In 1999 South Africa bought military equipment from companies in several different European countries. Critics asked why South Africa needed to spend so much on arms when it had major health and housing needs. The equipment included 28 Saab/BAE Gripen aircraft and 24 BAE Hawk trainers, worth about £1,000million to BAE. The Hawk purchase, in particular, raised questions since the planes cost more than double that of an Italian equivalent which was preferred by the military. The Export Credits Guarantee Department underwrote the full Gripen and Hawk package for near £1,680million.
Stories of corruption were soon circulating about various aspects of the European deals. Durban businessman Schabir Shaik was convicted and imprisoned in 2005 for corruption and fraud on a deal involving a French company. With regards to BAE, requests from the SFO for help from the South African authorities led to the leaking of documents which talk of secret payments totalling more than £100million.
Various small companies are named. Mostly registered in the Channel Islands and British Virgin Islands (BVI), they are said to have received payments, often through Red Diamond. One such company was said to have been under the control of the late Richard Charter, then BAE's main agent in South Africa; another agent was reportedly the Zimbabwean John Bredenkamp. An alleged recipient is Fana Hlongwane, who was an adviser to the late Joe Modise, the Defence Minister, when the arms deals were struck. The SFO documents are also said to name very senior BAE figures who approved the payments. Allegations have continued to be made. In December 2010, for example, it was said that General Siphiwe Nyanda, head of the South African Defence Force when key decisions were made, had received a very favourable loan to buy a property from a company owned by Fana Hlongwane.
Saab Chief Executive Hakan Buskhe announced in mid-June 2011 that a person employed by BAE had, without Saab's knowledge, paid about 24 million Rand ($3.5million) to Saab subsidiary Sanip Pty Ltd and that this was transferred to Fana Hlongwane shortly afterwards. This led to an apparently inaccurate financial statement for the company in 2003. All the material from Saab had been handed to the Swedish prosecuting authorities.
In September 2011, President Jacob Zuma, himself the subject of some of the corruption allegations, announced that he was setting up a Commission of Inquiry into the arms deals. Some saw this as an attempt to pre-empt a ruling from the constitutional court where a campaigner was asking for a court order that such an inquiry be set up. On 1 November 2011 President Zuma said he would testify before the inquiry, though its composition was not yet finalised.
Former African National Congress MP Andrew Feinstein spoke about the case at CAAT's 2009 National Gathering.