NCACC Annual Reports: 2016 & 2017, with Ministers of Defence & Energy; Deployment resources funding; Mozambique Channel piracy; Department of Military Veterans status

Defence

07 June 2018
Chairperson: Mr M Motimele (ANC) and Co-Chairperson: Mr E Mlambo (ANC)
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Meeting Summary

The Committee was briefed by the National Conventional Arms Control Committee (NCACC) on its outstanding Annual Reports for 2016 and 2017. Ministers MsNosiviwe Noluthando Mapisa-Nqakula and Mr Jeffrey Thamsanqa Radebe were present at this meeting.

The NCACC reported that it had received a clean Audit for the Financial Year 2016 and 2017.

Key areas of results from the 2016 analysis were:

  • There was a spike in Q3 in Export figures due to the seasonal adjustment, production cycles are in sync with marketing efforts of most players in the industries
  • The number of countries exported to or imported from have remained in the same band throughout the quarters in 2016
  •  
  • Notably Q4 is reflecting a higher figure of Contracts approved  because of anticipation for year end and the likely slowness of production to pick up in Q 1 of the subsequent year. This occurs each year and is thus an expected seasonal phenomenon
  • Various Departments and Agencies of the State continue to offer valued contributions related to decision support for the Cabinet Committee to finalise decisions
  • A key consideration on transfer(s) of controlled items is to avoid fuelling conflicts through SA transfers. Given the Country’s contribution for Peace and Security in Africa and worldwide, through various Multilateral platforms

Key areas of results from the 2017 analysis were:

  • The NCACC approved the implementation of enhancements to the Computerised Permit Systems, resulting in Two Way Import/Export Permit being issued to applicant this minimising the approval process and turn around for products that are critical and under repair 
  • The NCACC approved a process that required applications for Contracting Permit to be substantiated by regulated documents. This resulted in the reduction of “Ghost Applications” which in the past resulted in grossly inflated authorisation figures, sometime 8 to 1.
  • The corresponding result as well was that the Marketing Permit was correctly used, as envisaged by the Act. There was an abuse of process whereby applicants did not use the Marketing Permits to embark upon marketing products and services, but used the Contracting application process to test the waters even where there were no prospects of business or settling for contracting.

Members were concerned that domestic demand had plummeted and the budget of the SA Defence Force had also plummeted. It was noted that the defence industry in this country was not as healthy as has been indicated in the reports. The stakeholders in the industry had indicated that they were ‘haemorrhaging’ at the moment, and this too was not indicated the reports. Of more concern was whether South Africa was supplying weapons to countries perpetrating human rights violations. It was explained that South Africa was guided by the parameters set by the UN Security Council on whether there were sanctions against particular countries. When questioned about the allocation or denial of permits, the Committee was told that if there was a record of a country having committed human rights violations then permits would be denied. The issue of components or parts being exported to questionable countries was clarified by the explanation that End User Certificates had to be signed by all countries who received weapons from South Africa.

Members were notably worried about DENEL’s incapacity especially on hearing that all its problems had impacted negatively on the rest of the defence sector with money being diverted to salaries instead of for the production of equipment. However there were discussions between ARMSCOR and DENEL about a possible rescue plan. When the decision was taken to transfer the dockyard from ARMSCOR to DENEL, DENEL believed that they would be able to do the work and find credible partners who could provide the necessary financial injection to pull it onto its feet. This did not happen so there was no DENEL Maritime at the moment until the issues were resolved. The Committee was dissatisfied with the responses received about DENEL. The government had been slow in dealing with matters and the Committee was not provided with complete and coherent information about the problems with and at DENEL. The Committee was planning to approach the President to intervene in the situation regarding DENEL and to attempt to return it to the DOD.

