Defence Budgetary Review and Recommendations Report

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Defence and Military Veterans

12 October 2017
Chairperson: Mr M Motimele (ANC)
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Meeting Summary

The Committee met to consider the Defence and Military Veterans Budgetary Review and Recommendations Report (BRRR).

The DA made comments about the role and capacity of Denel, and its relation to the Department of Defence (DoD) and Armscor; and intellectual property. The opinion was that either the Defence Act had to be amended or the Intellectual Property Rights (IPR) Act had to be reviewed, so that benefits could also accrue to those who had developed intellectual property. The DA also had remarks about the development of military equipment that was suitable to African conditions.

The report was adopted with amendments

Meeting report

Introduction by the Chairperson

The Chairperson announced that a declaration had to be made. There was a letter from the Content Adviser that showed how to deal with non-tabling of Annual Report.

Members had read the recommendations circulated. He asked if Members wanted to make any amendments to the recommendations. It also had to be decided where possible amendments had to be located in the report. The recommendations were in the last part of the letter. It was not different to what had already been discussed. It was already already minuted. He gave Members time to go through the recommendations.

Consideration and adoption of the BRRR

Mr S Marais (DA) commented that the letter reflected the reality of what the Committee was faced with. The problem is that the Annual Report was not received, and hence no opinion could be expressed on it. It was important to get the opinion of the National Treasury. It was supposed to be a BRRR and it was not comprehensive. The BRRR was where all appropriations came from. It was a huge concern.

Ms N Dambuza (ANC) concurred with Mr Marais. The Committee conducted oversight over the Minister. The Ministers of Finance and Defence could consider the opinion of State Law Advisers to resolve the matter and report to the Committee. The timeframe in which to do that was 90 days, but it could be done earlier, so that revenue could be received.

The Chairperson advised that there not be a debate about Committee oversight over Ministers. The report was sent out to Members the previous afternoon. He asked if Members wanted to make any additions to recommendations. Thus far no amendments had been received about Armscor.

Ms Dambuza asked that key findings be looked at.

Mr Marais referred to the third bullet under Denel recommendations. He wondered if the matter was being reported on strongly and realistically, or whether the Committee was being too diplomatic. There were dangers adherent to Denel. Armscor and the nation depended on perceptions of Denel's capacity. It seemed that the Content Adviser was being too diplomatic, and did not want to step on toes. He wondered to what extent it could be noted that more feedback from Denel was needed. The submission from Armscor was considered, in respect of the financial position, going forward. He referred to the next bullet. “Dockyard and alternatives” could mean anything. He asked if it had to be put in or taken out. Denel was hampering Armscor and the nation.

Mr B Bongo (ANC) responded to the comment by Mr Marais. He opined that it was not advisable to raise an alarm that the nation was in danger. Personally, he was happy that it was stated somewhat lightly. Denel itself had not been called in, the Committee relied on the report by Armscor. The Committee recommendation was that Denel become part of the DoD. Then they could be brought closer. What was said about Denel had to be based on conclusive evidence. The meaning of the recommendation that Denel migrate to the DoD was not clear. There was a grammatical problem. He agreed with the recommendation, but the Content Adviser had to fix the grammar.

Mr Marais commented that a lot of things were said the day before that were not fully contextualised. He was not saying that the nation was in danger because of Denel. It was only an observation. But the fact remained that Denel was an arms producer and exporter and a supplier to Armscor, and the Committee did not know what it did. There was the undertaking to supply a vehicle for the infantry which the Committee thought would be available soon, but work on it had not even commenced yet.

Mr Bongo agreed with the concerns of Mr Marais. Still the only way to rectify the situation would be for Denel to report to the DoD. He asked that it be minuted that Denel had to be called in.

Mr S Esau (DA) remarked that half of the order book was under Denel. There had to be a list of all the items under Denel, and its ability to finalise projects. The A Data missile was also affected. Denel had to be called to answer. The Defence position had to be known. If Denel delayed, there were cost implications. It had to be known what the impact was on Armscor acquisition. Both the DoD and Armscor were under financial constraints. There had to be clarity about the role of Denel and its projects. A report back on the truck project had to be asked for. South Africa deployed soldiers, arms and equipment in Africa. If equipment was not suitable for the African environment, reimbursement from the UN and AU was less than what SA invested. When equipment was taken over, SA only received 75 or 60 percent. Unsuitable equipment could not be used. Suitable equipment had to be obtained. SA lost money when it took part in peace missions and took over equipment. He referred to dips. It was not only the MBDA dip that was outstanding since 1999 and amounted to R224 billion. There were other dips of 135 and 268 million. Plans had to be made for credits to be used to the benefit of SA, particularly for developing scientists and specialised technicians. Concerning current dips, there was not to be delays in implementation.

Mr Marais referred to intellectual property. Armscor was saying that there were billions worth in Denel and the private sector. It had to be managed responsibly. Intellectual property belonged to the nation, and Armscor was the custodian. It would invite criticism if it was said to be under the Minister. The value of Defence and Armscor was in organisations outside of them. Intellectual property was gained over many years and had to be protected.

Mr Esau remarked that the Armscor CEO had said that there were challenges in terms of the Intellectual Property Rights (IPR) Act. It was a threat. In terms of the IPR Act, the manufacturer as owner was the beneficiary, hence there was the risk that those who developed it could lose the intellectual property. It had to be considered to amend the Defence Act. To preserve intellectual property, that law had to precede the IPR Act. The current legislation had to be reviewed, or the Defence Act had to be amended.

The Chairperson noted that amendment of the Defence Act was in the pipeline and would be looked into. He advised that the Committee move on. He asked about the Castle and the DMV. The DMV had become a core business of the Committee. He asked that adoption be moved for.

Adoption was moved for and seconded, and the report was adopted with amendments.

Mr Esau referred to typographical errors that had to be rectified.

The Chairperson said that Members could make additions.

The Chairperson adjourned the meeting. 

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