The Rapier scandal is the biggest defence scandal in post-war Germany, leading of the resignation of two ministers, the arrest of several civil servants and civilians, the electoral defeat of the sitting conservative German administration and wound up costly enough to affect German defence procurement for the remainder of the 1970s.
In the British Empire the scandal had a severe impact on the Stock Exchange, making the Supermarine stocks loose a record-breaking number of points in May 1974.
"Swift-Ersatz" and Bribery
In 1968, the English Electric/Supermarine Lightning Interceptor was meant to form the backbone of the Luftwaffe fighter force, but turned out to be short-ranged in the lengthening engagement distances expected from primarily the Luftwaffe detachments stationed in Canada or meant to deploy there upon mobilization. At the same time the Supermarine Swift with which the Luftwaffe had originally been formed in 1960 was becoming obsolescent because of it's low speed and limited armament, even though it had performed splendidly in the Middle Eastern War.
Because of this, the Defence Minister and the Chancellor decided on 16th June that same year to issue Operational Requirement LJ-68-01, often mis-nomed "Swift-Ersatz" even in official papers. It consisted of a tender to replace the Swift, then still forming nearly half of the Luftwaffe's fighters and to equip several squadrons that had originally started out with the Lightning, Several planes were considered, among them the Mirage III and even the Soviet Su-17 were considered, but in July 1969 an announcement was made that the contract had been given to Supermarine for the land-based version of their then-new Rapier fighter.
Even though critics within and without the Luftwaffe and Defence Ministry cited the heavy per-unit cost and un-proven swing-wing technology, the conservative Government maintained it's course and in 1970 the first Rapier was delivered to JG-7, with half of the remainder delivered from UK-based factories and the rest license-produced by MBB.
The fact that the Minister had over-ruled his military and civilian advisers did not become general knowledge nor did it raise any suspicions even though the particulars had been reported by several Berlin newspapers in 1970.
Discovery and Aftermath
The scandal and bribes were discovered when several Rapier opponents anonymously leaked proof in form of several memorandums and notes from the Defence Ministry that the Government had fully known that the initial cost of 10 million D-Mark per plane was estimated far too low (by then it had "risen" to fifteen million) and that also suggested that the Minister, along with several high-ranking officers had taken bribes from low-level Supermarine Employees to recommend the Rapier for the Luftwaffe.
Even though denials followed suit, the Press, primarily 'Der Spiegel' refused to let the story of the decade go and further investigation by them and later also the police and a Bundestag Investigative Committee uncovered the full particulars of the Scandal.
In the aftermath the Minister resigned from all his official and party offices in 1973, followed by a devastating loss for the government and a land-slide SPD victory in the 1974 federal elections.
Militarily the scandal deeply affected procurement for the Luftwaffe. Firstly the contract was continued, but production of the German-made planes was slowed down, the unit-number was cut substantially and one entire Jagdgeschwader was dissolved rather than converted to the Rapier.
It also affected the Mosquito II procurement, leading to the number of planes on order being cut in half as there was no room in the budget for the full number and the new Chancellor refused to "throw good money after bad".