The Minister briefed the Committee on the status regarding piracy and other maritime threats on the Mozambique Channel. South Africa’s presence in that area had been extended, and one of the primary reasons for this was because of its success in deterring pirates. Budget constraints were impacting negatively on the forces in the area. The challenges included the high rate of attrition, soldiers were left in the area longer than the stipulated period of six months, soldiers had to pay for their own transport back to South Africa and Sexual Exploitation and Abuse cases have abounded in the region. The nature of war in the eastern DRC was changing as it was now characterised by acts of terrorism. South Africa was also considering withdrawing some of it equipment from DRC due to it not being serviceable anymore. Budget constraints were impacting negatively on the forces in the area

Members felt that there was a need for law enforcement agencies to do a threat analysis and present it to the Security Council. They asked why specific operations only covered certain parts of the country and not all the country’s borders. Concern was raised about the transporting of troops back to South Africa which they had to do at their own cost and the failure to implement the defence review policy.

Meeting report

Mr Motimele said that it was a privilege to have two Ministers: Ms Nosiviwe Noluthando Mapisa-Nqakula, Minister of Defence and Military Veterans and the Minister of Energy, Mr Jeffrey Thamsanqa Radebe, at this meeting.
 
Briefing by the NCACC (National Conventional Arms Control Committee) on its Annual Reports for 2016 and 2017
Minister Radebe, Chairperson, NCACC thanked the Joint Standing Committee on Defence (JSCD) for the invitation to present the 2016 and 2017 Annual Reports. The NCACC received a clean Audit for the Financial Year 2016 and 2017. One of the other highlights of 2016/17 was that South Africa was admitted to the Bureau of the ATT (Arms Trade Treaty) in Geneva. South Africa was the only African Country and one of six globally to achieve this honour.

The Minister said that the domestic context was framed by the National Conventional Arms Control Act 73 of 2008. The three Pillars of South African Arms Control were:

  • The NCACC Act – The Department of Defence (DOD);
  • The Non Proliferation Act – The Department of Trade and Industry
  • (DTI); and
  • Fire Control Act & Explosives Act – South Africa Police Services (SAPS).

Key areas of results from the 2016 analysis were:

  • There was a spike in Q3 in Export figures due to the seasonal adjustment, production cycles are in sync with marketing efforts of most players in the industries
  • The number of countries exported to or imported from have remained in the same band throughout the quarters in 2016
  • Notably Q4 is reflecting a higher figure of Contracts approved  because of anticipation for year end and the likely slowness of production to pick up in Q 1 of the subsequent year. This occurs each year and is thus an expected seasonal phenomenon
  • Various Departments and Agencies of the State continue to offer valued contributions related to decision support for the Cabinet Committee to finalise decisions
  • The Reports will include risks evaluation and mitigation thereof in relation to the supply of South African Controlled Items to particular countries. This is undertaken in order to avoid Sovereign embarrassment and/or Reputational Damage as a supplier to global markets
  • Under the direction by the Cabinet Committee, there are assessments of Global trends conducted as well as specific, urgent Geo-politics development(s) that must be concluded which are then monitored on an ongoing basis.
  • A key consideration on transfer(s) of controlled items is to avoid fuelling conflicts through SA transfers. Given the Country’s contribution for Peace and Security in Africa and worldwide, through various Multilateral platforms.

Key areas of results from the 2017 analysis were:

  • The NCACC approved the implementation of enhancements to the Computerised Permit Systems, resulting in Two Way Import/Export Permit being issued to applicant this minimising the approval process and turn around for products that are critical and under repair 
  • The NCACC approved a process that required applications for Contracting Permit to be substantiated by regulated documents. This resulted in the reduction of “Ghost Applications” which in the past resulted in grossly inflated authorisation figures, sometime 8 to 1.
  • The corresponding result as well was that the Marketing Permit was correctly used, as envisaged by the Act. There was an abuse of process whereby applicants did not use the Marketing Permits to embark upon marketing products and services, but used the Contracting application process to test the waters even where there were no prospects of business or settling for contracting.

