National Conventional Arms Control Committee Third Quarter Report

Meeting report

The Chairperson said the National Conventional Arms Control Committee (NCACC) would brief the Committee on its third quarter report, including a breakdown of imports per public and private sector.

NCACC third quarter performance report

Adv Ezra Jele, Head, NCACC, presented the key statistics of the entity for the third quarter.

Registrations

During the period under review, the NCACC received and processed 62 applications. These were the people seeking to be registered under the NCACC to partake in the processes and opportunities in the defence industry. The statistics may include renewals, because registration certificates were valid for only three years. There had been no denials during this period.

Marketing

Of the 62 applications, seven of them were marketing permits. While the registration was a licence to trade, a marketing permit was about what one was licensed to trade, that is, the scope was limited to what one had been approved for. Should a company wish to expand or change what it was trading, it would need to amend the marketing permit, but the two worked hand in hand.

Contracting

In this period, 27 permits were authorised, and none was denied. The total value of contracts that were authorised was around R6.8 billion. Of the 27 authorised permits, it was contracting with 19 countries.

Exports (Munitions)

Adv Jele said most of what was out there in the industry -- between 60% and 70% -- included mortar bombs, missiles, vehicles and so forth. 152 export permits were authorised, with a total value of R818 million. The exports went to 41 countries.

Imports

The number of import permits authorised was 82. The total value of the import permits authorised was R25 million, and the number of countries imported from was 17.

Transfers – in context

Adv Jele said in this section, he took note of the engagement that the Committee had had with the defence industry. What was presented here was not a rebuttal, but a correct framing to enable the Committee to understand what was happening -- and partly, why it was happening. It would be clearer later on how he had also framed what was deemed or perceived to be red tape. This slide negates the narrative that the NCACC did not sit frequently, or as per schedule. He pointed out that it was scheduled to sit ten months a year, and the only months it did not sit were in December and January. However, the Secretariat sat even during those periods and could close only two days before Christmas and two days after New Year's day to be able to continue processing what the industry required.

As examples, he had chosen the Kingdom of Saudi Arabia, the United Arab Emirates, Turkey and Poland, because there was a perception that the NCACC had a problem with approving countries from the Middle East. He said it would become clear later in the slides what the implications of this were, and why.

There were no exports to Turkey in the period under review because of a permit application on hold.

There was also the categorisation that had been included in this section.

• Category A comprised sensitive controlled items that could cause heavy personnel casualties and/or major damage and destruction to materiel, structures, objects and facilities. This would include fighter aircraft, submarines, explosives, missiles, bombs, artillery guns, tanks and weapons with a calibre of 12.7mm (0.5 inches) and larger.
• Category B comprised all types of handheld and portable assault-controlled items of a calibre smaller than 12.7mm (0.5 inches). This would include assault rifles, pistols, machine guns and ammunition for the weapons.
• Category C comprised all support items usually employed in the direct support of combat operations that had no inherent capability to kill or to destruct. This would include communication equipment, radars, unmanned air vehicles and simulators.
• Category D comprised all purposely designed de-mining, mine clearing and mine detection equipment and all non-lethal pyrotechnical and riot control products. This would include mine detectors, riot control agents, flares, etc.
• Category E comprised all those items and related products that were not allowed to be sold. This would include anti-personnel mines, incendiary weapons, laser weapons and cluster munitions.
• Category F comprised all purposely built controlled items, manufacturing equipment, plants, facilities and test ranges for the manufacture, development, maintenance, test, upgrade and refurbishment of armaments products. It also included all purposely-developed techniques and services, other than contractual after-sales service, that had relevance to the development, use, maintenance, assistance and advice about armaments and related products.

Information technology

User acceptance testing of information technology (IT) has been successfully done. Further work continued. Training and archiving were continuing for real-time feel and interventions. Further project costs of around R5.5 million were anticipated. The outstanding amount had impacted further training and system support. Details of the three phases of the IT project were provided.

