How Rheinmetall deceived the government in South Africa

Dr Richard Weitz

A subsidiary of the German company Rheinmetall in South Africa has become embroiled in a scandal over allegations of involvement in global arms trading.

Rheinmetall has been accused of using complex mechanisms to bypass international laws and sanctions, particularly by re-exporting weapons to conflict zones such as Ukraine and Israel.

These revelations have sparked a massive response from public organisations and residents of South Africa, raising questions about the need for increased oversight by government authorities. Why does the factory continue to operate while ammunition flows into war zones, and what steps must South African regulators take? Read more in our article.

Who really owns the Rheinmetall plant in SA?

The story began in 2008 when the construction of the Rheinmetall plant in South Africa was overseen by former Defence Minister Mosiuoa Lekota, who was later charged with fraud, accused of corruption, and misappropriating public funds.

A key event at that time was the signing of an agreement that allowed German Rheinmetall to hold a controlling 51% stake, while the South African state-owned company Denel held 49%. These types of agreements are used to create the appearance of equal participation, but legally they serve as a control mechanism.

In reality, all operations at the South African plant are managed by top managers from Rheinmetall in Germany, who are stationed at the plant. One such manager is the current chief executive of RDM, Dr Frank Dirksen.

International investigations into RDM

The situation with the factory has attracted the attention of several organisations from different parts of the world. Let’s discuss the two most significant ones. Investigations by the organisation Open Secrets have been exposing RDM’s activities in South Africa for several years, accusing the plant of exporting shells to Yemen.

Additionally, Investigate Europe journalists have launched an investigation accusing Rheinmetall of selling arms to war-torn countries. Investigate Europe claims that the German company uses local arms companies to bypass export controls and international laws in order to select the geographic destination of the weapons.

According to the investigations, the main buyers of RDM's products are the governments of Germany, Hungary, and other NATO countries. Rheinmetall operates warehouses and military infrastructure in Germany and Hungary, from which shells and weapons made at the RDM plant in South Africa are shipped to conflict zones like Israel and Ukraine.

The presence of a high-tech plant in South Africa producing scarce products is good for the country’s economy; however, no business, especially a foreign one, should violate South Africa's laws. South African law clearly states that re-exporting shells to countries involved in wars is a crime.

Another controversial fact is the official stance of Rheinmetall and the German government regarding ammunition exports. In light of the growing global demand for ammunition, Germany is the second-largest supplier of shells to Israel after the USA and the main state supporting Ukraine in its conflict with Russia.

Germany and NATO countries have repeatedly stated that their ammunition stocks are depleted after aiding Ukraine and Israel. Rheinmetall's chief executive Armin Theodor Papperger commented to BBC that Europe will need decades to rebuild its weapon reserves, and at the moment, ammunition stocks simply do not exist.

Rheinmetall plays a key role in this scheme as the principal arms supplier to these countries. Given the official contracts between RDM and NATO, Germany, and other countries with Rheinmetall presence, there’s little doubt that shells from South Africa are ending up on battlefields wherever Germany is a major arms supplier.

Information bulletin on the US Department of Defence website

If all the aforementioned accusations against RDM can be considered indirect, the next fact surprisingly went unnoticed in international investigations.

On January 10, an official report on the US Department of Defence website revealed that South Africa is listed as a participant in the Ukraine Defence Contact Group (UDCG) and is increasing the production of shells and gunpowder for Ukraine's needs.

However, South Africa is not officially a member of the UDCG, and the Rheinmetall Denel plant in South Africa should not be supplying products to conflict zones.

The report mentions the increase in shell production for Ukraine in countries like Germany, Spain, Hungary, South Africa, and Australia, with up to 700 000 shells expected to be produced by 2025. Although the names of the manufacturing plants are not directly mentioned, all these countries house plants belonging to Rheinmetall.

It is still unclear why the US Department of Defence singled out South Africa in this report. Perhaps it was an error or an accidental revelation pointing to violations of South African laws by RDM. This document could potentially be part of a dirty scheme to deceive the South African government, as sending weapons to Ukraine undermines the country’s efforts to maintain a neutral stance.

History repeating itself

Apart from being under intense scrutiny from activists, NGOs, and the government for many years, this is not the first scandal involving shadow exports by RDM.

The company was involved in selling weapons believed to have contributed to the crisis and human rights violations in Yemen. This practice was only stopped in 2019 when South Africa tightened its export control laws.

EFF MP Carl Niehaus, who also serves on the Joint Standing Committee on Defence, has stated that these issues need to be resolved soon and those responsible for the shadow schemes should be arrested, adding that he would raise these critical issues in Parliament.

In terms of government oversight, the National Conventional Arms Control Committee (NCACC) is handling the situation with RDM. Currently, the committee is led by Khumbudzo Ntshavheni, who is currently embroiled in a series of political scandals that are hindering her ability to fully focus on the challenges facing the NCACC at such a difficult time.

Legal loopholes and corruption

In addition to international journalistic investigations, the German corporation is under deep public scrutiny in Germany. According to the European Centre for Constitutional and Human Rights (ECCHR) and international media, numerous legal challenges have been filed in Germany’s courts against the export of arms violating international law, but they have led to no significant actions.

Public backlash against Rheinmetall is growing, as Borussia Dortmund football club fans do not want the arms manufacturer to sponsor the club. The conclusions are disheartening: the law has lost its power even in the very places where it was almost born.

Military enterprises worldwide use grey schemes, corruption, and legal loopholes to make enormous profits. According to various sources, Rheinmetall's profits have increased by 120% during the conflicts in Israel and Ukraine. Sponsoring Borussia Dortmund might also be part of a large "money laundering" scheme that the German government refuses to acknowledge.

What can be done?

The investigation into Rheinmetall’s activities has exposed significant flaws in South Africa's arms export policy. It also reflects a global trend of using complex logistics to circumvent international rules, with third-party countries acting as intermediaries.

The accusations against Rheinmetall point to systemic problems in international arms control mechanisms. As investigations continue, South Africa and Germany must address these issues and ensure compliance with international law and public commitments to peace and security.

Clearly, a temporary suspension of arms exports from South African Rheinmetall plants is necessary until a full investigation is completed. It is essential to achieve transparency in all stages of arms production and supply; this means not only obtaining all necessary information about logistics and final recipients but also reviewing all previous shipments of shells from the plant during the conflicts in Israel and Ukraine.

South Africa needs comprehensive reforms in its defence industry to restore public trust and strengthen the country's commitment to ethical standards in global arms trade.

* Dr Richard Weitz is senior fellow and director of the Center for Political-Military Analysis at Hudson Institute. His current research includes regional security developments relating to Europe, Eurasia, and East Asia as well as US foreign and defense policies.

** The views expressed here do not necessarily represent those of Independent Media and IOL.