The NCACC Framework is grounded in domestic law, in harmony with Treaties and Conventions. The Cabinet Committee applies itself effectively within the confines of prescribed Laws. The Cabinet Committee supports compliance with our International Commitments on Arms Control and the Secretariat is supported to attend Arms Control Meetings wherever the meetings take place. The Defence Industry in South Africa is growing as evidenced by figures presented.
 
The presentation included a summary per quarter (for 2016 and 2017) of export authorised, imports authorised and conveyance authorised.
 
(See attached NCACC 2016 & 2017 Annual Reports)
Discussion
Mr Motimele asked if the Report should not have also included 2018 statistics as well.
 
Minister Radebe said that they had been requested to do a briefing on the Annual Report for 2016 2017.
 
Mr Nontobeko Mafu, DDG: Empowerment and Stakeholder Management, DoD, said that the 2018 report could only be done in 2019. The reports were done on a calendar basis not on a financial basis. This meant that the Committee was given statistics from January 1 to 31 December of each year.
 
Mr S Marais (DA) said that although Minister Radebe had provided an explanation, it was difficult to prepare with the report that was given. He said with the greatness of respect, the two years – 2016 and 2017 – had flown by so fast it was difficult to comprehend what had transpired over that time. However, it was unknown why 2016 was asked for. There were still relevant issues that needed to be dealt with but one had to deal with the information that was received. Also, one could not rely only on the information received today, but also what had happened over a period and many reports that had already been done.
 
Minister Mapisa-Nqakula said if one wanted to see which permits were granted, this report had all the statistical information including controlled items; export authorised; import authorised and conveyance authorised.
 
Mr Motimele said that Members should understand that the question that he posed was not questioning the content of the report.
 
Mr S Esau (DA) asked if the reasons could be provided as to why permits were denied.
 
Minister Mapisa-Nqakula said that the DoD was very careful as to who it granted export permits to.
 
Mr Esau referred to areas where weapons had been supplied by South Africa, and asked if it had been checked if any human rights abuses had taken place in these countries, and if yes, how had South Africa responded to this.
 
Mr Esau said that the Islamic State of Iraq and Syria (ISIS) itself had been armed and trained by the USA and the USA has its own veto rights and also overrides any Security Council. He asked what position South Africa took with regard to the arming of rebels and forces and undermining other forces and governments with regards to the US. Further, he noted that in Mynamar, there are serious human rights abuses taking place and they imported weapons from South Africa that would assist in the launching of missiles. He wanted a response on the human rights abuses taking place and if these have been properly considered.
 
Minister Radebe said the position was guided by the parameters set by the United Nations Security Council on whether there were sanctions against particular countries especially if there were arms embargoes. Guidance was also provided by information about conflicts and South Africa’s own national interest in the country. The track record of certain countries in terms of their human rights situation was also looked at,  including the issue of regional dynamics in particular areas like whether there was stability or not. The other area of concern - which was a factor for consideration - was the possibilities of diversion, where arms would be exported and then the country in question would divert the arms to areas that were sanctioned. In all the instances mentioned, arms would be denied. The NCAAC would also look at whether countries were signatories to the Non-Proliferation Treaty or not. The Secret Service also provided information that helped when assessing whether arms could be provided to certain countries.
 
Minister Mapisa- Nqakula said that if there was a record of a country having committed human rights violations then permits would be denied. If there was conflict in a particular country then permits would be denied. The two countries where permits had been denied recently were Taiwan and Ukraine.
 
Mr Marais said that one would have expected the report to have dealt with the membership changes in the NCACC. What had happened to the Ministers who were no longer Ministers? This was another instance where the report had ‘flown’ over it without providing the context. He asked the Department to take the Committee into its confidence and tell them who the new members were.
 
Minister Radebe said, as was known in February, the Cabinet was reshuffled and the new members were added, such as the Minister of International Relations, the Minister of Police, the Minister of Public Enterprises, the Minister of State Security and the Deputy Minister of Finance.  
 
Mr Marais said that word was out that factories were being built in other countries with components from South Africa. He asked how this worked because there were companies in the Middle East and companies in North Africa. It was one thing to say that one did not export to countries where there were human rights abuses but then it was found that parts of weapons were exported to questionable countries.
 