Litigation

Adv Jele said there was litigation against the NCACC by Open Secrets and Lawyers for Human Rights in Yemen. The matter was in two parts -- Part 1 Joinder, Part 2 Review of Permits. The NCACC had had a default judgment due to non-defence of the Matter of Part 1, but this remained. Part 2, the review of permit applications, was pending. Case management under the auspices of the High Court had been granted, and a judge had been appointed. The matter was now going to court, and briefing to a Senior Counsel (SC) to defend had already been done.

In a new court case involving Myanmar, the Office of the Attorney General (OAG) had been engaged to brief SC.

Content of report

Adv Jele said reports had to be presented to Parliament quarterly, and Cabinet and Parliament annually. The content of the report was prescribed by law, as per s23(2). The report must reflect the controlled items regulation statistics; exports authorised; imports authorised; and conveyances authorised. The report had to comply with the UN Conventional Arms Register (UNCAR).

Summary

• The NCACC framework was grounded in domestic law, which was in harmony with treaties and conventions.
• The Cabinet Committee applied itself effectively within the confines of prescribed Laws.
• The Cabinet Committee supported compliance with South Africa's international commitments on arms control, and the Secretariat was supported to attend arms control meetings wherever these meetings took place.
• The defence industry in South Africa was growing, as evidenced by the figures presented.

[Please see the attachment for a detailed report]

Discussion

Mr S Marais (DA) reminded the Committee that in the past, the NCACC had said that the dual system was in operation, but what was indicated in the industry and the presentation tonight indicated that it was not. How long would it take before the dual system would start with test trial runs and the full implementation? In the "Red Tape 4 Flow Chart," after week zero, it said there was a review of two weeks necessary to print all the applications, but if they wanted to move away from the paper-based process, why did they have to do all the printing? Why could the scrutiny committee not access the documents electronically, because that would also save costs and time?

The industry had told the Committee that when the meetings had taken place, some had lasted a very short period -- some for about ten minutes, and sometimes half an hour. The industry had also complained about a lot of applications that were not processed or not considered, which were then postponed until the next meeting, and this had caused a lot of frustration for them.

They had also indicated that in cases where one contract had been approved, and it was a repetitive export, why should that not be processed only by the scrutiny committee and the administration thereafter? Why must it also go to the NCACC for final evaluation? That was why some of the industry players had lost contacts, because it took so long.

He said in slide nine, the presentation had talked about transfers in context under categories A and B, and Adv Jele had said it would become clearer later. However, Mr Marais said he still did not understand why some countries had been approved. Since there were not many of those countries, could the Committee get more information on why there were three permits for each of those three countries, and then nothing for Poland? The Poland permit was for nearly R1 billion, which was a substantial export contract and agreement, and if he were the owner of that company, he would also be concerned about not being considered. What could be the reason why none of those countries was under an embargo? For instance, SA had a good relationship with Turkey, and the Chief of the SA Defence Force (SADF) had recently visited them, and the Joint Standing Committee on Defence (JSCD) was also planning to visit Turkey. Thus, if there were things that the JSCD should know, they must be told about it, and if it needed to be in a closed session, so be it, because if the United Nations had identified any of those countries and SA had put them on hold, it was very important that the Committee knew about that. The industry must be informed that it was under an embargo by the UN, so their applications could not be considered. It was not clear what the reasons for that were.

The NCACC had said the exporters and the Aerospace, Maritime and Defence Industries Association (AMD) members must have a system. There were about three to five big players that one could expect, but then several smaller AMD members could not invest in the system if they did not know if they would get the dividend or the revenue eventually from the transactions. The delay in the matter puts them at a high risk of losing business, so what were those matters?

The industry also told the Committee that in week zero, if documentation was required, the NCACC did not communicate that to them. It was only when they enquired, and if they could reach someone, that they were told that their documents were incomplete. Why could that not be communicated? Even though it was not on the electronic system, one could still tell them that their documentation was incomplete, that they must come and fetch it and redo it, instead of making them wait for weeks to get them to fix errors. These complaints were raised by the whole AMD because they wanted to be more competitive, and had asked the Committee to intervene and liaise with the NCACC so that it could go more quickly.

