Trial Report: Twenty-Four

This report covers the period 4 - 10 August 2000

Friday 4 August 2000

Day 100 in court since the trial began on October 4, 1999 was marked by media reports that Basson's legal fees have cost the state R4 million since his arrest on January 29, 1997. This does not include the prosecution costs, those of the seven-year Office for Serious Economic Offences investigation, or the ongoing cost of forensic auditor Hennie Bruwer's investigation.

The fifth day of evidence in chief from external auditor Petro Theron focussed largely on the privatization of front companies Delta G Scientific and Roodeplaat Research Laboratories, in which Theron was closely involved from an auditing point of view. Theron explained that the one clear stipulation in the privatization of the companies was that as long as money was owed to the State by the "privatized" companies, no State employee was allowed to hold any interest in them. At a late stage in the privatization process, Theron expressed concern, to Admiral Murray, who by then was Chief of Staff Finance, about the shareholding, which saw 51% of Delta G allocated to Philip Mijburgh, through Medchem Consolidated Investments, and the same holding in RRL given to Wynand Swanepoel, through Contresida Holdings. In both cases, the remaining 49% was to be divided between "everyone else", including directors and personnel. Theron thought it unfair that the lion's share of the companies was given to the two chief executives, while the staff, whose welfare was allegedly one of the main concerns, were given far smaller shareholdings. Basson was "extremely upset" that Theron had not brought this matter up earlier in the process, but despite the auditor's reservations, the shareholding was approved.

Theron said he was unaware of Basson's interest in some of the companies linked to Project Coast, such as Protechnik, this he said was highly irregular and had he known he would have objected to it.

Theron knows very little about the sale of NBC suits, allegedly for Basson's personal benefit. He can shed no light on the alleged purchase of proximity fuses for R3,8-million, since no such transaction was ever reflected in the books he audited, nor on the secret bank account of Regent International Trading Services, operated in direct contravention of his earlier instructions that this account be closed, or the secret account of D John Truter Financial Services, used to channel proceeds from the NBC suits deal. The deposit of R3-m into this Truter account on May 28, 1991 and transfer from it on June 25 of R2,86-m to Charles van Remoortere's Luxembourg account, are not reflected anywhere in the Project Coast books and Theron has found no documents authorizing the transaction.

Monday 7 August 2000

The cross -examination of Petro Theron began today. Theron reiterated his concern that Basson had not informed him of some of the deals that had taken place. He told Basson's defence advocate, Jaap Cilliers, that had Basson approached him for assistance in structuring covert deals he would have provided it and that way could have avoided his current situation. Cilliers reinforced the picture that has emerged thus far, that Basson had to act on his own, that Project Coast was unique in every way and not even Gen. Knobel or his fellow Co-ordinating Management Committee members wanted to know the details of Basson's transactions, and indeed, given the sensitivity of the project, no one really wanted to get involved, including the SADF and Armscor. Theron admitted that he did not really want to know the full story behind the acquisition of chemicals, in particular, lest the knowledge endanger his personal safety, or that of his family.

Theron conceded that normal rules and regulations governing covert operations could not always be applied to Coast. He had the names of only three SADF officers to whom he could have taken any problems that arose, and it was true that in respect of clandestine foreign deals, Basson acted alone. Because of this, even if he never put a foot wrong, he would always be vulnerable to suspicion.

The crux of all Basson's problems, said Cilliers, is that documents, equipment and chemicals have all been destroyed, hence he is unable to offer proof of purchase. At the time of the transactions, international sanctions were being rigidly enforced and the few who dared risk helping South Africa did so under threat of enormous personal danger, which meant ways of protecting them had to be built into the project.

Theron remained adamant that Basson should have informed him that middle men and intermediaries were being used as conduits for project funds. But, said Cilliers, if an agent supplied goods, and was duly reimbursed, it had nothing to do with the auditor if those funds were then moved elsewhere. Theron agreed that if an agent was involved, his interest would extend only to payment of that agent on delivery of goods. But if the actual supplier and ultimate beneficiary of funds was not the person indicated on the authorization documents, project funds remained of interest to the auditor until they reached their final destination. Cilliers countered saying that all the CMC was interested in was: Did we get something for our money, and did Basson adhere to the rigid policy of not enriching himself in the process.

