Armscor Bill: hearings

Meeting report

DEFENCE PORTFOLIO COMMITTEE
15 April 2003
ARMSCOR BILL: HEARINGS

Chairperson: Ms T Modise (ANC)

Documents handed out:
ECAAR submission
AMD submission
Anti-War Coalition submission (Appendix)
Armaments Corporation of South Africa, Limited Bill [B18-2003]

SUMMARY
The Committee heard submissions on the Armscor Bill. The Bill seeks to redefine and refine Armscor’s role in the armament industry. It changes the constitution and functioning of the Armscor board and also provides guidelines on the entering of service level agreements. Economists Allied for Arms Reduction South Africa and the Anti-War Coalition argued that there was no need for Armscor and that the arms industry diverts money which could be spent on giving effect to human security. ECAAR suggested that the core function of Armscor was still offsets, which was impractical. The South African Aerospace Maritime and Defence Industries Association and VRG Telecommunications and Projects supported the Bill, but wanted certain considerations to be taken into account which would benefit the industry. The Committee’s response to the Anti-War Coalition’s submission was that it is not substantively on the contents of the Bill but rather against the war in Iraq. The Committee felt that the submission might have relevance at a different forum.

MINUTES
The Chair opened the meeting by apologising for the mistake in the advertisement in which the public was invited to make submissions. The Bill did not want to prohibit Armscor but rather to bring about changes and adjustments to the Corporation.

Economist Allied for Arms Reduction (ECAAR) submission
Mr Terry Crawford-Browne: Chairperson, ECAAR South Africa, read his submission, adding the following comments. While Armscor had been stripped of most of its original functions, it culture remained and this was problematic. It promoted a culture which said that it was all right to kill for profit. This was an attitude which emanated from the apartheid era. The Bill gave the offsets of ARMSCOR as its core functions. These offsets, which claimed that the South African public would benefit from the arms trade, were unconstitutional and ludicrous. The gangs in communities obtained their arms from Denel. The arms industry internationally loses money constantly. It was therefore not correct to say that South Africa would benefit economically. This industry rather diverts much needed resources. (Please see attached submission)

Discussion
Adv H Schmidt (DA) said that ECAAR’s submission implied that that Armscor should not exist. International warfare was part of national affairs and the Bill was aimed at regulating the arms industry.

Mr Crawford-Browne replied that the Constitution emphasises human security. There was currently no threat to South Africa, so military security should be reconsidered. The United Nations was there to ensure military security.

Mr A Blaas (NNP) said that he was confused with ECAAR’s submission. It was his feeling that the Bill was doing what they wanted. Armscor was being limited to a testing facility and an agent for procurement.

Mr Crawford-Browne said that the core function of Armscor was still offsets, which they felt was impractical.

Mr Middleton (IFP) asked whether the suggestion was that Armscor should close. What should be in its place?

Mr Crawford-Browne said that procurement does not have to take place through Armscor. The Department of Defence could do this.

The Chair asked whether ECAAR was against the Department of Defence existing.

Mr Crawford-Browne said that they were not against the Department existing, but felt that its posture should be rethought particularly since it functioned in a post Cold War and post 9/11 world. There were other forms of defence and functions needed by the Department, such as disaster management.

The Chair remarked that Mr Crawford-Browne had participated in the Defence Review and was always aligned to democracy. The Defence Review was a democratic process and he should therefore submit to the majority. With developments in the Middle East, it was not easy to convince South Africans that there was no threat to South Africa. Human security extended to military security. Was ECAAR suggesting that there be another review?

Mr Crawford-Browne replied that the NGOs at the Review had explained that the greatest threat to South Africa was poverty. The promotion of Armscor’s offsets created a climate conducive to corruption. He cited the arms deal as an example of this. He felt that there was a need for another review.

The Chair said that another review might have different results, which ECAAR would not be happy with and there would be a call for another one.

Mr R Mohlala (ANC) said that the submission suggests that offsets promote corruption. ECAAR was also suggesting that there was no threat to South Africa. It takes twelve years for an army to be combat ready. If the government were to downplay the Defence Force because there was no threat, it would be difficult to get it ready should a threat arise. He felt that Mr Crawford-Browne was also implying that ECAAR represented the NGO view.

Mr Crawford-Browne said that the apartheid government was heavily militarised, which was a waste of money. Despite this, South Africa was not attacked. What country was a threat to South Africa? Only the US could be a threat, and if this was the case another plan could be made. The immediate threat, however, was internal and remained poverty. He reminded the Committee that the South African NGO Coalition (SANGOGO) and the South African Council of Churches (SACC) had come together in 2002 and had called for the cancellation of the arms deal. Research had also shown that 65% of ANC voters were not in favour of the arms deal. Civil society therefore regards the arms deal as a waste. The offsets that were spoken about were not real and only leads to corruption.

