Joint Investigation Report into the Strategic Defence Procurement Packages: Chapter 3

Defence

19 November 2001
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Meeting report

PARLIAMENTARY MONITORING GROUP

JOINT STANDING COMMITTEE ON DEFENCE AND PORTFOLIO COMMITTEE ON DEFENCE
20 November 2001
JOINT INVESTIGATION INTO ARMS PROCURMENT PACKAGE REPORT: CONSIDERATION

Chairpersons:
Mr N Mashimbye, Chair of Joint Standing Committee on Defence
Ms T Modise, Chair of the Portfolio Committee

Documents handed out:
Joint Investigation Report into the Strategic Defence Procurement Packages

SUMMARY
Members thought it would be difficult to engage with the report as findings have already been made.

In terms of process, they would meet the rest of the week as they have scheduled a trip to Burundi the following week.

There were suggestions that the Report be examined alongside the Defence Review. Members were mindful that public money was involved and that they should exercise responsibility. There were strong calls for Parliament to exercise oversight over the acquisitions by the Department of Defence. There were also questions raised about the reliability of information provided by the Department of Defence and the SANDF.

MINUTES
Mr Mashimbye explained that they were scheduled to visit the troops in Burundi and the DRC during November 27-29. Their work on the arms deal report affects their schedule.

As a starting point for discussion Mr Mashimbye said that the South African Constitution is young and does not have provisions on Chapter 9 institutions taking action after reporting; it is not specific on follow-up. They would therefore be setting precedents. A number of Parliamentary Committees are involved but the Joint Standing Committee on Defence has been entrusted to deal with the bulk of the report. A common approach needs to be determined on how to proceed.

Mr Groenewald (FF) requested clarity on whether officials from the Department of Defence would answer questions. How could they deal with the report if they could not ask questions? For example: regarding the corvette programme, none of the tenders complied with minimum criteria. Thus, what standards has South Africa been committed to?

Mr Jankielson (DP) referred to pages 68-69 of the report, which said that the acquisitions do not satisfy the SAAF operations requirement. Why? He recommended that they draft questions to the investigating bodies. Parliament is charged with making additional recommendations.

Mr Mashimbye posed questions to Members. Why are we here? What are we going to achieve?

Mr Nqculu (ANC) suggested that they should depart from the premise that Parliament mandated the investigation. It was not their duty to reopen the inquiry. It was not humanly possible to investigate the findings, given time and resource constraints. What are the recommendations? We have obligations of oversight, policy and good governance. That the Chief of Procurements did not have a security clearance is not for us to reopen.

Mr Ndlovu said it was difficult to deal with a matter already committed and they cannot change the findings.

Mr Mabeta (UDM) said the need to have people to interrogate goes with the need to investigate the issues raised in the report.

Mr Theron (DP) thought that the report undermines South Africa's credibility. The findings on page 373 question whether this strategic package is the equipment that South Africa needs. South Africa's defence role has changed; can it now fulfil its functions?

Mr Smit (NNP) asked whether they wanted to call any of the three agencies. He suggested that they work chapter by chapter.

Ms Kota (ANC) endorsed the view of the UDM that the report needed to be interrogated by the Committee. At least in the future they would know what to avoid.

Mr Mashimbye said he agreed that they should look at the findings and investigations. The acquisition policy was inadequate with regards to procurement of equipment on international markets. They now find that there is a document referred to as VP1000, being Armscor's procurement policy. They should be engaging with Armscor and the Department of Defence to deal with that policy.

He said there was evidently conflict of interest within the Department and it needed to do something about that. Every other Committee must come up with a programmatic system to ensure that loopholes are dealt with.

The Committee needs to tease out the report, and respond to the recommendations. He said he did not need the agencies to tell him that there are problems with VP1000. It is perfectly in order for them to deal with these chapters.

Mr Mabeta said that the report is from many differing caucuses. They should not read party/policy issues into it.

Mr Groenewald (FF) said there were fifteen recommendations. Are the findings correct? Why did Armscor proceed with the procurement process knowing that it was inadequate? Would the Committee only rubber-stamp the report? They should tell Armscor to upgrade its management and report back to them, and it is for the Committee to determine whether the new structures are acceptable. Is it in the best interest of the SANDF that we procured these armaments that are unsuited/inadequate to South African requirements. He wanted clarity on the findings.

Mr Mashimbye explained that when the leadership of the SANDF said that they needed British Upholder submarines, Parliament then came up with a policy. While the wrongs need to be made right, how far can the Committee go into acquisition policy?

