1. Parliament passed the Armaments Corporation of South Africa, Limited Act, 2003 (Act No. 51 of 2003) ("the Act"), in 2003. The Act will come into operation at a date determined by the President by proclamation in the Government Gazette. The Act provides for the existence of the Armaments Corporation of South Africa, Limited ("the Corporation"). It also provides for the functions, accountability and finances of the Corporation.
2. When Cabinet approved the introduction of the Armaments Corporation of South Africa, Limited Bill into Parliament in 2003, Cabinet indicated that the Chief of the South African National Defence Force should not sit on the Board of Directors of the Corporation. The reason for such indication was that membership of the Board by the Chief of the South African National Defence Force would constitute a potential conflict of interest. Such a conflict would arise in the sense that the Chief would be part of the decision to determine the requirements of the South African National Defence Force as well as being part of the decision to determine which supplier should provide the requirements.
3. The 2003 Bill was, however, passed with the Chief of the South African National Defence Force as a member of the Board of Directors. This Amendment Bill now seeks to amend the Act so as to remove the Chief from the Board of the Corporation in order to address the concern of the potential conflict of interest.

2. CONSULTATION

Armscor was informed of the proposed amendment to the Act.

3. ORGANISATIONAL / PERSONNEL IMPLICATIONS

None.

4. FINANCIAL IMPLICATIONS

None.

5. COMMUNICATION IMPLICATIONS

None.

6. PARLIAMENT PROCEDURE

The State Law Adviser and the Department of Defence are of the opinion that the Bill must be dealt with in accordance with the procedure established by Section 75 of the Constitution since it contains no provision to which the procedure set out in the Section 74 or 76 of the Constitution applies.