ATC120911: Report of the Portfolio Committee on International Relations and Cooperation on the seminar held on the involvement of South African companies and personnel in security related activities and business abroad, the impact on the conduct of foreign policy abroad, dated 29 August 2012

Report of the Portfolio Committee on International Relations and Cooperation on the seminar held on the involvement of South African companies and personnel in security related activities and business abroad, the impact on the conduct of foreign policy abroad, dated 29 August 2012

1. Introduction

The Portfolio Committee on International Relations and Cooperation held the seminar on 7 March 2012 at the Strand Hotel, Cape Town . The seminar was meant to keep the Committee appraised on issues surrounding the conduct of South African companies abroad; and the involvement of South Africans in illegal security related activities abroad.

Members in attendance were:

African National Congress

Mr HT Magama : Chairperson

Ms R Magau

Ms W Newhoudt-Druchen

Mr E Sulliman

Ms L Jacobus

Democratic Alliance

Mr I Davidson

Mr B Eloff

Inkatha Freedom Party

Mr MB Skosana

African Christian Democratic Party

Ms C Dudley

In attendance were Ms L Mosala , Content Adviser, Mr L Sigwela , Committee Secretary and Mr D Madlala , Committee Researcher.

The experts invited to facilitate the seminar were Dr Siphamandla Zondi from the Institute of Global Dialogue (IGD); Dr Petrus de Kock and Catherine Grant from the South African Institute of International Affairs (SAIIA), as well as Mr Clive Tasker from Standard Bank Main office, Johannesburg .

2. Opening and statement of objectives

Hon HT Magama welcomed all those in attendance and gave an overview of the objectives for the seminar. He highlighted that the Presidency announced a deliberate policy of economic diplomacy in 2010. A number of high powered delegations of South African business fraternity have been seen accompanying the President to several trade missions he took to different countries around the globe. This is aimed at deepening economic relations and growth in partnerships for the good of the citizenry.

South Africa ’s many businesses are operating in Africa and beyond. The country’s footprint is evident in the global markets : goods and services emanating from this country are competing with the world’s best. In 2007, the ruling party pronounced, in Polokwane , the need to consider a code of conduct for South African companies doing business abroad. It was found critical for the Committee to engage in the debate on the concept of a code of conduct.

The conduct of South African business abroad should be complimentary, not contrary, to the aspirations and conduct of South African foreign policy. It would be useful to debate the issue, and learn more on the successes accrued to and inherent challenges facing South African companies doing business abroad.

It would also benefit the Committee to know if there could be other approaches to this pronouncement. The Committee is in support of a code that is facilitative and not impeding on the operations of South African business, as it is a fact that there is a scramble now for African markets and natural resources.

Through the activities of the African Renaissance Fund among other interventions, conflict situations were lessening and the environment for sustainable economic activity have been created. It could only be fair for South African companies, small or large to benefit from such environments, by making sure they are there doing business.

However, the Committee wishes to see these businesses conducting themselves in a way that will protect the image of the country: through practising fair labour practices; against corruption and ill-discipline; operating within the laws of the host countries and upholding South African values (UBUNTU), while keeping expected international standards.

There have been recorded challenges relating to the conduct of South Africa companies abroad:

· the issues of hegemony are said to be compounded by the conduct of our companies abroad;

· the image of this country and its people has been greatly compromised due to the conduct of businesses abroad; and

· some companies allegedly could not resist the temptation to be involved in partisan conflicts abroad, corrupt practices and bribery to win favour over their competitors. Labour practices are reported as less favourable to what obtains in South African business environment.

However, the Committee is aware of a lot of good South African companies are doing in the continent and beyond – infrastructure development and investments, human resource development, knowledge transfer, building post conflict institutions, technical assistance - there is a huge South African footprint in terms of business investments. The question is, however, whether the critics and the people of South Africa and beyond know about these milestones. There is a need for a stronger public diplomacy exercise.

The other issue related to both companies and individual South African personnel engaged in para militarism, mercenarism and security firms abroad. In recent times, this phenomenon reared its ugly head in many occasions. This was of serious concern to the Committee as to the apparent involvement of companies and individuals in these illegal activities.