Minister Radebe said that everyone who bought any parts from South Africa had to sign an End User Certificate. This meant that those components from this country could not be used unless the End User Certificate had been signed.  Random searches were also done by the Inspectorate to ensure that companies were compliant with the Act.
 
Mr Marais said that the ‘growing defence industry’ spoken about depended on domestic demand. It was known that domestic demand had plummeted. The budget of the SA Defence Force had also plummeted. The defence industry in this country was not as healthy as has been indicated in the reports. The stakeholders in the industry have indicated that they were ‘haemorrhaging’ at the moment, and this too was not indicated the reports. He was very concerned that these things were not picked up.  Even though it was reported that DENEL was doing well, the Minister has withdrawn their taking over the dockyards. The Defence industry was bleeding because of DENEL’s inability even though the capacity was there as was the capacity in ARMSCOR. It would seem that the industry was working in silos.
 
Minister Radebe said that it was not the responsibility of the NCACC to look at the ‘nuts and bolts’, but obviously some Members were concerned about DENEL and the Minister of Defence would provide more information about this matter.
 
Minister Mapisa-Nqakula said that DENEL had begun to encounter a lot of problems which had impacted negatively on the rest of the defence industry, particularly on the small companies. Money had been diverted to salaries instead of the production of equipment. DENEL fell under the Department of Public Enterprises. Being the number one client of DENEL, the Defence Industry had a very keen interest in it, and it had become an item on the agenda of the NCACC so that the Department of Defence was kept abreast of its situation. The situation has become so bad that it has impacted negatively on the spending of the Special Defence Account. There was hope in the situation because there was a new Board and a new Acting CEO of DENEL. Obviously, there had to be interaction with the Department of Defence so that it could have an understanding of the gravity of the situation. There have also been issues of DENEL being unable to pay small suppliers. However there were discussions between ARMSCOR and DENEL about a possible rescue plan.
 
Minister Mapisa-Nqakula said that when the decision was taken to transfer the dockyard from ARMSCOR to DENEL, DENEL believed that they would be able to do the work and find credible partners who could provide the necessary financial injection to pull DENEL onto its feet. They were given about two years, but unfortunately this did not happen. Hence there was no DENEL Maritime at the moment until the issues were resolved.
 
Mr Marais said that he was surprised to see that South Africa exported weapons to Oman. Of equal concern were the reports that there was no stock in other words permits or stock holding.
 
Minister Radebe said that there was no conflict in Oman at the time when SA authorised weapons for them.
 
Mr D Gamede (ANC) thanked the Minister for accompanying Members on their trip to the DRC. He noted reports that DENEL was in bad shape and at some stage it was said that the DENEL should have been handed over to the DOD (Department of Defence). There has been a decline in exports or permits because there has been more emphasis on peace keeping efforts rather than fuelling conflict.
 
Mr Gamede said he wanted to address the area of the export of ammunition to conflict ridden areas like Somalia. There was also a decline in heavy weapons exported. He asked for more information about these issues because it had an impact on the economy of the country.
 
Minister Mapisa-Nqakula said that there had been no exports of arms to Somalia. This because even in the Maritime Security Programme South Africa has made it clear that it would have nothing to do with what was happening in the Horn of Africa even with regard to peacekeeping.  
 
Mr G Michalakis (DA) said he was puzzled by one thing, in the Annual Report of 2017 exports were authorised for electronic equipment – perhaps not weapons – of military value that could actually help in warfare. These were to be exported to Myanmar despite the fact that in that year there was outrage worldwide with regard to ethnic cleansing and this was authorised. How does the Minister reconcile what was just said with what was in the Report?
 
Minister Radebe said when the decision was taken Myanmar was stable.
 
Mr Marais referred to the End User Certificate that was mentioned by Minister Radebe, and asked if it was issued per country, per company or per product. This question related specifically to components. He asked further, if this was related to components, how one would make sure that they were not specifically used for weapons in conflict zones.
 
