Meeting with Defence Portfolio Committee

Meeting report

STANDING COMMITTEE ON PUBLIC ACCOUNTS
7 MARCH 2001
MEETING WITH DEFENCE PORTFOLIO COMMITTEE

Chairperson: Dr Gavin Chairperson Woods (IFP)

SUMMARY
SCOPA briefed the Defence Portfolio and Joint Standing Committees on its investigative work on the arms procurement deal to date.
The Committee had intended to issue a second report this year, but the report about to be issued will be in respect of the side issues that arose out of the Fourteenth Report.

MINUTES
(Also present were Ms Thandi Modise, Chair of Defence Portfolio Committee, Ntsiki Mashimbye, Chair of the Joint Standing Committee on Defence, and members of both committees.
[Editor's Note: What follows is an edited first person account of the meeting]

Ms Modise: Parliamentary Rule 208 makes provision for formal discussions between SCOPA and the Defence Portfolio Committee (DPC). SCOPA is doing good work in its investigation, but there has been a public perception that DPC was doing nothing. It is important to hold the meeting because the investigation process is still unfolding, and we should have formal advice rather than rely on the media. It is also necessary to acknowledge SCOPA as financial watchdogs. You have the support of DPC, and I am sure that the Joint Standing Committee on Defence would agree. We don't have financial competences in this matter, but we agree with the processes as we have read of them in the media, and on television.

Chairperson Woods (IFP): Thank you for those comments. The purpose of this meeting is to brief you on what has happened at SCOPA. We are only interested in the financial management, and not policy issues.

Mr Smith (ANC): I think it would be useful if you, as Chair, give the overview. We can add if there are any oversights.

Chairperson Woods: This has been a particularly unusual Fourteenth Report, in view of the public allegations. The Auditor General's review has stressed that his investigations were superficial, but gave cause for concern. Our investigations and Fourteenth Report endorsed the AG's recommendation of a forensic investigation to rest the public mind, or to reveal any problems. We undertook to facilitate the investigation and to monitor the cost of the arms deals, and to meet the other committees on this issue.

Of particular concern are The BAe Hawk and BAe/Saab Gripen deals, Industrial Participations, especially Bae and Jobs, in conjunction with the Department of Trade and Industry Committee.

The procurement processes had weaknesses, and risks. We asked the AG to recommend tightening up. It was our intention to issue a second report this year, but the report about to be issued will be in respect of the side issues that arose out of the Fourteenth Report. We will start writing the report next Wednesday.

There are three bodies involved in the investigation: the Independent Directorate for Serious Economic Offences, the Public Protector and the forensic department of the AG's office. Their first meeting was held in early December. There have also been some discussions with the Speaker on the parliamentary relationship with the agencies. The Constitution makes provisions for accountability.

A fairly tentative reporting arrangement exists presently, with details of their investigation to follow before their report is tabled to SCOPA and Parliament. We want to assure the public of a thorough investigation.

The AG advised that they had established an investigating charter, and a budget of R13.5 million. They appreciate some of the legal implications of taking over the Heath unit functions. They have also reminded us of our intentions of all possible skills. A central office has been equipped with computers, etc. The investigation could take a few months to a couple of years. They will engage experts, including naval consultants. Records have been obtained from 68 agencies. Three auditing firms have been required to provide audited documents, bank statements, company structures, and also to investigate the cost to the state of the BAe Hawks and BAe/Saab Gripens, plus the selection of sub-contractors.

The team will review the arms procurement processes, and also all NIP and DIP contracts. They have also had access to the documents of the departments of Trade and Industry, Finance, Public Enterprise and of Defence, as well as Cabinet minutes.

No further formal meeting with the investigating team has been scheduled until July.

Ms Taljaard (DA): I am happy to have our colleagues on the policy issues. Can they have similar access to the documents provided to SCOPA members?

Chairperson Woods: We have been able to overcome resistance from the Department of Defence to obtain documents prior to the Fourteenth Report. These documents are now under Parliament's security.

Ms Modise: I have had discussions with Madam Speaker. We had a closed meeting last September when the Department of Defence talked us through the documents. I agree that any of our members should go through SCOPA if they want to examine them.