Theron was questioned about the peptide synthesizer, which he said he never saw despite the fact that he audited the laboratories at the Special Forces Headquarters, where the peptide synthesizer was allegedly kept. Theron said he had steered clear of the laboratories because Basson had told him the equipment was being used for research into something that could "scramble your thoughts".

Cilliers said it was impossible for Basson to have misappropriated 60-70% of all funds involved in foreign transactions for Project Coast. Cilliers reminded the court that Gen. Knobel and former National Intelligence Agency Deputy Director, Mike Kennedy testified that the program was very successful, being second only to that of the Russians. The technology, chemicals and specialist equipment needed to achieve this success were not available in South Africa. It would therefore have been impossible, argued Cilliers, for Basson to have created the world's second most successful program if he had stolen two-thirds of the foreign funding.

Tuesday 8 August, 2000

Cross-examination of Petro Theron continued and re-examination of the witness was concluded. During cross examination, counsel for Basson, Adv, Jaap Cilliers placed on record that Basson denies making any deceitful proposals, as alleged by the State, in order to defraud the South African Defence Force (SADF), or that he ever stole any money from the SADF. The denial covers all 23 fraud charges.

During cross-examination, Cilliers put it to Theron that in many instances he was not required to be aware of the way in which Basson conducted his business, that once the money had been approved for expenditure, the way in which Basson moved the money was of no consequence, just as long as it was ultimately used for the intended purpose. Theron disagreed with Cillier's assertions.

Following Theron, the court heard evidence from former Minister of Finances, Barend du Plessis, who authorized the privatization of Delta G Scientific and Roodeplaat Research Laboratories. According to Du Plessis, he was had only been in office a very short while when he was called upon to authorize the privatization and relied entirely on the auditor, Peter Wronsley, for his understanding of the deal. Du Plessis said he was unaware of the family relationship between Philip Mijburgh (who was the MD of the company and who would have benefitted from the deal). He said he should have been informed of this.

Wednesday 9 August, 2000

The court did not sit on Wednesday, it was a public holiday in South Africa.

Thursday 10 August, 2000

Jacobus "Vic" Botha, a retired member of the SADF Inspector-General's staff, was called to testify. Botha was responsible for an audit in 1990 of the physical assets of D. John Truter Financial Consultants and the financial management of the front company.

The defence has tried consistently to persuade the court that this audit, which included a physical inspection of 20% of equipment, covered Project Coast in totality, and thus there ought to be no questions about the existence of apparatus which Basson claims was bought with funds sent abroad. Botha's audit was, however, confined to the premises and affairs of D John Truter - and the "equipment" he verified was in possession of the front company, was nothing more than desks, office chairs, computers and typewriters.

At the time Botha requested access to Delta G and to other facilities used by Project Coast in order to conduct a broader audit. He was denied access since the sites did not fall within the Inspector-General's mandate, and security prohibited the access he sought, despite the fact that both Botha and his superior, Colonel Jacobs, had top secret clearance.

Botha was never aware of the existence of a Management and Financial Working Committee attached to Coast, and never attended a single meeting, although a document filed by the prosecution records that the committee included a representative of the Inspector-General's office (not named in the document). The chairman was Gen.Niel Knobel, with Basson acting as secretary and the chief executives of Delta G and Roodeplaat Research Laboratory as committee members. The purpose of the committee, stated in the document, was to liaise with both Military Intelligence and the Inspector-General on the financial policy and controls of Coast, in accordance with guidelines drawn up by Military Intelligence to ensure the proper control and management of the project finances.

During cross examination Adv. Cilliers put it to the witness that other members of the Inspector-General's office had attended meetings of the Management and Financial Working Committee.

Wally van Heerden of the Auditor General's office was called next. He has been employed by the Auditor General's office since 1963 and is currently the senior manager in charge of audits of both the South African National Defence Force and the South African Police Services. Van Heerden was assigned to Project Coast from the start - July 1, 1982. He rejects earlier defence claims that Coast was the SADF's most sensitive and thus uniquely handled project. The nuclear bomb project was equally, if not more, sensitive, says Van Heerden, and was thoroughly audited by his office.

Van Heerden explained that whilst he had conducted various audits over a number of years, for some time he also relied on the reports of Petro Theron. Van Heerden confirmed that Theron had said that the Croatian deal (allegedly involving the purchase of 500kg of a methaqualone (mandrax) derivative, and according to the defence also involved the purchase of a quantity of BZ) was suspicious.

Van Heerden's testimony continued on Friday, 11 August 2000.

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]