Minister Radebe said End User Certificates were issued as per the contract that was had with the country.
 
Mr Marais asked if when DENEL was spoken about, if this referred only to DENEL or affiliates of DENEL also. If yes, how were they treated?
 
Minister Radebe said that sometimes DENEL applied for authorisation as a group and other times as subsidiaries. Each case was according to its own merits.
 
Mr Marais asked about the weapons being imported into the country and asked what was being done with them, what happened to them and were they regulated.
 
Minister Radebe said that it was either public or private but the end user was the Defence Force.
 
Mr Esau said that Honourable Gumede had asked about the decline in the sales or exports of heavy equipment, and then of course the decline in revenue generated. This was badly affected by the Special Defence Account because money had now been diverted to the cost of employment. He was concerned about the IP development in SA that may be constrained because this was where revenue could have been generated by using it and developing it.
 
On the declining exports, Minister Mapisa-Nqakula said that SA was signatory to some of the treaties which made it transparent not only to Parliament but also to the nation. When the country engaged on bilateral levels there were people who were concerned about the high level of transparency. In these cases, how much equipment was possessed and by whom might be considered as exposing certain countries because South Africa was transparent about the orders placed for weapons and by whom.
 
Minister Mapisa-Nqakula said that IP development was approached very cautiously and very carefully as this was one of the tricky issues with regard to relations between countries.
 
Mr Esau asked if the stance of the government, particularly the NCACC, had changed with certain countries after the situations in the affected countries had been declared international disaster areas. Was anything sold to those countries who were involved in those conflicts?
 
Mr B Holomisa (UDM) said that the ‘cap’ he was wearing today was that of the Defence Force Service Commission but he would want to contribute as a Member of Parliament. With the issue being discussed at present, one was not going to get the right answer because this industry was being violated by people who claimed to be the champions of human rights. It was well known what the US was doing. Recently we saw Israel selling weapons to India. Why don’t we lobby some of the great countries and when they are here we showcase our technology so that we can get some orders from them. South Africa was too nice, not aggressive enough. ‘SA had sophisticated technology but it was too slow. It needed to change its tactics’
 
Minister Mapisa-Nqakula said that Honourable Holomisa was correct that the US was the biggest spoilers but what was interesting was that as much as the US was the biggest spoiler at times, they were very quick with their oversight. She cited an example of when there was a possibility of SA supplying arms to Iran and how quickly the US sent people to SA to threaten blacklisting them if they did. In this case the equipment was for training. South Africa has maintained bilateral relations with countries.
 
Mr Mlambo said that he was not satisfied with the answer that the Minister had given about DENEL. He agreed with the Holomisa about the slowness of this government in doing things. The issue of DENEL coming back to the DoD was a long standing issue and complete information was not given as to what the obstacles were. The issue of the dockyard was problematic because for a long time this Committee had said that ARMSCOR should have sped up renovating the dockyard.
 
Mr Gamede said that what the Minister had said had hurt the Committee. A letter has to be written to the President asking for proclamation or declaration to fast-track this issue and for DENEL to be given back to the DoD. The information given in this meeting has armed the Committee well to take a resolution to speak to the President.
 
Mr Motimele said that the matter regarding the movement of DENEL to the DoD was very urgent and he hoped that the Minister would take note of this.
 
Status regarding piracy and other maritime security threats on the Mozambique Channel
Minister Mapisa-Nqakula said that South Africa continued to be a presence on the Mozambique Channel. The President had recently written to the Speaker of the National Assembly and the Chairperson of the NCOP to inform them about the extension of South Africa’s presence in that area. It was believed that the three countries should remain in the Mozambique Channel especially South Africa because it had successfully deterred pirates.
 
There were challenges that impacted on all operations in the Mozambique Channel and more especially in the Democratic Republic of Congo (DRC). 11 people had been beheaded in Mozambique and recently there had been an exchange of fire between some reserves and the security forces of Mozambique and nine people were killed. This meant that there had to be an ongoing threat assessment of the region.
 
