Trial Report: Fifty-Two

This report covers the period Friday 17 August to Thursday 23 August 2001 Friday 17 August 2001

The cross-examination of Basson relating to charges of fraud continued.

Basson denied instructing Project Coast financial and administrative manager D John Truter, that the secret account he opened on May 7, 1991, was not to be disclosed to Gen Niel Knobel. He admitted telling Truter the account was to be used to channel "ultra-sensitive" funds, and because these had nothing to do with Project Coast, the funds were not subject to audit by Project Coast auditor, Petro Theron. Basson claimed the account was set up in terms of his mandate to launder funds for the Principals, and specifically to channel the proceeds of the sale of surplus NBC suits which had been donated, but not distributed, to UNITA.

Basson’s morning testimony was that the secret account was to be used for this purpose only, on a one-off basis, as authorised by Gen AJ (Kat) Liebenberg. By the end of the day, having been confronted by various other transactions that went through the same account, Basson claimed that his mandate was a broad one, and that he was entitled to use the account for other deals on behalf of the Principals as well. He said that when he had to find a way of selling off the surplus NBC suits, he consulted Gen Liebenberg about how best to launder the funds, and was told: Well, you do it all the time, use the Project Coast channels, but make sure the NBC funds don’t get mixed up with project funds.

Basson said that all the paperwork and bank transfers would be in the name of Project Coast, so as to avoid setting up a new front company. He said the Reserve Bank might have gained the impression that the funds transferred from this account were Project Coast funds. Reserve Bank documents showing the transfer of funds from the secret account to the Barcelona account state that this is an advance payment for Project Coast equipment to be delivered "between September 1991 and January 1992". But Basson said this was just the cover story.

State Prosecutor, Anton Ackermann said that the result was that the only checks and balances imposed on the sale of the NBC suits, and distribution of the proceeds, were those imposed by Basson himself.

Basson said that when the secret account was closed on July 31, 1992, R50 000 of the balance was paid to him in cash. He claimed the account was no longer needed by the Principals to move funds out of South Africa, and that he gave the cash to Yusuf Murgham. Basson said he never gave the Principals financial statements recording the use of their funds as this would have been a security breach.

Ackermann questioned Basson in detail about the sale of the NBC suits and said that the State believes the deal was structured to form part of the second Reserve Bank moratorium loan, which saw $970 000 paid to Blowing Rock Consolidated Investments in December 1991. Documents relating to the second moratorium loan inform the Reserve Bank that the funds were to be used for the purchase of two farms in Mpumalanga, and the Fancourt lodge. Ackermann pointed out that the farms had already been purchased by this time – the first in June, the second in September 1991. Ackermann asked why, if the Principals already had R5,5-m sitting in the Regent International Tradings account, had there been any need for the second moratorium loan at all? Ackermann said he believed that the transaction was designed by Basson to create the impression that genuine foreign investors were involved.

Basson said that he still had intermittent contact with the Principals in 1995 [after the official closure of Project Coast].

Basson said that an amount of $360 000 transferred to the secret P & S Engineering account from Luxembourg on October 20, 1992, had been used to pay for BZ (in April/May). He disputes the testimony of Sam Bosch that the funds were paid into the P & S account on the instructions of Philip Mijburgh, who did not want them deposited in any account that would be subject to audit. The funds are recorded in the P & S cashbook as being in respect of "sale of technology" to Firm Licenspolychim, 11 Minskaya Street, Moscow. The forensic audit showed that the funds originated from Project Coast and were part of the amount sent to Blackdale for the second peptide synthesiser deal.

Monday 20 August 2001

Basson testified that the lodge at Fancourt, like all the other properties in the WPW/Wisdom groups, was bought for the Principals as a safe house and venue for meetings. Basson said the Principals were already involved in hotel and resort development in the rest of the world, Fancourt was a natural choice for them to extend their South African interests.

Asked whether the Principals had expressed interest in acquiring a Macdonalds franchise at some point, Basson said he cannot remember this, but said they were involved with Nike at one time. Ackermann asked Basson whether there was also a proposal that an American football team be bought. Basson said this too he cannot recall, but qualified he answer saying that the Principals would have found it "great fun" to own their own football team.