Mr Jankielson suggested that they look at the report against the Defence Review and the Budget. If necessary, they should cut back on the additional aircraft and terminate contracts that are irregular. But they need to know the implications for the other contracts. He suggested that they must have background information on, for example, the light utility helicopters. The Committee needs advisers. It cannot push this through in three and a half days.

Ms Kota said the Committee cannot yet accept the report. Parties must raise issues chapter by chapter.

Mr Ngculu said that there are fundamental differences between Armscor now and Armscor of the apartheid era. The Speaker has allocated Chapters 3-7 and 10-12, and time frames. A long-drawn process will not help the Committee or Parliament. The Committee has a mandate, not to reopen the investigation but to address the policy oversight with the Department of Defence and Armscor. The report must be welcomed, and its findings and recommendations must be examined. I propose we should welcome the report and then look into the report page by page, and call in the Department where necessary.

Ms Modise said she did not wish to be used as a rubber-stamp. What are we to do in the interest of Defence? We will strive that Defence and South Africa are the winners. We can still demand drastic changes. Why could I, as a Member of Parliament, not previously get a copy of VP1000? No-one intends to be rubber-stamps. In noting recommendations, the Committee must correct things.

With respect to process Mr Mashimbye proposed meetings on Wednesday and Thursday from 10am until 5pm. On Tuesday next week the Committee would go to Burundi with representatives of all parties. Then there is also the NCACC Bill sub-committee. With process dealt with, Mr Mashimbye asked that they move on to consider substance.

Chapter Three: Review of the arms procurement process in terms of the Armscor Act of 1968
Mr Mashimbye referred to Chapter 3 and said that the Committee needs to urgently review the Armscor Act, 1968. The debate on the powers of Parliament in the acquisition process needs to be reopened. In the seven years of our democracy, what have we seen and learned about the rights and wrongs in the acquisition process. With respect to parliamentary lobbying and strengthening oversight, Non-Governmental Organisations can help.

Mr Smit (NNP) asked whether they could go through the report page by page. He was concerned about page 52; it is not the policy of Armscor to interfere in the selection of sub-contractors.

Ms Kota thought page 37 indicated that acquisition policy is not up to international standards.

Mr Nqculu said there must be recognition of fundamental shortcomings viz a viz the acquisition policy. How far is the Armscor redrafting process? There has been a working group on the Armscor Act. Their findings need to noted and dealt with urgently.

Mr Groenewald said that if the Armscor Act is outdated, what about the Defence Act? How far are we to go with acts that do not comply with international standards?

An argument then ensued between Mr Nqculu, Ms Kota and Mr Groenewald with respect to the use of Afrikaans. Mr Groenewald objected angrily and stormed out.

Ms Modise said that acquisitions are not limited to the Armscor Act. For instance, they were recently informed that the supply of uniforms was inadequate.

Mr Ndlovu asked what was meant by page 40, paragraph E.

Mr Mashimbye said that acquisition decisions were taken at various levels. But who was responsible?

Ms Kota said it also means that the product is agreed upon in terms of price.

Mr Jankielson said the price is agreed upon in terms of price, budget, commitment to buy a specific product.

Mr Theron referred to page 39, paragraph 3.1.4 and asked if someone could explain how these priorities are determined.

Mr Smit referred to page 39, paragraph 3.1.1.4C . Would it be in order to flag the need for assurances from the Department of Defence that the staff requirements will be adhered to? SA is supplying staff to be trained in Hamburg for the naval acquisition. Will these commitments be adhered to?

Mr Ndlovu asked whether Chippy Shaik is being spoken about on Page 41, paragraph D. Has the Department appointed a person to that board?

Ms Kota said there was concern that the Chief of Acquisitions should not be the chairperson.

Mr Ndlovu asked why the Department of Defence gave him the position? How is he qualified for the appointment?

Mr Jankielson asked why Parliament wasn't the oversight committee through the Portfolio Committee on Defence?

Mr Mashimbye asked how far the Committee must go with oversight.

Mr Ndlovu said they have to go through the process rather than be presented with a fait accompli.

Mr Jankielson said that while they could not change the report, they should make recommendations within the Budget/Acquisition plan.

Mr Mabeta commented that Professor Stockton referred to the oversight of the US Congress including the right of veto.

Ms Modise asked about the issue of ranks. Will Parliament have the backbone just to say no, no? Parliament needs to be sensitive. The link with the Department of Defence is too weak. The issue of veto powers recurs, including with the NCACC Bill.

Mr Mabeta said he did not understand how the chairperson of the board could say that the acquisition policy has been followed. It undermines the role of the Secretary of Defence.

Mr Mashimbye said the question of Parliament's role is very important. We are older now, and our democracy is maturing.

