In March 2006 a heavily armed Scorpions team launched raids on a set of cigarette importing and manufacturing businesses in Linbro Park, Sandton.
In October 2006 members of the United Kingdom Serious Fraud Office (SFO) swooped on the Berkshire premises of Aviation Consultancy Services (ACS).
Though he may not be the immediate target, one man appears in the background of both these probes: John Arnold Bredenkamp.
Bredenkamp (68) is a man who made his fortune trading in tobacco and arms with pariah states, beginning with Ian Smith’s Rhodesia and ending with Robert Mugabe’s Zimbabwe — with Saddam Hussain’s Iraq thrown in along the way (see "Barely legal").
But ACS, which has a long-standing relationship with British defence company BAE-Systems, also played a key role in lobbying for BAE to secure the sale of fighters and jet trainers in South Africa’s ill-fated arms deal.
Last year the Mail & Guardian revealed that ACS’s sister company, Kayswell Services, registered in the tax haven of the British Virgin Islands (BVI), received about £37-million from BAE for its role in the South African deal (now worth R691-million).
Now both the SFO and the Scorpions are looking more closely at what ACS might have done to earn this staggering "commission" — notably whether the company facilitated the onward payment of bribes to South African decision-makers.
But it is the investigation of Bredenkamp’s tobacco interests that might lead to the unravelling of an empire that has tentacles in virtually the entire Southern African region.
Cigarette smuggling is the contraband business to be in. The returns are as good as those from drugs and the risks and penalties are relatively low.
Investigators say there is a "golden highway" of cigarette and tobacco smuggling into South Africa from Zimbabwe and other Southern African states with lax border controls and weak policing.
Bredenkamp’s position on or off that highway is still under investigation. Bredenkamp trades in tobacco via Breco International, which has headquarters in Harare and manufactures the Mega brand. But he also operates through Masters International Tobacco Manufacturing in Johannesburg.
The M&G has established that in September this year a yellow-jacketed national enforcement unit from the South African Revenue Service (Sars) launched an inspection at the Johannesburg premises of Masters International Tobacco Manufacturing, confiscating about 4 500 master cases of cigarettes, comprising 45-million cigarettes.
It was by far the biggest seizure to take place in terms of a nationwide Sars project to crack down on the illicit trade in tobacco products that started this year, which has seen more than 7 500 master cases seized.
Sars, bound by secrecy regarding tax matters, won’t say exactly why the cigarettes were seized.
Around the time of the raid, Bredenkamp also put Masters’s local company into liquidation.
What is clear is that Bredenkamp has had business relationships with individuals who have been alleged to be part of a contraband network that is the subject of parallel Sars and Scorpions investigations.
The M&G understands that the Masters raid flowed from information obtained during an earlier round of Sars inspections in June this year targeting another company with Zimbabwean connections, Mavambo Coaches.
Mavambo, the business of which is passenger transport between South Africa and Zimbabwe, is a subsidiary of Pioneer Corporation Africa, a logistics company listed on the Harare stock exchange.
Mavambo was also a target of the armed Scorpions raid in March 2006. In that case the Scorpions obtained warrants of arrest for Zimbwean citizens Yakub Mahomed and Simon Rudland, the latter described as the "de facto managing director" for Mavambo as well as for South African Ebrahim Adamjee.
According to the affidavit used to obtain search warrants, Mahomed ran two related cigarette manufacturing companies, Gold Leaf and Sahawi, which were used to supply cigarettes on which no VAT or excise duty had been paid.
Adamjee allegedly "controlled the cash generated from the illegal cigarette sales" and some of the cash was laundered through Mavambo and other accounts controlled by Rudland, who was also allegedly involved in smuggling Sahawi cigarettes.
All those involved deny any wrongdoing.
The investigation has stalled because of a challenge to the Scorpions search and seizure process that is still awaiting a hearing in the Supreme Court of Appeal. The case was formally withdrawn because all the seized documents are under seal at the Johannesburg High Court pending the outcome of the appeal process.
Mohamed told the M&G last week that the case was dead and that the Scorpions had "got the wrong end of the stick".
But this June’s Sars raids at Mavambo, where computers and documents were removed, suggest that the investigation is not over.
