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Trial Report: Twenty-Three

This report covers the period 31 July - 3 August 2000.

Monday 31 July 2000

Court resumed after a six week break. The focus of the trial has shifted from the human rights violation charges of the previous court session to the fraud charges. The last weekly report indicated that the court would move its hearings to Florida, USA to hear the evidence of American attorney, David Webster in late August, early September this year, it is now expected to undertake the trip in mid-October.

The trial resumed with testimony from external auditor Petro Theron (referred to in all previous reports as Pierre Theron), the sixty-third witness to take the stand since the trial began last October. On what is only the 96th day in court, prosecutor Anton Ackerman, SC, led the state's case. Theron is qualified chartered accountant who spent much of his career with Coopers & Lybrand auditing top secret defence projects for both Armscor and the South African Defence Force.

While it had been generally assumed, and put to the court by several previous witnesses, that Theron was the external auditor of Project Coast, he never acted in that capacity, but was the external auditor of the SADF front companies set up to serve Project Coast, namely Delta G Scientific, Roodeplaat Research Laboratories, Infladel, Sefmed and D John Truter Financial Consultants. His annual audit reports were not even submitted to the SADF, but rather to the chief executives of the companies concerned. Theron was given the assurance that the companies he audited were the only fronts serving Coast.

Theron was responsible for checking that the amounts allocated within the global budget to the companies concerned, were used for authorised expenditure. This, he told the court, could only be done up to a point because of the clandestine nature of the companies activities and the subsequent lack of documentary proof of transactions. Auditing the companies was complicated by the fact that a high percentage of transactions involved a single individual - Dr Basson - and it was "impossible" to accurately audit deals of that nature. Theron was also unable to audit the application of large sums of money transferred to foreign bank accounts by Chief of Staff Intelligence and/or Chief of Staff Finance on behalf of the project. His probe could extend only as far as the transfer of funds, but after that, he had no way of checking what they were used for.

Theron explained that clandestine projects do not normally have invoices as proof of purchase and, therefore, the bona fides of the project officer were crucial and his word unimpeachable. Theron said he trusted Basson implicitly, and had absolutely no reason ever to doubt his veracity. Indeed, Theron held Basson in the highest regard as a medical man, respected his achievements on Project Coast and recognised his superlative intelligence at all times. Nevertheless, Basson's word was Theron's sole yardstick for measuring receipt of equipment, goods and services against expenditure. With the exception of limited bank documents, a few contracts and office rental agreements, Theron saw virtually no documentation at all.

Theron explained that it was acceptable practice for Basson to make use of foreign bank accounts held by people sympathetic to South Africa to hide the true nature of the transactions. Basson's links to the military would have prevented him from opening such accounts.

In Theron's opinion, management and control of Project Coast was at all times dominated by Basson and only he could, for example, account for the purchase and control of chemical substances from foreign suppliers.

Theron is suffering from ill-health and had to leave the court before the end of the day.

Tuesday 1 August 2000

External auditor Petro Theron's testimony continued to shed light on the absence of any suspicion that Project Coast funds were being abused. He reiterated that he was dependent on Basson for the justification of Project Coast expenditure, as had been Gen. Knobel. He admitted to having no knowledge of some deals conducted by Basson, including the deal in which the Jetstar was allegedly swopped for a peptide synthesizer, as previously claimed by Basson's defence team.

Contradictions emerged between Theron's understanding of many of Project Coast deals and answers provided by Basson to other inquires, discrepancies were also uncovered regarding Theron's audits and claims made by the defence earlier in the trial. Indeed, there were even discrepancies between statements Knobel made to the Office for Serious Economic Offences during its investigation and statements made to Theron regarding the status of companies associated with Project Coast.

Theron told the court again that he never carried out any physical inspection of Project Coast facilities to verify the existence of equipment. He relied entirely on the documentation sometimes produced and kept by Basson or Military Intelligence, and Basson's word. Since the documents Theron was shown were signed by Knobel, he had no reason to doubt their veracity.

Theron said one of the biggest problem areas, in terms of auditing Project Coast, was the acquisition of chemical substances, which were "totally unavailable" in South Africa, and for which Basson, as project officer on the ground, was the sole person who could judge whether the price paid to suppliers was "fair".

Wednesday 2 August 2000

Questioning of Petro Theron continued, focussing on the responses he and Knobel made to the Office of Serious Economic Offences during their inquiry.

Theron told the court that he was unaware of a number of deals Basson was shown to have been involved in and questioned irregularities in the way in which the deal for the alleged purchase of Chemical Agent Monitors from Graseby Ionics was reflected in the books. Theron said it was not acceptable for Basson to have withheld information regarding Project Coast deals from him.

Thursday 3 August 2000

Theron's testimony continued to reveal his trust in Basson. In 1994 the Office for Serious Economic Offences OSEO) posed specific questions to former Surgeon General, Gen. Niel Knobel and Theron, the answers provided by satisfied the auditor. The prosecution is claiming that these answers were a "total fabrication". So reluctant was Theron to even consider the possibility of fraud that during 1994, OSEO investigators accused him of being a close friend of Basson's, and of enjoying overseas trips with Basson at Project Coast's expense. The accusations incensed Theron, but he continued to believe in the integrity of Basson's word, dismissing the OSEO probe as a witch hunt.

The only transaction which Theron had reason to be suspicious of was the deal involving the alleged purchase of 500kg of a methaqualone derivative from Croatia in 1992. Theron was unable to get any documentation relevant to these transactions from Basson. By the time Theron submitted his final Project Coast audit, in May 1994, the Croatian deal had still not been clarified, and the Auditor-General was left with no choice but to write off the amount.

Theron said he found nothing irregular about the privatisation of Delta G Scientific and Roodeplaat Research Laboratories, despite the family relationship between Philip Mijburgh and Magnus Malan. By the time the privatisation proposals reached Malan, as defence minister, and Barend du Plessis, then finance minister, all they were required to do was rubber-stamp the deals, he says. They were not involved in structuring the deals, and there was no suggestion of nepotism, since the relationship between Mijburgh and Malan was "widely known" in military circles.

The court only sat for the morning session. Cross examination of the witness is expected to take place next week.

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.

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

 
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