Mr Mhlala added that much of what was said was perception and that there was no proof. Mr. Oosthuizen (ANC) said that there was no link between the hearings and the arms deal.

The Chair said that the arms packages were not promoted solely for the offsets. Armscor was also not leading the negotiation of the deal. Referring to comments that the government was doing nothing about conditions at the Swartklip munitions factory, the Chair said that this was not true. There is engagement with the Minister of Labour and Defence. The Committee also planned to visit Swartklip. The threats to South Africa could be debated the whole day.

South African Aerospace Maritime and Defence Industries Association (AMD) submission
Brigadier General E J Wesley: Executive Director, AMD, read his submission on the role of Armscor, function of the board, conflict of interest and so forth. (Please see attached submission)

Discussion
Adv Schmidt felt that the figure of R4000 per meeting which was given for remuneration of board members was problematic. Although this was the ballpark figure in the industry, it was dangerous to transfer this amount to government officials. He also felt that the objection to the word “facilitate” was unnecessary as facilitation could mean consultation. He asked whether it would be wrong for Armscor to exploit commercial activities as spelled out in Chapter 1: Clause 4(3)(a)(1) of the Bill.

Mr Wesley replied that there were certain things Armscor only should be allowed to produce. If they are not limited, it would increase competition with suppliers in the industry. It was felt that “commercial activities” should not include production.

Ms L Xingwana (ANC) agreed with the AMD that the Secretary of Defence and the Chief of the SANDF should be on the board. Regarding remuneration, she said that market related standards should be considered as many of the people who would be on the board were people from the private sector.

Mr Oosthuizen (ANC) wanted a definition of commercial activities. He also wanted to know which strategic facilities should be excluded from Armscor’s management. He asked whether AMD felt that the Chief Acquisitions Officer should be on the board. He questioned AMD’s suggestion that Armscor should motivate to the Minister for the reserve fund.

Mr Wesley said that the purpose of the reserve fund was not very clear. It was not clear whether it was for internal needs or for procurement. The definition of commercial activities would need time. He promised to present something to the Committee in two weeks time. The issue around strategic facilities was also not well defined. This is needed from Armscor. AMD will submit their definition of the term. AMD felt that the chief acquisition officer would bring a competence to the board which is needed.

Mr Ntuli (ANC) asked what would happen should the Secretary of Defence and the Chief of the SANDF disagree with one another on the board. He felt that the Chief should be excluded. Mr. Wesley said that both members would bring extra expertise to the committee.

Adv Schmidt referred to Armscor’s competition with the private sector. He asked whether it would be considered competition if it went into the commercial field.

Mr Gerber (AMD board member) said that if Armscor decided to sell old equipment, it could lead to a conflict of interests. Mr Wesley made an example of the Simonstown dockyard, which he said was not viable commercially. If Armscor ran it, it would not be in competition with the industry.

The Chair added that the commercialisation of Simonstown Dockyard was very important. She felt that the Chief of the SANDF and the Secretary of Defence would bring different expertise to the board. The inclusion of the Chief Acquisitions Officer would have to be considered carefully. The system of remuneration would also have to be considered as attendance at meetings did not mean that work was being done. She wanted to know what ‘SADISO’ was.

Mr. Wesley replied that it was a marketing board for the Department of Defence, Armscor and the industry. It would also look at how government support to the industry could be implemented. In recent months, the interface with the DTI had increased and with the Department of Defence had decreased.

VRG Telecommunications and Projects submission
Mr L Khumalo: Managing Director, VRG, addressed the Committee on behalf of his company and small black businesses in the telecommunications field. He encouraged Armscor to consider black companies when procuring technology. This was in line with the government’s policy of black economic empowerment. There was also concern that the public sector would be competing with the private sector in this field.

Mr Mthetwa (ANC) said that a commitment from Armscor was needed.

The Chair asked Armscor whether it was committed to black economic empowerment.

Mr M Phiyega (Armscor) assured Members that they were committed to black economic empowerment and had just appointed someone to look at this.

Adv Schmidt said he supported the argument, but felt that the submission should fall within the concerns of the tender function.

The Chair assured Mr Khumalo that his submission would be considered.

Submission by the Anti-War Coalition
Mr S Mohammed was accompanied by Ms M Wildschutte, who read the Coalition’s submission. Ms Wildschutte noted that the Coalition supported Mr Crawford-Browne’s submission. It seemed as if the Armscor Bill was a done deal and that they were just there to rubber stamp it.

The Chair interjected and said that she took exception to the statement, and assured the Coalition that the Committee takes public opinion very seriously.

Ms Wildschutte said that the Coalition rejected the Bill since it supported the imperialistic regimes and assisted in the suppression of weaker nations.