However, there is also little to suggest any relationship between Mahomed and Bredenkamp — except the intimacy of a US$4-million loan.
In August this year Mahomed and Sahawi issued summons against Bredenkamp in the Harare High Court, claiming that Mahomed entered into an oral agreement with Bredenkamp to make a US currency-denominated loan to be repaid when Bredenkamp had sold his interests in the Mukondo mine in the Democratic Republic of Congo.
According to the summons, from January 2001 to November 2002 Bredenkamp was advanced a total of US$4,27-million.
He repaid US$400 000, leaving a shortfall of US$3,87-million, plus interest at 6% a annum.
Mahomed said this week his lawyers were negotiating with Bredenkamp about the repayment of the loan. He described the advance as "an investment" and Bredenkamp as a competitor: "The man has never done me a single favour."
However, Mahomed conceded they had once considered a joint venture, for which he had put up a deposit on the purchase of some cigarette machinery.
Last week also saw the arrest in London of Tribert Rujigiro Ayabatwa, whose Mastermind cigarette group also ran a short-lived joint venture with Mohamed called African American Tobacco.
In the Scorpions affidavit it was claimed that Mahomed’s Sahawi operation also sold cigarettes sourced from Mastermind, without any VAT invoices.
Ayabatwa, a Rwandan, set up a Mastermind cigarette factory in East London in the 1990s but, since 2005, has been wanted in connection with another Scorpions case allegedly involving R55-million in excise tax and VAT fraud.
He was held two weeks ago on an Interpol warrant and released on bail pending an extradition hearing.
Better than drugs
"It’s quicker, easier money than drugs," says one investigator of the criminal allure of cigarette smuggling.
The worldwide effort to tax cigarettes heavily to reduce consumption and raise revenue means the major cost of selling cigarettes is in the VAT and excise duties payable. For example, in 2005 in South Africa a pack of 20 cigarettes cost about R1 to manufacture, but was liable to about R6 in tax.
Avoiding tax by the illegal sale of cigarettes means you can undercut the legal operators and still make huge profits. The allure of avoiding tax has been such that for decades the major international brands also made use of back channels to distribute some of their products, but in the past 10 years intense international scrutiny has forced them to clean up their act. This has allowed a gap to open up for smaller, more unscrupulous players.
South Africa has been no exception and official estimates suggest 15% of the local market may be illegal. There are several ways of achieving this. Cigarettes may be smuggled into the country and sold for cash without paying excise duties and VAT.
More sophisticated players produce cigarette packs marked with counterfeit or stolen tax die-stamps, which indicate that duties have already been levied.
Still others manufacture or import cigarettes and declare to the South African Revenue Service that they have been re-exported, claiming the taxes back from Sars, when in reality the export certificates have been faked and the cigarettes are sold locally for cash.
Dangerous Liaisons 2: JB and the secret
The website of John Bredenkamp’s Breco Group is keen to suggest its hands-on approach: "A small management team enables fast decisions to be taken," it boasts.
The only member of the team actually profiled is Bredenkamp.
However, in one section there is a contrastingly coy tone about the role of the "Group Chairman".
Under the heading "Representative for aircraft manufacturers", the website notes: "In respect of defence procurement, John Bredenkamp is a passive investor in a company which acts as a … consultant for established European and North American aircraft manufacturers in Southern Africa with valid Government approved export licences. John Bredenkamp is not involved in any day-to-day activities of the company."
The unnamed company, Aviation Consultancy Services (ACS), represents the dark heart of the Breco empire and despite the reassurances about government approval, Bredenkamp clearly wants it understood that he doesn’t know exactly what goes on there.
Since the raid on ACS and Breco offices in 2006 by the UK Serious Fraud Office (SFO), this hands-off approach to the arms dealing side of his business has been emphasised. The raid was part of a broad SFO investigation into possible bribery by defence giant BAE-Systems in various parts of the world, including South Africa.
For example, his spokesperson told Africa Confidential, "Mr Bredenkamp was not personally involved with the BAE-Systems deal in South Africa.He knows nobody who was on the BAE-Systems side of the deal in South Africa. And likewise Mr Bredenkamp doesn’t know anyone on the South African government side of the deal."