These practices do a lot of harm to the image of the country and again these individuals need to be educated of the challenges they impose on the conduct of international relations abroad. Their involvement in illegal practices for financial gain impedes the way the country relates with the outside world.

3. Presentation by Dr Petrus de Kock : The involvement of South African companies and personnel in para militarism, mercenarism and security firms abroad; the impact on the conduct of foreign policy abroad

3.1 Background

In his presentation Dr Petrus de Kock began by giving some background on the issue of Private Security Companies ( PSCs ) and noted that South Africa already has legislation which deals specifically with these companies. Dr de Kock also discussed the imagery associated with these companies with people seeing them as mercenaries or ‘hired guns’ which can be a misleading terminology to use considering the variety of services that PSCs provide to countries like the United States.

International conventions have made provisions against mercenarism and private military security companies engaged in illicit military activities. The UN Convention on Mercenaries 1989 outlaws mercenaries and illicit activities of private military and security companies. The universal revulsion of mercenary activity led, in time, to the OAU Convention for the Elimination of Mercenarism in Africa 1977. It is interesting to note that only South Africa and the USA have domestic legislation that aim to control PSCs’activity .

The South African legislative framework is as follows:

· The Regulation of Foreign Military Assistance Act 15 of 1998

· Prohibition of Mercenary Activities and Regulation of Certain Activities in Areas of Armed Conflict Act 27 of 2006 (received presidential assent in November 2007, but yet to receive presidential proclamation necessary to repeal 1998 Act).

3.2 Context

Since the end of the Cold War, there has been a significant increase in the number of PSCs globally and in South Africa . The use of private military contractors in the Afghanistan and Iraq wars remains controversial. Cases like Blackwater and civilian casualties in Iraq are an example of the controversies that appear. The problem with PSCs in war zones is how to keep these companies accountable due to the fact that they fall outside of regular military command structure. Clients of PSCs include: states; dictators; private corporations; drug cartels; rebel forces; humanitarian organisations; oil exploration companies; and some mining firms in volatile contexts. Excess retired and ex-military personnel with experience in armed conflict create a vast pool of personnel from which PSCs can recruit.

3.3 Cautionary suggestions

Cases where PSCs and mercenary activities can compromise, undermine, and negatively affect South Africa ’s foreign policy include: where such organisations and their agents are involved in coups (example, the so-called Wonga coup attempt led by Simon Mann and Nick du Toit in Equatorial Guinea ); activities of the now disbanded Executive Outcomes.

The activities of PCSs can undermine South Africa ’s foreign policy when they undermine South Africa ’s human rights principles; the international image and/or standing of South Africa . When they cause or exacerbate instability in other African states (which goes against the grain of the country’s stance on continental peace & security).

In 2011, allegations that South African PSCs were hired by Muammar Gaddafi and his son Saif al Islam did a lot of damage to the country’s image and role in the African Union effort to mediate in the conflict. As a result, questions were asked about the relationship South Africa had with Gaddafi. The net result of such reports was that it unfortunately eroded South Africa ’s vocal opposition to the no-fly zone imposed by NATO (under United Nations Security Council resolution 1973).

3.4 Operational issues

As a result of the range of clients that call on PSCs ’ services, and the changing nature of warfare in the 21 ^st century (4 ^th generation network centric wars; insurgency; transnational business and criminal networks; extractive industry investments and exploration in volatile conflict-prone regions), PSCs are performing an ever wider range of services for clients. Such services include operational deployments and command services in conflicts; training, advisory, intelligence services; counter-insurgency operations or support missions; non lethal security and operational support functions.

In cases where PSCs are utilised in conflict, it is important to note that International Humanitarian Law (IHL) which governs warfare and classifies people into civilians and combatants, does not make provision for PSCs (hired guns) whether they are contracted by state or non-state actors. This leaves PSCs in a proverbial legal no man’s land. PSCs are often contracted by governments that do not want to risk regular military personnel, or reputation in domestic or international operations.

3.5 South African foreign policy challenges

South Africa has one of the world’s most advanced legislative codes aimed at controlling PSCs activities. This is largely a result of South Africa ’s history, and the demobilisation of soldiers from the apartheid armed forces. For example, Executive Outcomes was initially created by former 32 Battalion officers and staffed with soldiers from its units.