Mr Blaas (NNP) said that much of the submission was not connected to the Bill in question. The Chair added that the submission was largely linked to the war. There was relevance but it should be raised at another forum, perhaps at the Conventional Arms Control Act hearings. The Defence Committee could not respond to some questions. The NCACC should respond to many of the questions. The Committee had not yet received a report from them.

Mr Mohammed said that they were against the manufacture of arms and were therefore against the Bill. In his opinion, Armscor was continuing what the original apartheid era organisation did.

Mr N Gogotya (ANC) referred to Iraq and asked whether the Coalition was suggesting that the working class should be armed.

Mr Mohammed said that through the Bill, arms would be given to the imperialist governments.

The Chair asked whether it is better to give arms to the working class than to the imperialists. Mr. Mohammed confirmed this.

Mr Mohlala said that there was very few issues about the Bill in the submission. Would the Bill be accepted if the war tribunal was established, as called for in the submission. He also took exception to the statement made by the Coalition that the South African government had “contempt for the people of Iraq and the poor in South Africa”. This was not true, this was politics, and had nothing to do with the Bill. It was also possible that anyone could become an imperialist.

Mr Mohammed said that everything in the submission would have to be addressed and not just the tribunal. He stood by his statement, as Minister Asmal and company had gone uncorrected by the government regarding the sales of arms to the US and the UK. The peoples’ voice had thus been ignored concerning the invasion of Iraq. Imperialism did not change overnight. The Coalition was standing by the poor and working class of the world.

Mr Blaas asked whether there was a mandate or responsibility on a country to defend itself. The Bill was the best way of controlling the buying and selling of arms.

Mr Mohammed asked whether the Bill was defending the working class industries or the monopolies. He pointed out that when he spoke of “the country” he referred to the working class and not the government. The working class therefore had the right to defend themselves.

Mr Mthetwa (ANC) said that there seemed to be confusion between the Bill and ideology. He felt that there was no substance in the submission regarding the Bill and that there were many contradictions. The demands placed on South Africa, in the submission, suggested unilateralism.

Mr Fihla (ANC) said that the submission was too broad. The world was dominated by an imperialistic power, namely the US. It would seem that those who opposed the imperialists had to disarm, according to the submission. It was South Africa’s responsibility to protect itself; it was not realistic to call for it to disarm. South Africa remained at the forefront opposing the USA.

Mr Ntuli (ANC) said that everyone wanted a world where arms were not necessary, but in reality, security was needed.

Mr Mohammed said that the world was dominated by monopolies and that the principle for which it stood was that South Africa must not continue to supply them. There was a contradiction in that Members felt South Africa had to defend itself, yet it supplied arms to the imperialist. In all organs of multilateralism, the imperialists were present and had power. South Africa had not instituted any measures to support the people of Iraq. He concluded by saying that they fought for a world where there would be no domination and would therefore be no need for arms.

The Chair said that it was wrong to think that there was contempt for the people of Iraq. It was wrong as well to say that South Africa had done nothing. South Africa had been the only country to intervene before the war. South Africa would not deny other countries the right to defend themselves and it had a right to defend itself as well. She assured the Coalition that its comments would be remembered. She also felt that the Committee should seek to go back to the Conventional Arms Control Act and address any weaknesses. She pointed out that this Act was the best in the world regarding the control of conventional arms.

The meeting was adjourned.

Appendix:
ANTIWAR COALITION
SUBMISSION ON THE ARMSCOR BILL

Introduction

The arms industry must be seen from the context of a world being controlled by capitalist monopolies. Within this context the productive forces are not used for social development but for the destruction of humanity. The productive forces are channelled towards the control of world resources chief among them being human beings, for the profit of the handful of capitalists. The arms industry fits into this context and reflect that a huge part of world resources is based on the destruction of humanity. The armies of imperialism are the last resort to keep the people of the world in chains. It is from this basis that we reject the Armscor Bill as being fundamentally flawed it fits within the destructive imperialist framework and should be rejected out of hand.

There can be no such thing as selling arms to imperialist forces for defensive purposes The imperialist regimes control the world and selling arms to them assists in the control and domination of the working classes of the world by them. Such weapons even assist iii the subjugation of the people of South Africa. if South Africa continues to sell weapons to the imperialists, then it is assisting in the suppression of the weaker nations. The war and occupation of Iraq clearly demonstrates this. The sale of weapons to the imperialists show the lie that the R60 Billion arms deal is to assist in our defensive capabilities. How can you buy weapons from the imperialists and supply them at the same time and claim that this is to defend ourselves from the same imperialist! The National Conventional Arms Control Committee recently decided to continue with the contracts with the very imperialists is this building up our defensive capability? Does this not show that, in the face of millions of people in uproar over the invasion of Iraq, that the SA govt is showing absolute obedience to the very imperialist that they in words claim to oppose?! The arms deal and arms contracts should be scrapped along with the Armscor Bill.