Ackermann asked Basson how many times the Principals visited South Africa between December 1986 and December 1992, and where they stayed. Basson said that they visited South Africa probably about 10 times they had stayed at the apartment in Sunnyside, Pretoria. They also stayed with Basson, and his mother.

Basson answered questions about the Fancourt Lodge and about trips undertaken in the King Air aircraft. Ackermann put it to Basson that the Fancourt lodge was never bought for the Principals, but by Basson, Philip Mijburgh and Wynand Swanepoel for their own pleasure. Basson denied this.

Ackermann then turned to the company Systems Research and Design, set up on December 11, 1986. Basson said that coincidentally, at just about the same time that Project Coast identified the need for a research facility, the Principals expressed the same need. Jan Lourens was appointed managing director of SRD, and he borrowed R60 000 from Infladel to buy his 29% shareholding. Basson said that SRD’s subsidiaries each had a specific purpose. Phoenix Service Station, he said, had an SADF contract to maintain Project Coast vehicles and those of other covert operations. Phoenix also supplied special equipment in the vehicles used by members of the quick reaction teams which would be called in the event of an accident at Delta G Scientific or RRL.

Basson said SRD Electronics, set up in January 1987, had a contract with the SADF to supply and maintain radios, communication systems, and electronic surveillance equipment used by Project Coast. QB Laboratories, Basson said was the domain of (Bart) Hettema. Basson said that Hettema was the liquid aerosol expert in South Africa at the time, and was responsible for research on the aerosolisation of teargas and other substances. Basson said the results of Hettema's research were supplied to the Principals. Basson said the Principals provided about R300 000 in capital for SRD.

Basson said it was a coincidence that the establishment of SRD – with initial shareholding of 71% in WPW Inc’s hands and 29% in the hands of Lourens – took place just one month before YCVM and Regent International Trading Services signed a contract for 45 000 NBC suits. The contract specified that quality control will be carried out by SRD. Ackermann said this meant that a company in which the Principals held the majority share, was wholly responsible for certifying the quality of the SADF’s protective garments.

Ackermann established that extensive research had already been conducted in the industrialised world, into all defensive CBW systems and protective garments. In 1986, however, South Africa was new to the field. Given this, Ackermann asked why the Principals had chosen to ask Basson to set up research facilities for them in South Africa. Basson responded saying that the Libyans could not have set up their own research facility because CIA and satellite surveillance would have picked this up immediately. He said South Africa was seen as "neutral" territory safe from the probing eyes of the satellites.

Ackermann put it to Basson that it was highly unlikely that in 1986, the Libyans would ask South Africa to conduct their CBW research for them.

When Protechnic was set up, it assumed certain tasks previously performed by SRD, namely development and evaluation of defensive CBW systems for the SADF. Basson claimed that he furnished reports on research programmes to the Principals until the end of 1995. Challenged by Ackermann to identify the areas of research on which he supplied reports at this late stage, he mentioned activated carbon, but could add no more.

Ackermann asked Basson whether his sense of morality would not have not precluded him from doing this. He asked why Basson had not simply stopped furnishing reports to the Principals in 1993. Basson said his morality had nothing to do with it.

Basson said he had not told Gen Knobel about the supply of information to the Principals since he had no obligation to do so. Basson said he was carrying out his mandate in terms of the orders of the SADF Chief, initially Gen Kat Liebenberg, then Gen Georg Meiring. Pressed for an answer as to whether Gen Meiring knew that Basson continued to furnish research reports to the Libyans in 1995, Basson said Meiring did know about the continued submission of reports to the Libyans.

Ackermann put it to Basson that it was extremely unlikely that as late as 1995, he was still giving reports to the Libyans and asked how he had done so. Basson said he had handed them to Abdul Razak and "his people" at various places in Europe, for example, Basel and Spain. He said he last saw 'the East Germans' in 1994.

Tuesday 21 August

Ackermann questioned Basson in some detail about the company Intramex. Basson has claimed Intramex was an SADF front company established to act as an intermediary in the sale of CR from Delta G to Armscor so as to hide the origin of the CR. Basson is listed as a director of Intramex. Basson told the court that he only became aware of his directorship of the company when questioned by the Office for Serious Economic Offences in 1992.