In 2011, several rumours and reports surfaced about South African PSCs activities on the side of Libyan rebels, and that a group had been contracted to protect Muammar Gaddafi and some of his family members. The latter type of cases can reflect negatively on South Africa ’s foreign policy. It becomes so especially if such reports question whether there was any direct or indirect link between the South African government and such PSCs ’ activity in Libya .

It has to be noted that International Humanitarian Law (IHL) has not been able to criminalise mercenary activities, but PSCs can be held accountable according to the rules of IHL in cases where PSCs commit war crimes. This means that the South African government’s response to mercenary and PSCs activities has to consider whether war crimes were committed.

An evaluation should be made of the current system that grants approval to PSCs to act outside South Africa ’s borders. Most states confronted with this issue have opted not to outlaw PSCs and mercenary activities, but rather to develop stricter regulatory regimes to monitor and curtail their activities.

The ‘soft’ PSCs services such as protection, training, and military assistance are relatively non-controversial. However, the South African government could consider stricter controls over PSCs that provide the following type of services in conflict environments: when PSCs are positioned at military-specific locations to provide either offensive or defensive services in theatre; when PSCs are contracted to provide specific targeted killing services (note covert operations); when PSCs utilise and are contracted to operate high-tech and unmanned weapons systems; use electronic surveillance and control information operations.

The Foreign Military Assistance Act (1998) prevents any foreign military assistance without prior authorisation from the National Conventional Arms Control Committee (NCACC). It may be necessary to audit, review and interrogate the current regime to determine its effectiveness. Furthermore, it would be to establish whether there is a need for further change to prevent cases where the South African government may be embarrassed, or its foreign policy objectives undermined by PSCs actors.

In the case of a scenario reflected in the paragraph above, it may also be necessary to interrogate the extent to which NCACC decisions on foreign military assistance are informed by the mandate of the Department of International Relations and Cooperation (the Department), regarding South African diplomatic activities, South African Secret Service, and domestic intelligence. Decisions whether to allow PSCs to act in specific theatres have to be assessed against the backdrop of ongoing South Africa ’s diplomatic, economic and other engagements in countries where PSCs apply to render services. This may help to prevent unnecessary embarrassment or negative impacts on South Africa ’s foreign policy.

3.6 Observations by members of the Committee

· The role of South African embassies in conflict countries should be redefined.

· The use of child soldiers in conflict situations is unacceptable. Hopefully there are no South African companies involved.

· It should be investigated whether there were companies engaged in illegal activities hiding in South Africa .

· Local security companies are sometimes linked to foreign entities. Credibility of these accusations should be established.

· It would be useful to establish how many South African companies are involved abroad in private military security issues.

· There should be monitoring of the activities of South African companies abroad.

· There should be a differentiation between lethal and non-lethal activities of private security companies.

· The right to work should not be impinged upon by measures to curb the activities of private security firms.

· Only South Africa and the United States have regulations on PSCs but little is known about this, public diplomacy must be enhanced to keep the public informed.

· It should be established whether the South African state uses PSCs and the extent of citizenry involvement in such activities.

· The focus areas in current legislation being reviewed must be explored.

3.7 Reponses by the presenter

· Embassies are not really meant to be a watchdog, but if they are aware of PSCs causing problems for South Africa , they can alert the South African government.

· Child soldiers are typically associated with rebel activities.

· People or groups hiding out in South Africa are a Department of Home Affairs issue.

· Of the 62 PSCs worldwide, 9 are South African.

· A legislative review will focus on chain of command issues.

· The South African government does not use PSCs .

4. Presentation by Ms Catherine Grant: Thoughts on the concept of a code of business conduct for South African companies abroad and the impact of their activities on the conduct of foreign policy abroad

Ms Grant began her presentation by noting the fact that while issues concerning the responsibilities of business have been an ongoing debate, today the conception of Corporate Social Responsibility (CSR) marks the start of a new era. Corporate Social Responsibility gives business a new role and purpose. The objective of CSR is entrenching the idea that business needs to earn their ‘licence to operate’ and thus act in a manner in line with ‘society expectations’. Hence a commitment to corporate citizenship is the key to long-run profitability for individual firms by ensuring public support for the market economy.