The nature of war in the eastern DRC was changing as it was now characterised by acts of terrorism. South Africa was also considering withdrawing some of it equipment from DRC due to it not being serviceable anymore. Budget constraints were impacting negatively on the forces in the area.
 
One of the challenges was the high rate of attrition. Soldiers were left in the area for longer than the stipulated period of six months.   SEA (Sexual Exploitation and Abuse) cases have abounded in the area. However all cases had been investigated and penalties had been imposed. Sentences imposed by judges were very lenient hence the push to finalise the Military Discipline Bill. This Bill imposed a sentence of 10 years on the perpetrators of sexual offences.
 
Discussion
Mr Marais said it was known that funding was a problem, but it was also known that South Africa’s GDP was incredibly low. At the end of this was Section 200 of the Constitution and not everyone was aware of the practical implication of this. He was concerned about Operation Copper existing at the expense of the rest of the marine borders in SA because it had to be executed in territorial waters in South Africa. This should not be done at the cost of the rest of South Africa’s shores.
 
Mr Marais said if one looked at Operation Corona, the focus was the KwaZulu-Natal border, Mpumalanga, Kruger National Park and Limpopo. This Operation did not cover the rest of SA’s borders. The biggest threat might be in the above-mentioned areas, but it was also known that in the other areas people are free to move, drive across the borders and small planes could land, hence there was no real capability there. Priorities rather than numbers were of primary concern.
 
He referred to the Minister’s observations on SEA and asked:  ‘who was protecting it and who wanted SA out’. In his view the SEA cases were probably overstated, but the fact that they were there for over a year was grave.
 
Mr Marais said that another concern was that of transporting the troops back to South Africa which they had to do at their own cost. This was in his view unacceptable. If SA transported its troops anywhere, then SA should transport them back. Again this was linked to logistics – pity they (the people who dealt with logistics) were not here. In addition, there were two serious problems that were picked up relating to this: one was the response from logistics that it took too long to replenish, and two was about transport. Often when the transport landed in the DRC it broke down and had to be repaired. So the transport back had a lagging effect. A comprehensive view on this matter would have to be taken. This implied that with the current budget certain things had to be sacrificed. Both the National Treasury and the DoD had a view and these two were very far apart.
 
Mr Holomisa said that he just wanted to confirm what the Minister was talking about in terms of the frustration of the Department. As one moved around assisting in camps inside and outside the country, the morale was not good at all and drastic steps had to be taken with regard to this. Revisions might have to be made to the Security Council. The Security Council had the DG and Minister of Finance and other sectors of our security. There was a need for law enforcement agencies had to do a threat analysis and present it to that Council and then decisions could be taken because the Council was chaired by the President. The reliance on the clerks in the Department of Finance tossing everyone around was not working. There was a reviewed defence policy but no one was prepared to put a cent into implementing it. Matters had to be escalated to the highest level and then one would be able to see the difference it would make. 
 
Minister Mapisa-Nqakula said that she had decided that she needed a General who was reputable, had integrity, and who would be able to assert his command and control in the Department of Defence and Military Veterans (DMV) – sort out problem in the DMV – and she had decided that General Mukwedi would do this. He was retired but she had asked him to come back and deal with the challenges in the DMV.
 
The Minister said she had withdrawn all the powers given to the Deputy Minister. This is not because there was a problem, but because she wanted to be able to take full responsibility and not hide behind a second party. The powers were withdrawn particularly because of the challenges in the Department of Defence and Military Veterans.
 
The constituency of military veterans was a very highly charged political constituency and sometimes very difficult to deal with. She took the opportunity to thank the then Deputy Chair/ADG Comrade Max Ozinsky who had done a sterling job and even got a clean audit which had never happened before in the Department of Defence and Military Veterans.
 
Mr Mlambo thanked the Ministers and the NCACC. 
 
The meeting was adjourned
 

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