The Bill commits Armscor to ' defence industrial participation' ie ' the process by which defence acquisition is used to leverage defence industrial and economic benefits for the Republic'. in other words, this Bill formalises and entrenches the so-called counter-trade that is part of the unmandated and highly questionable R60 billion arms deal. If openness and accountability were really to be practiced then parliament should have no qualms about enshrining in the Bill, or even calling a referendum where the choice would be clearly put if we, the people of South Africa, prefer the R60 billion to be spent on arms or on housing, education and productive work.

If transparency was to be enshrined in a real way then why is it that the parliamentary report on arms sales for 2003 has not been released yet. There should be a monthly update and release of full information, including details of the items being sold. How is it that the National Conventional Arms Control Committee (NCACC) can issue a statement which says Denel had not supplied any equipment to the US marines, nor to any other units or divisions of the US armed forces'[ Business Report 28^th March 2003], yet the parliamentary report of 2000 and 2001 clearly show sales to the US and UK of R11 million and R74 million respectively These include category A weapons, re weapons that can cause severe casualties or major damage or destruction Now unless Kader Asmal is saying that these weapons were sold to civilians, we assume that these could only have been sold to the respective US and UK militaries. There should be severe penalty such as 4 year imprisonment for those who deliberately lie or deceive the public about arms sales. The truth is that the cornerstone of the arms industry' is precisely weapons of mass destruction - every arms manufacturer knows this.

In terms of accountability and lawfulness, the Bill should enshrine the precondition for any sale of arms that any government . including the SA government, should bind itself to an International Criminal Court. and all environmental protocols such as the Kyoto agreement with no allowance for amnesty to heads of state We do not mean the World Court that acquitted the butcher Sharon, but a new body run by the exploited and oppressed of the world. In the light of the spirit of lawfuIness and accountability, we would like to challenge parliament to pass a resolution calling for George Bush, Blair, Howard to be tried by international tribunal for war crimes in Iraq. This tribunal should be dominated by the Iraqi working class. There should be an investigation to see if any SA arms were used by the US and their cohorts in the iIIegitimate invasion of Iraq. then the S-A government should be held accountable in a similar manner as Bush and co.

If the above basic points cannot be adhered to then we call for the complete rejection of the Armscor Bill. There can be no half-measures. We note the contempt that the. government has for the Iraqi people and for the poor in SA - they have not responded to our demands put forward in the march on parliament on the April 2003. With the bloodstained streets of Baghdad fresh in our memories, we reiterate our demand

We, the citizens and toilers of South Africa call for the immediate withdrawal of US and allied troops from Iraq. Let the people of Iraq determine how they should be ruled. Let the workers form workers councils and take over the running of the factories and indeed of the economy. If as the US and UK says that the invasion was not about oil, then let them leave the oil and related industries nationalised.

We feel that the SA govt has to take a clear side of the Iraqi people and of the people of South Africa. This is an ilIegitimate invasion for the interests of the giant companies.
mainly based in the L'S. It is wrong for the SA govt at this time to continue to sell billions of rands worth of chemicals that propel missiles, millions of rounds of ammunition, laser range finders and all military equipment of any kind to the regimes of the invading forces We therefore demand that the South 'African government:
I call for the immediate end of the occupation of Iraq by the L'S and allies,
I the right to self determination of the Iraqis arid Kurds should be respected
2 'There should be immediate free political activity and the right to organise and complete freedom of expression;
3 the economy of Iraq should be placed under armed working class control
4. Food , medicine and humanitarian aid should be sent without strings and on terns favourable to the Iraqi people
5 The oil industry should remain nationalised
6. immediately expel the ambassadors of the US, UK, Israel, Spain and Australia from South African soil.
7. immediately recall all diplomatic staff from these said countries,
8. immediately end all sales of arms to the US. UK and Israel by SA companies, be they state owned, like Denel, or any private company. immediately cancel the arms deal and spend the money on food - housing and employment of the millions of South Africans:
9 as chair of the African Union call for similar cuttings of diplomatic ties between Africa and the US, UK, Israel, Spain and Australia as well as closing all US military bases on the continent such as in Botswana and Diego Garcia:
10. immediately demand the lifting of UN sanctions against Iraq and for the governments of the US. UK , Israel, Spain and .Australia to pay reparations to the people of Iraq.
The toiling and impoverished people of this country. Who have suffered colonialism and dispossession over centuries. reject and condemn n the strongest possible terms the invasion of Iraq. The South African government is duty-bound to arm' out these. out demands. if it is to retain even a semblance of legitimacy in the eyes of ordinary' people As Govt you are either with the imperialists or with the working fellow' poor and supporters in South Africa! We urge you to stand with us! We pIedge ourselves to continue to campaign until the above is achieved.

For the Anti-War Coalition
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