Mr Schalkwyk (DA): Regarding the products involved, though I don't know what aircraft were considered, there is nothing wrong with the products. The acquisitions have given a boost to the morale of the SANDF and country.

Mr Nqculu (ANC): We are happy with your report, and that it has brought our committee on board with the SCOPA investigation. You have done a good job.

Chairperson Woods: On behalf of SCOPA, thanks for joining us. The remainder of our agenda is the planning committee, the Government Communication and Information System (GCIS) issue, the Treasury replies, and the tabling of SCOPA's First and Thirteenth Reports for 2000.

The Planning Committee met this morning and, given the overwhelming volume of work, proposes that SCOPA meet on Tuesdays, Wednesdays and Fridays.

Mr Smith: For the remainder of this term until early May, I propose only two days and to include Fridays after the next recess.

Chairperson Woods: The next planning meeting will be Tuesday between 1 and 2pm. We want to bring stability back to SCOPA.

Mr Doidge (ANC): We should invite the chair of Committees, Mr MJ Mhlangu so that he can get a sense of timing problems. There needs to be a meeting of the planning group with the Speaker to discuss research and other capacity problems.

Mr Gumede (ANC): I agree with everything said, but I am concerned about how we should proceed when we have difficulties, as we have had with the arms deal. This is what has led to the time problems.

Chairperson Woods: I appreciate this, and the arms deal has highlighted this. You proposed the vote last time. This is one of the mechanisms of a democratic society.

Mr Doidge: We should be pro-active rather than wait until a crisis erupts. It may be wishful thinking that we will always overcome differences.

Chairperson Woods: Perhaps spokespersons from the parties should work a way through.

Mr Makwetla (ANC): Point of order. We are debating scheduling, not voting or other difficulties or differences.

Chairperson Woods: I take your point.

Mr Kannemeyer (ANC): Because of the magnitude of the arms deal, the plenary has been the area of contestation rather than the sub-groups. Once this is past, we will naturally revert to sub-groups to do much of the work, which should overcome the time problems.

Ms Taljaard: We may be a unique committee, but we are subject to international benchmarking. There is a body of literature about public accounts committees, and it would be wise to consider those benchmarks.

Chairperson Woods: The planning committee recommends three clusters. Will Plenary accept this rather than the five we have had recently?

(The Committee agrees)

Chairperson Woods: Greater certainty is coming back into our work. The ANC has put forward names for convenors for the work groups.

Mr Feinstein (ANC): The flux in the Secretariat staffing is totally unsatisfactory. Could we suggest that Parliament must sort this out?

Ms Taljaard: I concur that this issue should be dealt with with Madam Speaker.

Mr Makwetla: I propose the following sub-groups: Peace and Security, Social Sciences and Economic clusters.

Ms Taljaard: Last week it was proposed that we resolve this in the planning group.

Chairperson Woods: The Plenary must decide. I cannot rule on this.

Mr Doidge: We took a decision this morning to resolve this in the planning group.

Mr Makwetla: No, Plenary should take this decision. The ANC has decided that Vincent Smith should lead the Peace and Security group.

Mr Beukmann: It is important to maintain a bipartisan approach. Public accounts committees all over the world operate on a bipartisan basis.

Chairperson Woods: GCIS has asked us to authorise an overpayment of R1.2 million paid for the printing of the President's state-of-the-nation address. The AG has indicated that the amount may not be recoverable.

Du Plessis of AG's Office: We have highlighted the transaction was unauthorised. If SCOPA is not prepared to authorise the transaction, then the normal legal course will proceed.

Chairperson Woods: The GCIS has surrendered the amount back to Treasury. What are SCOPA's responsibilities?

Mr Du Plessis: The whole amount is unauthorised, but we will have to write off R1.2 million as a loss to the state. The defendant in the matter is Solomon Kotane.

Mr Doidge: I am concerned that the stakeholders are not taking Parliament seriously. The responses from the State Attorney's office are not acceptable. I think that the Justice committee would be very interested in the attitude of the State Attorney's office, and that Parliament should recommend action. It is not acceptable that the State Attorney's office says that it cannot find Mr Kotane.

Mr Du Plessis: The full amount is unauthorised, and the committee will have to take it up in a finance bill or, alternatively, that Treasury provides for it next year as a loss in the books of the GCIS.

The meeting was adjourned.