six years in question.

In addition, the 45 000 NBC suits purchased by Regent International Trading Services from YCVM/Technotek cost R14,5-m. When all these costs were subtracted from the total budget for the six years, only about R20-m was left. Bruwer pointed out that this arithmetic was an oversimplification, and that the budget for each year had to be considered separately. He had established from the annual audit reports how much had been budgeted, what expenditure had been made and then been able to track the flow of fraudulent funds as set out in his report.

Bruwer's cross examination was concluded on the same day and re-examination of the witness by the prosecution began. Cilliers concluded by saying that the State's fraud case rested on the premise that Basson was the beneficiary of the WPW Group of companies based in the Cayman Islands and not an undisclosed group of principles. If the State is unable to prove this, the defence argues, the case against Basson will fail. In re-examination the State set out to prove that Basson had ample opportunity to inform investigations conducted by the Auditor-General and the Office for Serious Economic Offences about the companies he is allegedly linked to and about the flow of funds. The State also attempted to demonstrate that Basson had instructed Webster

on all occasions and that it had not been the other way around. The state presented correspondence between from Basson to Webster instructing him on various matters, to prove the point.

Bruwer stepped down on Tuesday afternoon. His place on the witness stand was taken by an associate of Basson's, Pieter Willem de Jager, who has known Basson "very well" since about 1979, when they met while both serving in the SADF. De Jager left the SADF in 1981, but he and Basson stayed in touch, meeting socially, playing squash, watching rugby together, until about 1988. At that time, De Jager was head of the SABC's security division, responsible for its facilities throughout the country. At a social function, Basson told De Jager "someone" would approach him in due course in regard to a company he might be interested in. The approach was made by Wynand Swanepoel, whom De Jager had met previously through Basson, but did not know well. Through Swanepoel De Jager became involved as a director of some of the companies in which Basson is alleged to have interests. De Jager ultimately became involved in a farming enterprise, Waag 'n Bietjie Boerdery, mentioned in the charge sheet. However during the three years that he farmed, the business lost some R3 million and he lost the land. The minutes of meetings of the holding company for the farming enterprise show that Basson was present a most of the directors meetings. De Jager testified that the capital invested in this, and other companies by Basson was from an undisclosed source.

During the cross examination of De Jager, Adv. Cilliers, put it to the witness that the zoo which was allegedly owned by a company known as Wisdom Idle Winds, in the Western Cape was to be the source of animals for laboratory research by Roodeplaat - animals that RRL itself could not/did not keep. According to Adv. Cilliers, the "zoo" would have served as a "very convenient way of expanding the range of animals for research at RRL".

The next witness was Hercules Orffer, who was a major at Military Intelligence from January 1987 to October 1990, and the man who made the foreign fund transfers on Basson's orders. Orffer performed the same service for various other secret projects. The procedures were the same in all cases - funds were to be moved in such a way that they could not be traced back to the SADF, transfers had to be duly authorised and within the broad project budgets.

The prosecution questioned Orffer about the usual manner in which funds would be transferred. Orffer told the court that Basson would call him from his car phone and tell him he was on the way to MI headquarters. Orffer, who by nature of his work always wore civilian clothes, would then have to wait for Basson outside the Liberty Life building in Vermeulen Street (home of Military Intelligence). When Basson pulled up in his car, he would hand Orffer a brown envelope from within, and drive away. Inside, Orffer would find the necessary instructions and authorisations. Basson's signature alone was sufficient to facilitate the transfer of millions - his bona fides were accepted by Military Intelligence without question, and no one, not even General Knobel, was required to co-sign the request for fund transfers or confirm the details of the purpose. All further arrangements were made by Military Intelligence through the Reserve Bank. Various accounts were used by Military Intelligence to launder funds - Executive Services, Karko and Herpeco being most frequently used. There was also Global Capital Investments (Pty) Ltd, which Orffer believed was, like the other accounts, merely a name that was used. He later learned, however, that this was a duly registered company. The GCI account was used sparingly, however, and only for certain projects, of which Coast was one, at times. Another "name only" account sometimes used for Coast was Dynamic Services. Because of the need-to-know principle, Orffer accepted the explanations for expenditure at face value. Checks and balances were left to members of the Auditor-General's staff, of whom three were permanently assigned to MI at any given time, and the internal SADF auditors. At Military Intelligence, the man in charge of Coast internal audits was Brigadier Hein Pfeil. Orffer could not recall any errors being made by Military Intelligence in transferring funds, and says the system was so well oiled that he was never aware of any security breaches.