Despite the testimony of various witnesses – PW de Jager, Cecilia Grant, Viljoen, even David Webster – to the contrary, Basson told the court that profit-making was never the objective of any companies in the Wisdom group. Ackermann said that at a meeting of Wisdom Holdings on April 12, 1990, Basson had said that the objective of the various subsidiaries in the group was to generate income. Basson said this was designed to mislead anyone who might gain access to the minutes. He said Viljoen and Wynand Swanepoel knew the true state of affairs, and played along.

Basson said there would not be a single document which identified the Principals as the true shareholders of these companies, since that would have been a serious security breach. Ackermann put it to Basson that in fact, the objective of every company in the Wisdom group was to make money, and that the reason this had not happened, was because incompetent people were appointed to run the companies.

Asked about the Tygerberg Zoo, Basson said animals at the zoo were used for experiments, small deer for pheromone research and cheetahs for heavy metal research. Basson said the research was conducted by the University of Stellenbosch and Swartklip Products.

Ackermann then turned to Protection Management Services (PMS) and asked Basson to tell the court what he knew of this company. Basson said that Karel Koen had been an SADF security officer who joined Armscor before moving to Delta G Scientific. Basson said it was decided that it would make financial sense to make use of contract security services than to have security officers on the company payroll, and Koen offered to set up a private company for this purpose. Basson said Koen also intended marketing electronic surveillance equipment. Basson said that he referred Koen to Roger Buffham at CSD in connection with electronic security equipment. PMS was used as a channel to import equipment for both Project Coast and the Principals. Basson said that equipment procured by PMS from Buffham was supplied to the SADF's Special Forces, EMLC, the National Intelligence Service and the South African Police’s VIP protection unit. Basson said the equipment included sophisticated bomb detection apparatus and surveillance equipment.

Ackermann pointed out that Koen’s testimony was that at the end of 1988, Basson approached him and asked him to set up a private security firm, telling him that he just happened to have a company available for this purpose. Basson denied this, but could not disagree that SRD Electronics became PMS.

Ackermann then produced an invoice which had been attached to Gen Niel Knobel’s response to the Office for Serious Economic Offences when certain foreign payments by Project Coast were questioned. The explanation furnished by Basson for payment of �100 000 to Buffham on August 10, 1990, was that it was in respect of "security equipment for Project Coast, used operationally and written off". The attached invoice is for 15 Diviner detection systems @ �650 each. However, the section of the invoice in which the name of the client should appear, is blank. Basson could not explain this. Clearly, he said, despite the fact that both he and auditor Petro Theron initialled the invoice, it did not appear to have been issued by Buffham. The original document seems to have disappeared. Nor could he shed any light on a letter to Koen from Buffham, dated October 9, 1990, in which he asks: "How are things going with the Diviner system? Please let me know".

A second invoice, used to support payment of another �100 000 to Buffham on October 15, 1990, was explained to the Office for Serious Economic Offences as being in respect of "development of security paper prototype for Project Coast by Buffham". This, said Basson, was for special impregnated paper and sensors. Like the first invoice, this one, too, contains a blank space where details of the client should appear. In addition, the amounts on the invoices and those on the authorisation for fund transfer signed by Knobel, differ by a few thousand pounds in both cases.

In the absence of any explanation by Basson for these anomalies, Ackermann put it to him that in fact, the equipment specified on the invoices had been bought by PMS, and that Basson had used the invoices, with the company name suitably removed, when called on to explain payments by Project Coast. As usual, said Ackermann, Basson was doing what he is best at – taking details of one situation, doctoring them and then inserting a real situation into an imaginary one, to explain himself when challenged.

Wednesday 22 August

Despite the mention in various minutes of Wisdom Holdings meetings of Protection Management Services being a subsidiary in the group, Basson continued to deny this, and to deny that he had any financial interest in the company. Anton Ackermann put it to Basson that not only did he have financial interests in PMS but, that he also had a financial interest in Roger Buffham’s company, Contemporary Design Systems.