Two official influences that have led to movements of business conduct: Firstly, the continuing official public concern with environmental issues and threats such as green house gas emissions has led to the idea of a movement in actions and policies of sustainable development. Secondly, the hostility towards Multinational Enterprises (MNE) in general that their behaviour is profit motivated.

A code of conduct sets rules outlining the responsibilities of or proper practices for an individual or organization. It is defined as ‘Principles, values, standards, or rules of behaviour that guide the decisions, procedures and systems of an organization in a way that (a) contributes to the welfare of its key stakeholders, and (b) respects the rights of all constituents affected by its operations.’ A code of conduct is a voluntary set of standards describing the behaviour expected from the people in companies. These standards exist so that companies conduct their business in a framework of relevant laws, regulations and internal policies.

Recommendations were made for bringing the state and business closer and working together:

— The relationship should be more interactive between government and business.

— Parliament, organised labour and civil society should be involved more comprehensively.

— Business needs to communicate more about its approach to development, and more success stories must come to the fore.

— NEDLAC’s fringe study on South African companies on the continent is a good start and long overdue.

— There is a need to consolidate information on existing codes and compliance by South African companies already doing business abroad.

— There is a need to upscale skills of government officials to interact and better understand interests of the private sector e.g. enhance economic diplomacy training within the Department.

— There is a need to advocate for a strong organised business both locally and on rest of the continent.

— The code of conduct should be formulated by government in conjunction with business. However, it would be strongly recommended that it is owned by business itself in terms of its implementation.

5. Presentation by Mr Clive Tasker : A perspective from business formations in South Africa involved in Africa

Standard Bank will be 150 years old in May and employs over 50 000 people. It has operations in 53 countries with 17 of those being in Sub-Saharan Africa. It is Africa ’s largest bank, and it has policies aimed at developing well behaved corporate citizens. Employees are trained in a manner which emphasizes integrity through avoidance of bribes and conflicts of interests. Social investment and corporate responsibility are values that Standard Bank takes seriously. The bank is willing to enter into a dialogue and reach an agreement with stakeholders on a code of conduct.

5.1 Recommendations by the presenter

It would be preferable to have a body/entity which will be a custodian of a code of conduct for companies. However, such a body should also monitor all companies from sub-Saharan Africa . Enforcement mechanisms are by nature voluntary and are not easily implemented. There is a need for business to be made aware that they are flag bearers for South African foreign policy.

5.2 Observations by the members of the Committee

· The Committee needs statistics on good and bad behaviour by companies to fully comprehend the depth of the situation.

· The image of South Africa is very important and companies need to realize that they play an important role in promoting and marketing that image.

· Interaction at NEDLAC is not sufficient; a lot more consultation is needed.

· Standard Bank was congratulated for its efforts in being responsible.

· On their own, Codes are not sufficient.

· Applicability and monitoring are an issue only because the regimes are not strong enough.

· There is evidence of contradictions in the laws of different countries in which these companies operate. There is a need for a set of minimum standards that all companies must apply in all countries in which they have operations. However, South African companies must not be disadvantaged in the African markets.

5.3 Responses by the presenter

· South African businesses need to be aware of their role in strengthening South Africa ’s image abroad.

· Codes apply to a range of companies that voluntarily subscribe to them.

· A company like Edcon pay its employees equally in countries like Botswana .

· The envisaged code of conduct must extend to business operations in IBSA and BRICS countries.

· NEDLAC engagements have been meaningful. However, it is clear that far more than NEDLAC is needed. This mechanism is not sufficient.

· A name and shame campaign for companies that do not behave well should be considered.

6. Presentation by Dr S Zondi : Any possible alternatives to guide South Africa’s future business engagements on the continent, within the confines of foreign policy?

