Mbeki's Arms Ache.(Thabo Mbeki)(Brief Article)

They first met secretly in June 1998, in a Cape Town coffee shop a few blocks from South Africa's Parliament buildings. Terry Crawford-Browne, a banker turned peace activist, expected questions about his campaign to redirect the new black government's hefty defense budget toward building schools and houses. Instead, he says, a senior government intelligence official spun a tale of high-level malfeasance. The most damning accusation: that associates of well-placed members of the ruling African National Congress stood to reap windfall profits from subcontracts signed under a $6 billion arms deal with Britain, Sweden, Germany and Italy, the result of conflicts of interest. "My eyes were out on stalks," says Crawford-Browne.

Under apartheid, the South African arms industry grew notoriously corrupt. Secrecy was the rule as the pariah government sought to maintain its regional dominance in spite of an international arms embargo. Prosecutors still are unraveling some of the allegedly self- serving deals, which involved complex webs of offshore bank accounts. Have members of the black-led government that took power in 1994 fallen victim to similar temptations? Not long after the country's milestone political change, Anglican Archbishop Desmond Tutu observed that the new black political elite had stopped the gravy train only long enough to climb on board. A budding scandal may bear him out.

Nobody has suggested that President Thabo Mbeki or his predecessor, Nelson Mandela, profited personally from the arms deals. But press reports and government sources implicate some ANC insiders in conflicts of interest. Defense Minister Joe Modise, the former commander of the ANC's military wing, Umkhonto weSizwe, retired from government in 1999 to lead a defense-contracting firm. Key management contracts reportedly went to companies whose boards included relatives by blood or marriage of Modise and his procurement chief. (Both deny any wrongdoing.) Critics charge that the structure of the arms deals invited influence peddling: in the name of black empowerment, foreign suppliers were required to form partnerships with local business people and to guarantee investments in the South African economy. "Officials go and establish companies either with their own silent involvement or with other people acting as their fronts," says Patricia de Lille, a member of Parliament from the opposition Pan Africanist Congress of Azania, who has funneled corruption allegations to investigators. "Genuine companies lose out."

Parliament is leading the charge. Just before adjourning in November, the National ...