When they were certain about an application process, it became easier for them to comply and for the NCACC to hold them accountable, but in a process where there was uncertainty, the industry could not afford what they experienced as red tape. Could the Committee get information on the cases marked in red, as he was unaware that any of those countries were under an arms embargo because SA was exporting to them anyway? Members were not aware that Poland was under an embargo, so he asked for assistance with that information.

NCACC's response

Adv Jele said in the NCACC engagement with the industry, several claims had been made. They had said they had competitors whose permits were processed within six days. The Secretariat was not perfect, but it would like to learn about those countries and how they did this. He was not saying this as a rebuttal, but arms control was a very expensive business and had to be done according to the law, regulations and other imperatives. There was no room for cutting corners, so the NCACC would want to know which those countries were.

Other matters raised included lifts that were broken or not working, problematic buildings and load shedding. Adv Jele asked the Committee, in its wisdom, to advise how these issues could be solved. For instance, the receiving of documents in week zero, as shown on slide 20, was done on the ground floor, which meant no lift was required. In any case, should the lift be broken or not working because of load shedding, that building had stairs -- it would not be certified habitable if it did not have those stairs, which were needed as a fire escape. He asked the Committee to guide the response to those questions.

At week zero and week 4, the Secretariat did not receive or accept defective documents -- they were turned back. So, there was no requirement or need to revert to them six weeks down the line to say that a document was not correct. The challenge that the Secretariat was facing was that companies that were using courier services -- for example, from Durban and Cape Town -- still presented a problem because the courier company always refused to take back those documents saying it was paid to bring them to us, not to take them back. The entity ended up having a problem with routing them back. He was keen to know the incidents where it had taken long to respond to the documents, not to victimise any complainant, but to be able to strengthen the current system. The NCACC was not perfect, but it could only improve, and it also helped if there were facts that could be gathered that informed such things. Once claims were made and not substantiated, it became a problem.

In response to the issue of two weeks of review, the current system required the entity to make photocopies, which is going to change with the new system because the review would not be photocopied. However, nothing would change if, for instance, the review took three days.

In response to Mr Marais's question on the dual system, he said the dual system was working, but where it was not was where the industry could log on. The user acceptance testing was still meant for the NCACC, because it was the one that had to determine what worked and what did not. The old system was still in place, so that was where the duality was, and immediately the problems and debugging were resolved in the new system, the whole system would need to be shut down and the whole duality was also going to cease to exist. The system would then explore extending where the industry would be in a position to log on, and as indicated, that would require money.

He said often, when they looked at the industry, they would categorise them as big players and smaller players, but they were all subject to the same Act. He corrected the viewpoint that exports went back to the NCACC. He was the one who approved the export committee, and when the NCACC sits, it sits for those delegations that were within their remit, which was contracting permits. This was because those had political ramifications, and the prism through which they were looked at was still Section 15. When Mr Marais said he could not understand why he had said he would give the NCACC position as to why categories A and B were sometimes held there, and that if there was a call for a closed session, it had to be done, he could advise that the Committee had done that. He had indicated that three entities were, by law, the ones that gave indicators that could be worked in both categories to fashion out a recommendation. These were State Security, the Department of International Relations and Cooperation (DIRCO), and Defence Intelligence. He was not going to use a country name, but if any reviewing department said Section 15 stated what the risk of diversion was, one could check it out. They had flagged that country to say that with the information they had through their collection, they did not support that. There were no Security Council resolutions, but there were key criteria. Five of those were weighted, but each had to be aligned. If there was a misalignment, the Committee would need to correct it, because by the time it had to approve, it must understand what informed it. It could not sit and countenance a situation where because it involved certain billions and this misalignment was in terms of compliance with Section 15, and decided to look the other way. One would be getting a very turbulent system, which was not desirable.