The importance of Bredenkamp’s stance of non-involvement has in-creased as evidence has emerged that he benefited personally from the deal.
In January 2007 the M&G revealed the SFO had obtained information indicating that BAE paid £37-million to an ACS-linked company, Kayswell Services, in commissions on the South African deal — alongside generous payments to local BAE agent Richard Charter (see Dangerous liaisons 3: JB and Mrs Charter) and to Fana Hlongwane, former adviser to the late defence minister, Joe Modise.
And earlier this year Africa Confidential revealed that internal company documentation showed that of £26-million paid by BAE to Kayswell between June 2003 and September 2005 about £10-million had been transferred for the benefit of Bredenkamp.
Now the M&G has had insight into the same documentation, which sets out in more detail who exactly makes up ACS and how they benefited.
The three signatories on the Kayswell bank account are listed as Bredenkamp, Jules Pelissier and Graham Andrews. Pelissier, a former Rhodesian special branch policeman, is effectively the chief executive of ACS. Andrews is Bredenkamp’s former accountant, now resident in the UK.
The beneficial owners of Kayswell are listed as Bredenkamp, Pelissier, Walter Hailwax, Richard Passaportis and Trevor Wilmans. Hailwax, who runs the Namibian branch of ACS, sat on the board of Windhoeker Maschinenfabrik, a military vehicle manufacturer owned by the Namibian Defence Force.
Passaportis is based in Zimbabwe.
Wilmans, a former member of South African military intelligence, runs the South African operation of ACS and, according to former associates of Bredenkamp, also has good contacts in Botswana, where he is friendly with President Ian Khama.
The documents obtained by the M&G reflect payments of £2,5-million to Hailwax, £1,5-million to Passaportis, £812 016 to Wilmans and £513 067 to Pelissier — as well as significant transfers to two entities, the Willow Trust and the Sebel Trust, that may be linked to one or more of the owners.
It is likely that transfers from BAE continued after 2005 — when the records obtained by the M&G come to an end — as such commissions are generally linked to contractual disbursements received from the buyer, in this case, South Africa.
Given these payments, the question being probed — by both the SFO and the Scorpions — is what ACS did to earn its money in South Africa, given that Charter was the "official" registered agent for BAE.
Bredenkamp claims not to have been involved in the South African deal, but one former associate told the M&G Bredenkamp had personally met former defence minister Joe Modise on at least one occasion in South Africa during the lobbying process.
Modise is dead and the M&G was not able to verify this claim.
Bredenkamp failed to answer questions from the M&G about this allegation, as well as about what contact other members of ACS might have had with South African decision-makers.
Bredenkamp was also asked about whether it was correct, as alleged by one of his former associates, that he was on good social terms with Richard Evans, the former chair and chief executive of BAE. Evans has been listed as a suspect in the SFO investigation.
Through his lawyer Bredenkamp said he had not been given enough time to respond to questions.
The documents obtained by the M&G also disclose payment of US$5-million to ACS by Italian company Augusta as commission on the sale of helicopters to South Africa.
Meanwhile, the SFO investigation appears to be gaining momentum.
Last week an agent linked to lobbying for BAE in Czechoslovakia and Austria, Count Alfons Mensedorff-Pouilly, was arrested and questioned by the SFO before being released.
Another man was also questioned. It is understood to be Julian Scopes, a former head of government liaison for the BAE and now the company’s operations chief in India.
Dangerous Liaisons 3: JB and Mrs Charter
One of the most remarkable alliances to emerge from the arms deal has been the romantic attachment between John Bredenkamp (68) and Janet Charter (48).
Janet Charter is the widow and heir of Richard Charter, the acknowledged South African agent for BAE-Systems, while Bredenkamp has never admitted to any role in the South African arms deal, despite a long association with BAE — and despite allegations he was a beneficiary of commissions on the deal.
It is not clear whether the relationship is emotional or based on a more hard-nosed assessment of common interests. These might include the possibility that, given the ongoing criminal investigations, BAE may be reluctant to fully honour any further commission payments and might seek to shift responsibility for any improprieties in the deal on to its agents.
Bredenkamp failed to answer questions about how or when he became involved with Janet Charter. He cited lack of time to respond.
