Joint Investigation Report into the Strategic Defence Procurement Packages

Meeting report

PUBLIC SERVICE AND ADMINISTRATION PORTFOLIO COMMITTEE
20 November 2001
JOINT INVESTIGATION REPORT INTO ARMS PROCUREMENT PACKAGE

Chairperson: Mr PJ Gomomo (ANC)

Relevant documents:
Joint Investigation Report into the Strategic Defence Procurement Packages
Input by the ANC on Chapter 10 of the report (see Appendix)

SUMMARY
The Committee are to consider the findings and recommendations set out in Chapter 10 of the report. The ANC, IFP and NNP were supportive of the findings and recommendations in the chapter. The UDM refrained from taking a stance on the issue but the DP was totally opposed to the findings and recommendations. The DP felt that further investigation into the matter was needed.

MINUTES
Chapter 10: Report on the selection of subcontractors and conflict of interest
The Chairperson, Mr Gomomo, made it clear to the Committee that they were only mandated to look at the findings and recommendations pertaining to Chapter 10 of the report.

Mr M Waters (DP) nevertheless raised the following issues. Firstly, in considering Chapter 10, the Committee should read Chapters 6 and 11 as well. Secondly, the Minister of Defence is to explain the reason why Mr Chippy Shaik the Chief Director of Acquisitions in the Department of Defence has been relieved from duty. Thirdly, Section 118 of the Defence Act should have come into play, as the infringements were of a criminal nature.

Notwithstanding Mr Waters' objections, the Committee agreed to deal only with Chapter 10.

Ms B Mbulawa-Hans (ANC) proposed that each party be given an opportunity to express their views on the findings and recommendations on Chapter 10. The proposal was accepted.

ANC position
Mr M R Baloyi (ANC) handed out a report setting out the ANC's position. The essence of the report is that ANC supports the findings and recommendations made by the investigation agencies in Chapter 10.

NNP position
Mr Durand (NNP) had no problem with the findings and recommendations on Chapter 10. He supported the ANC document but he asked that a provision be included in it, which would allow Parliament to call on the Department of Defence and Armscor to report to them if the need should arise.

The ANC agreed to include a provision to this effect.

UDM position
Mr T Abrahams (UDM) stated that he respects the view of the ANC but chose to refrain from giving the UDM's view on the findings and recommendations as is set out in Chapter 10.

IFP position
Mr Sibiya (IFP) unconditionally supported the findings and recommendations as is set out in Chapter 10.

DP position
Mr Waters (DP) vehemently opposed the findings and recommendations as set out in Chapter 10. The fact that the ANC had drafted a document expressing their support for the findings and recommendations in Chapter 10 is proof enough that they are attempting to bully the Committee into accepting their viewpoint.

Mr Waters also objected to the fact that the Committee chose to ignore the issues that he raised earlier irrespective of whether they fall outside the ambit of Chapter 10.

The Chair reacted that it was not up to the Committee to look into issues that the DP has problems with. The mandate of the Committee was to deal with Chapter 10 and it would stick to it. Mr Gomomo informed Members that he would submit the ANC report to a meeting of chairpersons later that day.

Mr Waters raised an objection that the report does not reflect the views of the Committee but only that of the ANC.

The Chair reacted that he would make it abundantly clear to his fellow Chairpersons that the report only reflects the views of the ANC. He would in addition also inform them on what the views of the opposition parties were in the Committee.

Mr Gomomo pointed out that the issue is not yet finalised. A Committee report would still have to be agreed upon and drafted. The aim of the meeting was only to obtain the various views of political parties on the findings and recommendations as is set out in Chapter 10.

The meeting was adjourned.

Appendix:
THE INPUT OF THE AFRICAN NATIONAL CONGRESS
TO THE PORTFOLIO COMMITTEE ON PUBLIC
SERVICE AND ADMINISTRATION

CONSIDERATION OFTHE JOINT INVESTIGATION REPORT INTO THE STRATEGIC DEFENCE PROCUREMENT PACKAGES

1. Introduction

The report being considered relates to the investigation into the Strategic Defence
packages for the acquisition of armaments (sic) for the South African National Defence
Force, which was conducted jointly by the Offices of the Public Protector, Auditor
General and the National Director of Public Prosecutions (Report: 2).


The investigation came about after it was established by the Auditor-General during November 1998, that the procurement process was a high-risk area that warranted a review. Subsequently, a special review by the Auditor-General was conducted and signed on thel5th September 2000 (Report: 5), which recommended that certain areas of the procurement process needed attention. The matter was handled by the Parliamentary Portfolio Committee on Public Accounts, which recommended that a multi-agency probe into the matter be conducted, hence Parliament's approval for such on 2nd November 2000.

The three agencies conducted the investigation, and focused mainly on the cost to state, the selection of prime contractors, the selection of sub-contractors and the contracts themselves, After thorough investigations on these issues, the agencies established that, despite certain anomalies and technical inadequacies at various stages of the procurement process, the Agencies found no evidence of an improper or unlawful conduct by the Government. They also made recommendations on areas where particular attention need to be drawn to the Executive or the Prosecuting Authority for action.

On getting this report from the three agencies, Parliament gave instructions to seven
Portfolio Committees to interact with same, and the Portfolio Committee on Public
Service and Administration was accordingly charged to deal with issues falling within
their scope, particularly Chapter 10.
2. Background

2.1 Chapter 10 deals with anomalies related to the Selection of sub-contractors in the procurement process, and particularly the points that the report indicates that there has been conflict of interest in the selection process, and that the process was not managed according to stipulated processes.

2.2 The facts in this regard are that: -

2.2.1 The Chief of Acquisitions had conflict of interest in the process arising from the fact that he had a brother who had interest in sub-contractors that were also bidding for the contracts. He declared such conflict of interest, and yet did not recuse himself from activities of the PCIB meetings which were to decide on the allocation of such contracts.

2.2.2 The main contractors did not follow a formal process for the selection of sub-contractors in all instances, as they only embarked on teaming arrangements and joint ventures with the local defence industry.


2.23 Despite the fact that it is a requirement of the Defence Review and Department of Defence Procurement Policy that role-players should have security clearance, the Chief of Acquisitions did not accordingly secure a clearance.

It should be noted that the agencies found the facts above to be serious violation of the expected conduct by people charged with responsibilities of public duty, and that they (Agencies) declared the Chief of Acquisition5 declaration of interest as null and void.


As we deal with this report we should not loose sight of the fact that there are policies that we may employ to address some of the negative tendencies of the likes of which we have highlighted above. The Public Service Act and the Public Finance Management Act (PFMA) are for instance, useful tools to deal with questions of conflict of interest, financial management and procurement issues.

Recommendations

The Portfolio Committee believe that the Agencies' Report is so clear that there is no need to call for a further session with any or all of the Agencies, and that on the basis of this report, we 'nay be able to prepare a final report to Parliament.

The Portfolio Committee upholds the recommendations of the Agencies, and that as they are implemented, care should be taken of existing policies so as to avoid duplication. In strengthening this Position, we call on the Public Service Commission to closely monitor the process of policy implementation, review and/or development and that to achieve this, the Department of Defence and Department of Public Service and Administration must work closely with one another in addressing the matter.

Portfolio Committees should also tighten their actions for stricter oversight on policy implementation accordingly, as the situation dictates.