US secures first state capture conviction

The first state capture conviction for bribery and corruption at South African Airways (SAA) eight years ago has been secured – but not in SA – in a US court, reports News24. The US Department of Justice (DoJ) convicted US citizen Julian Aires of bribing SAA procurement officials and SAA director Yakhe Kwinana. In this, he was assisted by joint venture partners in SA who channelled the bribes. Aires has implicated two large international firms: the aviation parts business, AAR Corp and the SA subsidiary of Swissport, a Swiss-based aviation services company. The ‘statement of offence’ does not name the people or companies, but, notes News24, it is possible to identify many from their descriptions and evidence from the Zondo Commission. Aires pleaded guilty to the charges in a plea bargain with the DOJ in June, according to the Stanford Law Foreign Corrupt Practices Act (FCPA) Clearing House, which monitors corruption involving US firms. The sanction against him has not been decided.

Aires was president of US company JM International and a director of SA-registered JM Aviation with Vuyisile Ndzeku. Through JM Aviation, they secured a five-year contract with US joint venture partner AAR Corp, paying kickbacks to SAA directors and officials. According to the ‘statement of offence’ agreed to in Aires' plea bargain, they also secured a baggage handling contract at SAA for Swissport through bribery and kickbacks. News24 notes the bribery allegations involving JM Aviation were aired at the Zondo Commission, which concluded that the $125m contract between JM Aviation/JM International and AAR had been ‘unlawful, irregular and unfair’. It also concludes bribes and kickbacks were paid to Kwinana and SAA procurement head Nontsasa Memela. DoJ documents in the case, put up online by the FCPA professor, show that bribes to Kwinana and others were paid in cash and done by wire transfer, disguised as ‘consulting fees’. Between 2016 and 2020, $5.3m was paid in connection with the SAAT contract in ‘commissions, success fees, and advance payments’, a portion of which was paid as bribes. In the Swissport case the ‘statement of offence’ states that Aires and another member of JM Aviation drafted a service agreement between JM Aviation and Swissport through which the former would provide services to the latter.