Mr Oosthuizen referred to page 42 and pages 45 and 46 which refer to the contractual relationship between the Department of Defence and contractors. They were very proud of Armscor, but there are conflicts of interest between the Minister of Defence and the Minister of Public Enterprises, given the control of Denel.

Ms Kota cited page 48, saying that the acquisition of main battle tanks was surprising since they understood that there was no agreement to put them into the package.

Mr Ntuli (ANC) asked who determines what is bought?

Ms Modise said it is the chief of the SANDF who is responsible, and would also best know what equipment is suitable. But it is actually Parliament that must determine what is acquired.

Mr Mashimbye said they agreed that the corvettes without maritime helicopters are not operational. But what is happening with the helicopters? The fact of the probe does not mean that the helicopters have not been approved. The report refers to acquisition numbers as 5,4 and then 0.

Ms Modise said as far as she knew SA is still acquiring them.

Mr Mashimbye asked whether they would start a new process with respect to the preferred bidders.

Mr Theron asked whether SA still needed the equipment on pages 47 and 48.

Mr Jankielson asked whether the process of acquiring the tanks could be stopped?

Mr Mashimbye said they needed to engage the Department of Defence on this issue.

Mr Bloem (ANC) said the Department would explain the process. Could they revisit this matter, or not?

Mr Ndlovu proposed that they had to make recommendations.

Mr Mabeta asked how they could monitor this?

Ms Modise said she was positive that tanks are being acquired, but how many and where? Maritime helicopters are also being acquired although the report denies it. Either the investigators have been lied to, or the Committee have been lied to. She believed that the investigators are writing only on what they have been informed. This raises the question of whether we can rely on the information provided to the Committees by the Department of Defence and the SANDF.

Mr Bloem referred to page 50, regarding SOFCOM. Is the 1948 structure still in place? If so, it must be reviewed.

Ms Kota agreed that SOFCOM needs to be revised. It is not gender or race sensitive and its structure is not acceptable.

Mr Ndlovu asked who decided on this structure, and why?

Mr Smit pointed out that the Chairperson is referred to in page 52, with the finding that the allegations against him were unfounded. He said he was very glad to hear that they were unfounded.

Ms Modise said it struck her that that when the Department of Defence is referred to together with Armscor, that it is not the policy of the Department to interfere with the selection of sub-contractors.

Mr Jankielson said the press raised the issue of sub-contractors continually. We must do more than just note it. The CEO of Armscor has made contradictory statements.

Mr Mashimbye agreed that they should look at the sub-contractors.

Mr Bloem said that Parliament has a duty to look at the structures between prime and sub-contractors. We are here now because of problems with the sub-contractors.

Mr Oosthuizen said that, looking at the package and the role of the prime and sub-contractors, it is clear that there had to be offset benefits and that the Department of Trade and Industry is involved. There was a holistic approach applied in the defence package. It is not good enough for Armscor or the Department of Defence to say that it is not their practice to intervene. He said he would not be easily convinced that the performance guarantees are adequate. The attitude of washing one's hands of sub-contractors is not acceptable.

Mr Mashimbye said that they are dealing with public money, and there must be responsibility.

Mr Nqculu said that this is a grey area. One needs to be careful before prescribing to Armscor which sub-contractor is used by the corvette combat suite. It would be very dangerous to stipulate Armscor's responsibility.

Mr Smit proposed that they question this Armscor policy.

Ms Shope agreed that they are dealing with public money and the Procurement Act on State Tenders. If the Committee did not look into the sub-contractors then those laws would be ignored.

Mr Mabeta referred to pages 59- 52, saying that this is not normal procedure. If the acquisition process was justified by the offsets, the Minister's Committee should have been interested in the spin-offs; public money against spin-offs. The Committees must satisfy themselves on this matter.

Ms Modise said that because the sub-contractors are involved, perhaps they should look at the option of getting think-tanks to investigate. To leave it to the Department of Defence and Armscor would not help. Certain portions of the policy were flouted. More and more decisions came out of the Department of Defence. Now Armscor is about to be restructured. The problem is that thinking is usually left to the Department rather than the Committee doing their own thinking.

Mr Mashimbye said they need to engage with the use of public money. He said they needed independent advice.

Mr Jankielson referred to pages 53- 59. He said he could not evaluate these pages without the documents referred to, such as VP 1000 and others.

Mr Mashimbye asked Mr Campher (the Committee Clerk) to find these documents. These policies must come to Parliament. It is very embarrassing that Members of Parliament have not had knowledge of these policy documents until now.

The meeting was adjourned.

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