The basis for examining whether there should be a code of conduct or not depends on the framework needed for guiding our foreign policy. It should be decided whether it would be economic diplomacy combined with political diplomacy. A good balance should be found between these two elements, and both must be driven at the same time. Economic diplomacy must be a tool for extending elements of foreign policy. South Africa needs to rethink its international strategy to fit into the global economic shift. The trends have propelled the country to a stage where it is part of BRICS and IBSA. South Africa cannot continue to ride on the ‘Mandela magic’ tide; it must decide whether it strengthens its soft power or hard power in world economic and political affairs.

There is pressure on foreign policy to provide evidence that it concretely contributes to domestic priorities. This presupposes that economic diplomacy must be prioritised. Huge delegations on presidential trips abroad must be meaningful and work towards alleviating poverty in South Africa . The economic policy drive must be supported by solid strategies and objectives to place South Africa as an emerging economy, and business must contribute to this drive.

South Africa is faced with a domestic dilemma as there is no consensus on national issues. The rainbow nation notion remains just an ideal. Society is highly divided, and this sends confusing messages about foreign policy objectives. Radical elements in society resist change while liberal elements are ready for change. There is no unanimous buy-in in foreign policy stance. With a situation like that, a code of conduct would be reduced to a technical process. Discussions ensuing are such that business will be pan African and humane as opposed to those in big foreign companies who are only interested in profit at all cost.

At times South African companies promise more than they can deliver, creating unrealistic goals. Negotiations within NEDLAC collapsed because of mistrust, aloofness and perceptions that South Africa has a black government with white business still dominant. Globalisation of markets is now regulating business, not governments, as they are believed not to have enough capacity.

6.1 Recommendations

Dr Zondi recommended that the options South Africa has at its disposal are the following:

§ South Africa should seek a complementary regional code as well as a regulatory mechanism for business in the region. This should be a consultative process between governments, the private sector and civil society.

§ Nationally, we need either a code or a charter between state and business to lay down a framework for doing business in South Africa . Existing regulations could also be synchronised and improved to reflect the basic principles requisite to govern business in the domestic sphere.

§ Perceptions abroad are that the face of South Africa is ‘white’. This is because the majority of businesses abroad associated with the country are mainly white owned and controlled. Therefore the challenge is really not about conduct alone. Black business, small and large, should be engaged as well.

§ There is no greater consensus between South African business and government. Businesses should work together with government to fight poverty.

§ Strong and decisive public diplomacy is needed. Communication is very poor communication from the Department to the middle class in South Africa ; it will be a challenge for them to get it to the rest of Africa . DIRCO does not use all the tools of diplomacy at its disposal to get the messages across (soft and hard power currencies).

§ Business should take the initiative and encourage others to adhere to good, ethical conduct.

§ There are still unresolved challenges within the region, such as harmonisation of industrial policies, communication and interconnectivity impacting on regional intra-trade. There should be an exerted effort between government, the private sector and civil society to address these impediments.

§ Either way, strong leadership in the above groupings is needed.

6.2 Observations by members of the Committee

· Perceptions can be managed with the correct level of diplomacy.

· South Africa needs to invest more in Africa but China has beaten the country to it. This is despite the fact that through the African Renaissance Fund, a huge contribution has been made to ready the environment for conducive and sustainable economic activity.

· South Africa should stay focussed and more competitive in African markets and elsewhere.

· A lot can be learnt from Brazil about their strengthened research in Agriculture and strategies for fighting poverty.

· Sullivan principles are playing out in a very interesting way in relation to South African business abroad. (Sullivan principles: Rev Leon Sullivan, an African-American minister who was a member of the board of General Motors, introduced the principles in 1977, and later launched them jointly with the UN Secretary General Kofi Annan in 1999. This code of conduct consisted of seven requirements a corporation was to demand for its employees as a condition for doing business. In general, the principles demanded the equal treatment of employees regardless of their race both within and outside the workplace). These demands directly conflicted with the official South African policies of racial discrimination and unequal right in the workplace.

· Business and government need to work more closely together because it is government that takes the brunt for the conduct of South African companies abroad.

7. Conclusion

In conclusion, the Chairperson noted that economic diplomacy should be considered an extension of South Africa’s foreign policy, and that it would be important for the Committee to perhaps engage with the Portfolio Committee on Trade and Industry on any future engagements held on the issues of South African companies abroad, to consolidate recommendations on the way forward on this issue.