Basson said that the Principals had invested in CSD resulting in the expansion of the company. He said the company suffered financially when the Principals withdrew their support when Buffham fell out of favour. Basson said Buffham was an important supplier of equipment for Project Coast, and necessary steps were taken to protect him. He said funds were moved through Buffham’s bank accounts on the instructions of Dieter Dreier, and these operations formed part of Basson’s mandate to launder money for the Principals.

Basson said he first heard of Roger Buffham at a meeting of the CBW Mafia, when Dieter Dreier described him as "one of our people". Basson said he then gave Buffham’s name to the SA military attach� in London and learned that Buffham had tried several times to supply strategic equipment to the South African security forces. Basson set up a meeting with Buffham at a July 1986 exhibition of electronic equipment in a London club.

Basson said he presented himself to Buffham as someone involved in procuring technology for the South African, and other governments. Basson said that when Buffham visited South Africa in late 1986/early 1987, he met with Gen Lothar Neethling at the South African Police's Forensics Laboratory.

Basson said the Principals ceased to support CSD after Buffham made an unauthorised trip to Moscow, which drew the attention of MI5. As a result, Dreier decided that Buffham had served his purpose but, Basson continued to cultivate Buffham, as Project Coast still needed him.

Basson claimed that while CSD was used as a front, the rule was that three to four months before funds were injected by the Principals, Buffham would create documents motivating a request for additional financing. As a trained intelligence agent, said Basson, Buffham was "extremely good" at creating false documents. Viljoen was never told that the documents were all part of the cover story, and they were created for the benefit of "anyone" who might probe CSD. Buffham had to have a plausible explanation for the flow of funds into CSD. Basson said that the funds were payments for highly sensitive equipment which Buffham supplied clandestinely and that most of the equipment supplied by Buffham was subject to sanctions.

Detailed questions regarding specific payments to CSD were put to Basson.

Thursday 23 August

Basson continued to maintain that after the Principals withdrew their support of Buffham following his unauthorised visit to Moscow, it fell to him to wind down CSD on their behalf. Basson said that Project Coast still needed Buffham, so he [Basson] had to find a way of maintaining Buffham's goodwill while at the same time, ensuring that there was no breach of security. Basson did not want to place CSD in liquidation, as this might have angered Buffham so much that he could be tempted to publicly disclose covert operations. The task of finding the best way to deal with the situation was left in the hands of David Webster and Tjaart Viljoen. Basson said all he could do, was to supply Buffham with whatever false documentation he needed in order to attract alternative investments.

Basson said that Buffham’s affairs were a closed book and that no-one (not he or David Webster or Viljoen) ever really found out "what was going on" at CSD, or who Buffham was spying for. Basson said there were several reasons why Project Coast needed to maintain a relationship with Buffham after the Principals walked away. Buffham was a source of information, in connection with Special Forces operations and the running of agents, and as a Justice of the Peace, Buffham issued and certified documents needed by members of both the South African Police and Special Forces.

According to Basson, Buffham also had contact with Porton Down, and he arranged for Gen Niel Knobel to visit the facility.

Clearly, said Anton Ackermann, the Principals had made "the biggest mistake of their lives" when they formed an association with Basson. By naming them in court, he had blown their cover. Basson said that he had not wanted to do so, but had been advised by his counsel that he had no choice, even if this meant his personal safety, or that of the Principals, would be jeopardised. He said that representatives of the British and American governments briefed in 1994/95 about Project Coast had "fallen off their chairs" when informed about the various projects in which he had been involved.

Ackermann said that Basson had testified that no intelligence agency anywhere in the world knew of his relationship with the Principals. In response Basson said that at the briefing of the US and UK experts he said nothing about his Libyan connections, and had emphasised the role of the Russians instead. Basson said had been shown aerial photographs of Libyan installations and was able to "help" the US and UK government representatives, but, in accordance with his orders from then SADF Chief General Georg Meiring not to reveal "sensitive" information, he had not made full disclosure to them. Basson said Gen Meiring believed that the British and Americans "wanted all the sensitive information so that they could keep it from the ANC".

This report has been prepared by Chandré Gould and Marlene Burger. Chandré  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]