He has previously stated that he met Richard Charter only three times before Charter’s death in 2004, but failed to answer questions from the M&G about how the two men coordinated or divided up the representation of BAE in South Africa between Charter’s Osprey Aviation and Bredenkamp’s Aviation Consultancy Services.
Janet Charter, who now lives in London, has previously failed to return calls.
The alliance may also be related to concerns over safety.
According to sources close to the family, Charter has expressed concerns over both her own safety and that of Bredenkampand on occasion has questioned whether there might have been something untoward in the accidental death of her husband.
Richard Charter was drowned in a canoeing accident near his luxury farm on the Orange River on Sunday January 25 2004.
The M&G has established that Charter was due to attend a consultation with his lawyer on the following Monday relating to a possible request by the Scorpions to answer questions under oath in connection with his role in the arms deal.
According to someone familiar with the investigation, he had indicated he was willing to be cooperative, though he did not believe he was personally guilty of doing anything wrong.
According to several sources close to the family, Charter, normally an extremely calm and controlled person, was agitated in the period before his death.
He indicated he felt betrayed in some way by people in the ANC, and especially by late defence minister Joe Modise’s former adviser, Fana Hlongwane.
Hlongwane has repeatedly failed to respond to attempts to pose questions to him about his role in the arms deal.
Barely legal: John Bredenkamp
Bredenkamp was born in Kimberley in 1940 and educated in Zimbabwe at Prince Edward School.
He joined Gallaher, the international tobacco concern, in Zimbabwe and was transferred to Holland in 1968.
In 1976, he founded the Casalee Group of companies in Belgium. Casalee was primarily a leaf tobacco company but was also engaged in barter deals.
It was Casalee that apparently served as a sanctions-busting vehicle during the dying days of Rhodesia. Bredenkamp told a newspaper in 2000: "Yes, I was requested by the government of the day to help source supplies and equipment for the beleaguered country, and yes, I did so … But no, for many years, I have not been involved in the arms business at all."
Bredenkamp also appears to have been involved in sanctions busting for South Africa. Minutes of the Strategic Fuel Fund for March 13 1989 carry a note stating: "John Bredenkamp, who has acted confidentially for SA govt. before, offers oil [Casalee]."
Casalee was also linked as an agent for supplies of landmines to Iraq during the Iran-Iraq war and other supplies to Iran.
It became the biggest non-US leaf tobacco company and was sold in 1993 to Universal Leaf Tobacco for US$100-million.
In Zimbabwe Bredenkamp drew flak in some quarters for his closeness to the Mugabe government. He piggy-backed on the Zimbabwean military support for Laurent Kabila when Kabila seized power in the Democratic Republic of Congo and was granted copper and cobalt mining rights at the Mukondo mine in Eastern DRC.
At some stage this was in partnership with Zimbabwean fugitive Billy Rautenbach, but the two fell out when Rautenbach elbowed Bredenkamp aside.
Bredenkamp was cited in a United Nations report on resource exploitation in Congo, but later cleared, following extensive legal and political lobbying.
The UN report also accused him of being involved in the supply of spare parts for Zimbabwean BAE Hawk jets early in 2002 in breach of European Union sanctions.
In 2006 Bredenkamp was able to sell his stake in Mukondo to Israeli diamond trader Dan Gertler for US$57-million.
He also has tourism interests in Zimbabwe, Mozambique and South Africa.
In September 2006 Bredenkamp was acquitted in Zimbabwe on charges that he used a South African passport on international journeys. Zimbabwean citizenship law does not permit dual nationality.
He is said to be struggling to have his Zimbabwean passport renewed.
Questions were sent to John Bredenkamp’s South African lawyer, Ian Small-Smith, at 8.05am on Wednesday this week, giving him until 10am the next day to respond.
Small-Smith sent the following reply: "I confirm that I act on behalf of Mr. Bredenkamp. We acknowledge receipt of your questionnaire on 22 October 2008. We believe it is irresponsible of you to expect us to respond thereto within a day.
"I have read through the allegations and point out that there are various factual inaccuracies and falsehoods in your document. Publishing it would be slanderous.
"I have been instructed to point out that Mr Bredenkamp’s rights remain fully reserved should you proceed with the publication of this article." Source: Mail and Guardian (SA)