Mr Marais thanked Adv Jele for responding to the questions raised. He hoped that he would take into account what he had said about the liaison of the Committee and the Chief of the South African Defence Force with Turkey, for instance, and if there were issues, the Committee must be informed. It would be very embarrassing for the Members and the SANDF if they were under the illusion that exports could take place, yet there were reasons why they could not take place. He said that based on what the industry had told the Committee, Adv Jele had once given him the advice to approach the AMD, and maybe his advice back to him was to go to the AMD and sit down with them so that they could provide the evidence and the facts that they had given to the Committee.

The Chairperson interjected, and said that was not the kind of advice the Committee would like to give to Adv Jele. If the industry had any concerns they felt needed to be addressed by the scrutiny committee or the NCACC, they must write to them directly. They were not saying they had been knocking on that door without any response, or the door was locked, or they did not get service when they went in. It had not yet reached that stage, and the JSC must not be a bridge between the industry and the NCACC. Of course, the JSC played an oversight role over the NCACC, but not to the extent that it would get to the level where they would come to the Committee on matters they had not conveyed directly to the NCACC. The Chairperson said the next time they came to the JSC, he would ask them if they had conversed with the NCACC and the response they had got. The JSC must encourage the relationship between the two, and one with the issue should raise it, not the other way around. The NCACC could not go to the industry to look for the issue.

Mr Marais said that was what he intended to do.

The Chairperson again interjected, saying he had not interrupted him when he was talking. Now he was just telling them what the Committee could not do. It could not advise what Mr Marais was proposing. He thanked Adv Jele for the manner in which he had responded to the question, and agreed with him that the defence industry was highly competitive and issues would always arise. There was a need to hold a lekgotla with the industry to create a platform for them to voice their concerns with the NCACC face-to-face. That lekgotla would be held early next year. He asked if the date had been confirmed.

Adv Jele said he was not sure because the NCACC would not be hosting the event -- they would attend through an invitation. It was going to participate because the lekgotla would provide a platform to engage with the other stakeholders on what it did, why it did it and when it did it. It would also provide a platform for the entity to pick aspects that were blind spots for the NCACC. The entity was not perfect, but it was effective. It had cordial relations in engaging the industry through their chair and the sub-committee on arms control. They could be the ones that were helping the NCACC to become the apostles, so they must be converted and then speak the gospel properly. Their presence made the NCACC’s work lighter in that whenever a member ran to them to grumble, they could ask them if they had done one, two and three, even without the NCACC’s knowledge, but because they would have said they were the custodians of knowledge of systems.

The truth of the matter was that until there was compliance with the Act, they would be frustrating themselves. Companies were always encouraged to improve internal compliance by investing in both personnel and equipment to allow and prevent slippages. He was certain that the NCACC was having a good interaction with the players of the industry and was on speed dial on many other things, and he went wherever he was required to. For instance, the NCACC planned to do an industry outreach in December, one in Durban and the other in Cape Town. The NCACC was waiting for the industry to say who was ready and where it was going to be held, because the entity was going to talk to the existing and new members to tell them about the NCACC. The NCACC was the face of the government regarding these matters.

The Chairperson clarified that he was referring to the proposed national defence industry lekgotla, which was meant to be between 4 May and 5 May 2022, but had been postponed and the Minister had said it would take place early in the new year. He said this was one of the platforms, but he considered the lekgotla very strategic in that it would discuss matters that would pave the way forward on some of the issues on which he had asked the JSC to give guidance.

Committee Matters

The Committee deliberated on the proposed programme for next week's closed meeting and the content of the programme was based on the discussion that was held in this Committee on the things that required a closed meeting. Issues to be discussed included the readiness of the SANDF, border safeguarding challenges, external deployments, specifically in Mozambique and the Democratic Republic of the Congo, and so forth.

The Members welcomed the proposed programme. Committee minutes were considered and adopted without any matters arising.

The meeting was adjourned.