Joint Investigation Report into Strategic Defence Procurement Packages - Chapter 10: adoption of Committee Report

PUBLIC SERVICE AND ADMINISTRATION PORTFOLIO COMMITTEE
6 December 2001
JOINT INVESTIGATION REPORT INTO STRATEGIC DEFENCE PROCUREMENT PACKAGES - CHAPTER 10: ADOPTION OF COMMITTEE REPORT

Acting Chairperson: Mr M Baloyi

Documents handed out:
Draft report of the Portfolio Committee on Public Service and Administration (see Appendix)

SUMMARY
The Committee considered its report on Chapter 10 of the Joint Investigation Report. The Committee was unanimous in their acceptance of the report with the exception of the Democratic Party that voted against it. The DP had hoped that the Committee recommend action be taken against the Minister for dereliction of duty because he did not take action against conflict of interest concerning Mr C Shaik. However the DP suggestion was rejected.

MINUTES
Mr M Baloyi was elected as acting chairperson in the absence of Mr P Gomomo.

Mr R Mohlala (ANC) presented specific amendments to the recommendations in the report. Here they are as amended:

(1) The Portfolio Committee [upholds] supports the recommendations of the agencies, and believes that as they are implemented, care should be taken of existing policies so as to avoid possible duplication.
(2) In strengthening this position we call on the Public Service Commission to closely monitor the process of policy implementation on an ongoing basis and report to the committee.
(3) We call on the Department of Defence and Department of Public Service and Administration to work closely with [one another] each other in addressing particularly the urgent personnel audit to ensure that all staff of the Department of Defence comply with the prescribed security clearance requirements, within a period of 12 months.
(4) Portfolio Committees should also tighten their actions for stricter oversight on policy implementation accordingly, as the situation dictates.

Mr Mohlala suggested that the report be adopted.

The Chair, Mr Baloyi asked for comments from members.

Mr M Waters (DP) said that the Democratic Party had unresolved concerns over Chapter 10 of the Report. It felt that the Executive should have taken action over the conflict of interest issue concerning Mr Shaik. Mr Waters wished for there to be an investigation into the conduct of the Executive. He proceeded to read the code of conduct applicable to the Executive.
Mr Waters also referred to Section 17 (1)(b) of the Public Service Act. It gives the Minister the power to fire an employee if the need should arise. Mr Waters thus felt that the Minister did not exercise this power over Mr Shaik and therefore should be held accountable. He proposed that the Committee by way of an additional recommendation take action against the Minister.

The ANC noted Mr Waters concerns but took the stance that the Committee would not be dealing with issues pertaining to specific persons. The Committee should preferably occupy itself with ways of closing loopholes in existing policy. The proposal of Mr Waters was thus rejected.

Adv Madasa (ACDP) suggested that a further recommendation be added which essentially notes the actions taken against employees in the Department of Defence and the Department of Trade and Industry but that the Committee would be monitoring the progress of these actions.

Mr Durand (NNP) proposed that the Committee include a provision in the report expressing their appreciation for the work that had been done by the three investigating authorities.

After considering these suggestions, the Committee agreed to release a press statement in which the essence of what had been suggested would be included.

The Committee with the exception of the DP agreed to the recommendations as amended and adopted the draft report. The DP voted against the report.

The meeting was adjourned.

Appendix:
DRAFT REPORT OF THE PORTFOLIO COMMITTEE ON PUBLIC SERVICE AND ADMINISTRATION

Introduction
The report being considered relates to the investigation into the Strategic Defence packages for the acquisition of armaments for the South African National Defence Force, which was conducted jointly by the offices of the Public Protector, Auditor-General and the National Director of Public Prosecutions.


The investigation came about after it was established by the Auditor-General during November 1998, that the procurement process was a high-risk area that warranted a review. Subsequently, a special review by the Auditor-General was conducted and signed on the 15 September 2000, which recommended that certain areas of the procurement process, needed attention. The matter was handled by the Parliamentary Portfolio Committee on Public Accounts, which recommended that a multi-agency probe into the matter be conducted, hence Parliament's approval for such on 2 November 2000.

The three agencies conducted the investigation, and focused on the cost to state, the selection of prime contractors, the selection of sub-contractors and the contracts themselves. After thorough investigation on these issues, the agencies established that, despite certain anomalies and technical inadequacies at various stages of the procurement process, there was no evidence of an improper or unlawful conduct by the Government. They made recommendations on areas where particular attention need to be drawn to the executive or the Prosecuting Authority for action,

On getting this report from the three agencies, Parliament gave instructions to seven Portfolio Committees to interact with same, and the Portfolio Committee on Public Service and Administration was accordingly charged to deal with issues falling within their scope, particularly (chapter 10).

Background
2.1 Chapter 10 deals with anomalies related to the selection of sub-contractors in the procurement process, and particularly the fact that the report indicates that there has been conflict of interest in the selection process, and that the process was not managed according to stipulated procedures.

2.2 The facts in this regard are that: -
2.2.1 The Chief of Acquisitions had conflict of interest in the process arising from the fact that he had a brother who had interest in sub-contractors that were also bidding for the contracts. He declared such conflict of interest, and yet did not recuse himself from activities of the PCB meetings, which were to decide on the allocation of such contracts.

2.2.2 The main contractors did not follow a formal process for the selection of subcontractors in all instances, as they only embarked on teaming arrangements and joint ventures with local defence industry.

2.23 Despite the fact that it is a requirement of the Defence Review and Department of Defence Procurement Policy that role-players should have security clearance. the Chief of Acquisitions did not accordingly secure clearance.

It should be noted that the agencies found the facts above to be serious violation of the expected conduct by people charged with responsibilities of public duty, and that they (agencies) declared the Chief of Acquisitions declaration of interest as null and void.

As we deal with this report we should not loose sight of the fact that there are policies that we may employ to address some of the negative tendencies of the likes of which we have highlighted above. The Public Service Act and the Public Financial Management Act (PFMA) are for instance, useful tools to deal with questions of conflict of interest, financial management and procurement issues.

Recommendations
(1) The Portfolio Committee upholds the recommendations of the agencies, and that as they are implemented, care should be taken of existing policies so as to avoid possible duplication.

(2) In strengthening this position we call on the Public Service Commission to closely monitor the process of policy implementation on an ongoing basis.

(3) We call on the Department of Defence and Department of Public Service and Administration to work closely with one another in addressing particularly the urgent personnel audit to ensure that all staff of the Department of Defence comply with the prescribed security clearance requirements, within period of 12 months.

(4) Portfolio Committees should also tighten their actions for stricter oversight on policy implementation according as the situation dictates.