Brigadier Hein Pfeil was next to take the stand. The former SADF brigadier served as internal auditor on secret projects with Military Intelligence from 1984 to the end of 1988. Among the projects he audited was Coast, and he reported verbally to General Niel Knobel about once every three months. His reports were based on audits confined to the paperwork for transfer of project funds abroad. Like Major Orffer, Pfeil's mandate was merely to ensure that the correct signatures were on the authorisation documents. He never knew what the expenditure was for, beyond the vague and fairly general descriptions given on the fund transfer requests by the project officer(s). This applied to all top secret projects, so was not unique to Coast.

Pfeil never saw, nor did Military Intelligence receive, any proof of payment or invoices to show that the equipment ordered had been received. Once funds had been placed in foreign accounts, MI had no further control over them. Since he never knew exactly what equipment was being purchased, or where it would be deployed, there was no way he could ever have physically checked that the SADF got what it paid for.

On Friday 2 March evidence from the first of Basson's close business associates to testify, began with accountant Tjaart Viljoen being warned by the judge in terms of Section 204 of the Criminal Procedure Act. This means that if the court finds at the end of the trial Viljoen has been totally frank and honest in his testimony, he may be granted indemnity from prosecution for his own involvement in the alleged fraud.

Apart from directing and managing many of the companies of which Basson is said to be the beneficiary, Viljoen was also initially an accountant and auditor of Infladel, one of the official Project Coast companies set up to handle the finances and administration of the project. During questioning Viljoen told the court details of the companies allegedly established by Basson and about his involvement in these companies.

It is expected that Viljoen will remain on the witness stand for the next fortnight after which Samuel Bosch will be called.

This report has been prepared by Chandr� Gould and Marlene Burger. Chandr� Gould is a research associate at the Centre for Conflict Resolution working on the Chemical and Biological Warfare Research Project. Marlene Burger is monitoring the trial as part of the CCR Chemical and Biological Warfare Research Project. The Chemical and Biological Warfare Research Project is funded by the Ford Foundation, the Friedrich Ebert Stiftung and the Norwegian Government.

Explanation of scientific terms:

On 2 February 2000 (covered in the 10th weekly report) the court heard that on June 16, 1993, U$100 000 was paid into the Aries trust, with another U$150 000 paid in on September 13. The two amounts were recorded as a loan to Aries Trust from Waterson Trust.

Bank documents relating to the trust record the amounts as being paid by Baker & Hostetler for "transfer of technology - transfer of know-how and methods of manufacturing (inclusive of process package and synthetic route) for 4, 5 - Epoxy - 3 - Hydroxy - 6 - Methoxy - A - Ethorphime".

This substance has been identified as ETORPHINE, a highly potent and rapid acting opiate used in veterinary medicine for large animals. Minute amounts of this substance can exert serious effects leading to coma. It is used in large animals as a restraint for surgical procedures. It is at least 400 times more potent than morphine in humans. It may also be absorbed through broken skin or mucous membranes. Naloxone is the antidote, if used in time. Meat that has been injected with it is not for human consumption. Effects are tachycardia or bradycardia, hypertension or hypotension, respiratory depression, cyanosis, temperature drop. The outcome of exposure to minute amounts in humans may be fatal. It is not intended for domestic animals.

Centre for Conflict Resolution, UCT, Private Bag, Rondebosch, 7701, South Africa Tel: (27) 21-4222512 Fax: (27) 21-4222622 Email: [email protected]