Committee Report on Annual Reports of Department & Armaments Corporation of South Africa: adoption

Meeting report

DEFENCE PORTFOLIO COMMITTEE
24 October 2006
ADOPTION OF COMMITTEE REPORT ON ANNUAL REPORTS OF DEPARTMENT & ARMAMENTS CORPORATION OF SOUTH AFRICA
 

Report on Departmental Hearings on Annual Reports of Department of Defence and Armscor.
Armscor Report
Special Pension Application Form: Form1, Form2, Form3 & Form4

SUMMARY
The committee considered and its reports on the Annual Reports of the Department of Defence and the Armaments Corporation of South Africa. Some grammatical changes were made to the report in respect of the Department. It was noted that the Wahlmanstahl land issues needed still to be addressed. The Committee members agreed to differ on point 3.1, but for the rest agreed that the report was correct. This report was adopted. The Committee then considered the report on the Armaments Corporation Annual Report. It was noted that there had been some inconsistencies in the Annual Report. The Chairperson suggested that the Corporation should be called upon to account for its R51 million saving, which could be viewed it as an instance of underspending. It must further report on its employment equity and transformation policy. Concern was expressed that there was stated to be effective financial management despite under spending. Reports were needed on the suspension of the CEO, the ensuing loss of R132 million, the Strategic Defence Procurement Package, R3.4 billion underspending, and the large percentage of budget applied to salaries despite poor human resource strategies. In the Committee report it was noted that a report was still needed under point 3, dealing with the mainframe and IT questions. The report was adopted. The impending trip to Canada was briefly discussed.

MINUTES
Adoption of Committee’s report on Department of Defence Annual Report
The Chairperson tabled the Committee’s report on the Department of Defence Annual Report. Points 2.1 to 2.8 were adopted unanimously.

Mr R Jankielsohn (DA) drew attention to incorrect grammar in point 2.9.1 and requested that the word "need" be changed to "needs" in both paragraphs.

The Chairperson agreed with Mr Jankielsohn’s recommendation.

The Chairperson drew attention to the insertion of the Wahlmanstahl land claim and indicated the need for a briefing on the situation before any further discussion.

Ms A Van Wyk suggested that the first comma in the first sentence of point 2.9.3 needed to be changed to a full stop.

The Committee agreed that point 2.10 was acceptable

The Chairperson noted that the Committee agreed to disagree on point 3.1. Points 3.2 to 3.5 were agreed as acceptable.

Mr O Monareng (ANC) motioned that since there were only minor grammatical errors the report should be adopted.

Mr L Diale seconded the motion.

The report was adopted.

Adoption of Committee report on Armscor Annual Report
The Chairperson stated that she had listened to the tapes and was heartened by the good discussion and critical questions posed by the Committee in considering the Annual reports of the Armaments Corporation of the Armaments Corporation of South Africa (Armscor).

She recommended that Armscor should be called upon to account for its R51 million saving, which could be viewed it as an instance of under spending, being related to lack of spending on staff vacancies and necessary IT equipment. Armscor should also be asked to report on its employment equity and transformation policy. It was disturbing that the section of the report dealing with corporate governance had highlighted effective financial management as an attribute, when in fact there was under spending. In addition, the Chairperson believed there was a need for a report on the suspension of the CEO, and the ensuing loss of R132 million. Further reports were required on the Strategic Defence Procurement Package, the issue of a R3.4 billion under spending, and the fact that salaries accounted for 72% of Armscor’s budget.

The Chairperson tabled the Committee’s draft report.

Discussion
The Chairperson stated that a report was needed on the mainframe and IT situation, under point 3 of page 1.

Mr Monareng noted that the submarine issue covered in point 4.1 was resolved.

The Chairperson questioned why Armscor was losing personnel in light of the huge budgetary allocation.

Mr S Ntuli (ANC) agreed and felt that the Committee needed to investigate these issues, especially when considering the 72% allocation of the budget to human resources.

The Chairperson noted that in terms of point 8 it was necessary for Armscor to allocate more funding to the trainee programme.

The Committee’s report was adopted.

Committee business
The Chairperson raised the issue of the impending trip to Canada and expressed regret that only five members would make up the delegation due to financial constraints. There would be three ANC members, one opposition member and one staff member. The delegation would be meeting Canadian counterparts and would visit their academies as well discuss peace-keeping. The office of the Ombudsman would be researched and consideration given to its application in the South African context.

The meeting was adjourned.